Welfare State

HC Deb 23 July 1996 vol 282 cc152-205

Madam Speaker

I have selected the amendment standing in the name of the Prime Minister.

3.48 pm

Mr. Chris Smith (Islington, South and Finsbury)

I beg to move, That this House asserts its renewed commitment to a strong welfare state to provide a platform of opportunity and security for all citizens during those times of their lives when they need it; expresses alarm at recent indications that Her Majesty's Government is considering the privatisation of parts of the welfare system; deplores the Government's stewardship of the welfare state, which has left it more expensive for the nation but more brutal for those who rely on it; believes that the way to reduce welfare expenditure is to help people to move from benefit to work, not to remove or reduce their benefits; and fears that the future of the nation's welfare state is not safe in this Government's hands. This debate is taking place because the Government have failed those who depend on the welfare state and the nation. In a world of increasing insecurity, the need for a strong platform on which we can all depend at the times of our life that we need to is greater than ever. We must modernise the welfare state—make it appropriate for a modern world—and we should not dismantle it. That is the crucial difference between the Labour party and the Conservative party.

The Government's stewardship of the welfare state stands on the record. They have doubled the number of people dependent on state benefits, from one in 12 of the population to one in six.

Mr. Michael Stephen (Shoreham)

Will the hon. Gentleman give way?

Mr. Smith

So soon?

Mr. Stephen

The hon. Gentleman alleges blithely that we have doubled this and that. Has he not heard that the entire western world has just come through the worst economic recession since 1929, or was that also the fault of the British Government?

Mr. Smith

I notice that the hon. Gentleman and his party are quick to claim credit when the global economy is going well, but rather less quick to claim the blame when it is going badly.

The truth is that twice as many people are dependent on state benefits now as there were when the Government took office in 1979. In addition, they have doubled the amount of means testing in the system: it is up from 16 per cent. of benefit payments to 36 per cent. Now, one in five of all non-pensioner households have no earned income, and that worrying trend—the development of a category of non-earning households—should concern any sensible Government.

As we learned a few moments ago, one in four of all children grow up in poverty, and, at the same time, the budget for social security across the nation has risen by a third in real terms during the time the Government have been in power.

Mr. Nigel Evans (Ribble Valley)

How will the hon. Gentleman benefit the families that have 16 to 18-year-olds in further education when their child benefit is removed?

Mr. Smith

There is no such proposal at the moment, and if the hon. Gentleman listened to what the Labour party has said, rather than paying attention solely to his Conservative central office briefing, he might recognise the truth.

Every year, we have grand announcements from the Secretary of State about claimed reductions in expenditure from the uprating statement, and then, every year, he overshoots his departmental budget, often to the tune of several billions of pounds.

On top of all those examples, we see increasing inequality in this country. The Secretary of State tried to tackle that issue in his speech in Southwark cathedral recently. He told us that people who talked about increasing inequality were missing the real picture, and that we were all upwardly mobile now. He said particularly that those at the bottom of the heap were upwardly mobile now. That assertion stands in the same category as his claim to a number of lobbying organisations some months back that there was no poverty in Britain, because it was a problem only for third-world countries.

The Secretary of State based his evidence on a survey carried out by his Department on the work and earnings experience of men aged 29 to 44 in 1978–79, and their contributions history from then until now.

Mr. David Nicholson (Taunton)

I hope that—in addition to telling us what my right hon. Friend the Secretary of State said in Southwark cathedral—the hon. Gentleman will tell us how the Labour party proposes to reduce social security spending, about which he has complained; how he expects the reduction of means testing, to which he has also referred, to help that process; and how he will pay for the increase in basic pension and the restoration of the link with earnings, as called for by his predecessor as social security spokesman, Baroness Castle. That has been traditional Labour party policy, from which it has resiled.

Mr. Smith

Apart from making the obvious observation that Baroness Castle, dear friend as she is to me, does not make current Labour party policy, the hon. Gentleman might be better off in framing his questions if he reads what we have produced as a party in recent weeks—including, for example, the excellent document entitled "Getting Welfare to Work", which was published some weeks ago. By that means, he might learn something of benefit to him.

In his Southwark cathedral speech, the Secretary of State referred to a departmental survey. That survey excluded women. It excluded also those who were unemployed at the beginning and at the end of the period covered by it. It focused on a particular generation. The survey gave the lie to the broad conclusions that the Secretary of State tried to build upon it. A passage on the first page of the survey reads: The findings tell a statistically significant story of the work experiences of a particular group of people, and do not reveal trends in the labour force as a whole. Yet the Secretary of State attempted to claim in his Southwark cathedral speech that the survey revealed trends in the labour force as a whole.

The Secretary of State for Social Security (Mr. Peter Lilley)

The hon. Gentleman has not quoted me. That applies to all his other allegations. He has not presented a single quote to justify them.

Mr. Smith

The right hon. Gentleman said clearly that those of us who have talked about growing poverty and inequality were practising the politics of envy. The tone of his speech was in support of the thesis that inequality does not matter, because it is superseded by mobility. That is what the right hon. Gentleman was saying. If he wants to quibble with my paraphrase of the content of his speech, I am happy to give him the opportunity to do so.

Mr. Lilley

I thought that it would help Hansard readers if I gave them a shorter version of the hon. Gentleman's remarks, and were merely to say that I did not say any such thing.

Mr. Smith

The Secretary of State has shot a hole through the entirety of his speech. He was clearly arguing that the evidence of mobility that his departmental survey showed, as he claimed, made it clear that we did not need to worry about inequality. He is now telling us that that is not what he said. The right hon. Gentleman should go through his speech and withdraw it in its entirety.

Mr. Robert G. Hughes (Harrow, West)

The hon. Gentleman has no evidence that there is anything like the thought that he suggests is to be found in the speech of my right hon. Friend the Secretary of State. The hon. Gentleman and his hon. Friends—the shadow social security team—have sent out a document to Labour Back-Bench Members for the debate. On the second page, near the top, it states: The secret report reveals that Ministers intend to justify these cuts in services by arguing that 'some of the customers had brought these problems on their own heads, by failing to take any responsibility for dealing with their own problems'". There is no quote like that, is there? Will the hon. Gentleman confirm to the House that he has simply made it up?

Mr. Smith

I have a copy of the speech made by the Secretary of State. The right hon. Gentleman said what I claimed he said. I refer to a section that is headed "Opposition Approach". It states: Indeed, an obsession with equality often displaces concern for poverty by the politics of envy. That is precisely what I said the Secretary of State was saying. The right hon. Gentleman continued. In another section is headed "Average Incomes Have Risen." He continued by claiming: Our policies are working. The vast majority of people in this country are better off now than their counterparts were in 1979. Another section is headed "Improvements for People in the Bottom Tenth of Incomes". It states: It is significant that claims that the 'poor have got poorer' do not generally focus on benefit levels. Instead they largely relate to statistics for households with the lowest tenth of reported incomes. He goes on to talk about how people in that decile have seen their position become upwardly mobile. Case after case in the Secretary of State's speech supports the paraphrase that I have just made of it. If the Secretary of State wants to intervene to tell me that he did not say the things in the printed text of his speech, I shall happily allow him to do so.

The Department's survey, which excluded women and people who were unemployed at the beginning of the survey period, does not bear out the construction that the Secretary of State put on it. For example, the survey reveals that more than two thirds of those out of work in 1978–79 were still out of work in 1992–93. It shows that less than half of the lowest paid in 1978–79 had climbed into a higher earnings bracket in 1992–93.

The report is specific about the most recent period, under the present Prime Minister, in relation to people at the bottom of the pile. It says: Earnings growth over the period varies directly with the decile position, with the highest growth occurring in the upper deciles … What growth there was in the lower deciles occurred mainly in the first two thirds of the period"— back in the 1980s. growth in the last third of the period is lower, with no apparent growth at all in the bottom decile". It is clear from the Department's own study, which the Secretary of State prayed in aid in his speech at Southwark cathedral, that, during the Government's stewardship, the people at the bottom of the pile have seen no apparent growth at all in their incomes and standard of living.

The Government must recognise that inequality and poverty in Britain are real and should not be brushed aside, as they constantly have been by the Government. Not content with having presided over that trend to poverty, inequality and dependency, creating a divided Britain, the Secretary of State is now setting about making it worse.

Mr. Bernard Jenkin (Colchester, North)

rose—

Mr. Smith

I shall give way to the hon. Gentleman, but then I must make progress.

Mr. Jenkin

The hon. Gentleman has spent about five minutes attempting to argue that somehow the rich have become richer and the poor poorer. Yet he finished up resting on a phrase tendentiously suggesting that the bottom 10 per cent. are "no better off". That does not mean that they have become dramatically poorer, as the Labour party's propaganda constantly seeks to suggest.

Mr. Smith

First, the phrase that I quoted came from the Secretary of State's own Department's study. Secondly, as I explained at the outset, that study ignored women and those who were unemployed at the beginning and at the end of the survey, so it was a distorted picture anyway. Thirdly, the Joseph Rowntree Trust's report of a year ago showed clearly that the income, after housing costs, of the bottom tenth of the population had fallen by 17 per cent. during the past 17 years. The hon. Gentleman should look more carefully at the figures before he makes such an intervention.

Mr. Stephen

rose—

Mr. Smith

I shall give way for one last time.

Mr. Stephen

On the subject of distortions. I have in front of me a draft Labour press release which was no doubt left on a photocopier by a prospective Conservative candidate in the hon. Gentleman's office. It says: Last Wednesday we saw the plans that have been under discussion in the Treasury … It is a nightmare vision of what would happen if the Tories are re-elected. The scrapping of the basic state pension; forcing people to take out private insurance for unemployment or sickness benefit". Surely it was an act of gross negligence to prepare a press release for Labour Members without checking that it was prepared by one of their own prospective parliamentary candidates. Will the hon. Gentleman assure the House that the text of that press release will be amended to read, "It is a nightmare vision of what would happen if Labour were elected"?

Mr. Smith

I had expected better even of the hon. Gentleman.

Mr. John Denham (Southampton, Itchen)

I had not.

Mr. Smith

I bow to my hon. Friend's wiser judgment.

The hon. Member for Shoreham must get it right. The lady in question, who has been traduced several times by Conservative Members, is not a prospective parliamentary candidate for the Labour party, although she is, I understand from press reports, a member of the Labour party, and that should make no difference whatever to her capacity to provide impartial service as a civil servant at the request of her superiors in the Treasury, and to provide that advice, with others, to the permanent secretary at the Treasury, answerable to the Chancellor of the Exchequer, who is not yet a member of the Labour party.

Not only are the Government presiding over a trend towards poverty, inequality and dependency, but they are setting about making it worse. In the past few days, we have had announcements from the Secretary of State about the ending of the freephone advice service, and the Government are considering ending direct payments to people on income support to cover their gas and electricity bills, which would make budgeting for low-income families much more difficult than it is at the moment.

We have also had further announcements about increasing non-dependant deductions on housing benefit, which will inevitably lead, as the Social Security Advisory Committee has constantly pointed out, to the increasing break-up of families. All of that is on top of the various measures that the Department announced earlier in the year in the uprating statement.

A sensible Government would not go about controlling the social security budget by chopping and slicing people's benefits and removing and reducing the money that people need to survive on and live. A sensible Government would, of course, get people back to work.

Many of the measures that the Government recently announced make the move from benefit to work more difficult rather than easier. The Government propose to cap housing benefit for under-25s at the level of shared accommodation rather than for ordinary property that someone of that age group can rent, and which is available. How will it encourage someone of that age group who is considering taking a risky or possibly temporary job, which may last only six months but will take them off housing benefit for that period, if, when they come back on to benefit at the end, they will be on the lower rate, and so might well face losing not just their job but their home at the same time?

Mr. Lilley

I should have thought it was self-evident, and that is why we introduced it. If people who are unemployed are able to get 100 per cent. of the housing benefit for properties that they would not be able to afford if they were in work, they will be trapped in unemployment. That is why we try to restrict them to housing benefit that is equal to the sort of shared accommodation that most people of that age can afford in work, so that they do not get trapped out of work on benefit, which is what the Labour party wants.

Mr. Smith

It appears that the Secretary of State's solution is to make the trap that he has identified twice as bad. The change that he is making means that someone who takes a temporary job will receive less housing benefit when he or she stops doing the job. Far from relieving people of that trap, the right hon. Gentleman is making the position much worse. The sooner Conservative Members realise that the better.

It is not only the creation of divisions in society and the removal of incentives to work that make the Government's stewardship of the welfare state incompetent; it now seems that their drafting of legislation is also incompetent. The Pensions Act 1995 demonstrates, fundamentally, the way in which the Government get it wrong. I am given to understand that, owing to a technical defect in its drafting, all the orders and regulations made under the Act so far—including commencement orders bringing various parts of it into effect—are legally invalid, and that there is no legal basis for bringing any of it into force, short of a retrospective enabling statute.

The defect is in the commencement section, section 180. As is usual in such cases, it provides for most provisions in the Act to be brought into force by order of the Secretary of State on such days as may be appointed. That is in subsection (1). Section 180 goes on to say that certain specified provisions—not including the section itself—will come into force on the day on which the Act receives the Royal Assent. The usual drafting of a commencement provision of this kind specifically includes the coming into force of the commencement section itself on the day on which the Act is passed. Section 180, therefore, is not one of the sections that came into force on the day of Royal Assent, but it is the only section that contains the power to make the orders necessary to bring the rest of the Act into force.

The only way out of the dilemma, which poses a real problem—it means that the Government cannot implement any of the Pensions Act—is to ensure that powers are validly exercised, and that the Act comes into force, by passing an amending Act declaring that section 180 came into force, and shall be deemed for all purposes to have done so, on Royal Assent. I look forward to hearing that the Government intend to do precisely that. It seems that, even when they are making changes, they do not make them properly and competently.

Mr. Jenkin

Devastating.

Mr. Smith

It is indeed devastating to the implementation of the Pensions Act. If the hon. Gentleman does not understand that, he ought to go back to the Act and read carefully what it actually says and does.

Mr. Jenkin

Will the hon. Gentleman give way?

Mr. Smith

No. I have given way a good deal, and I want to make some progress.

Let me now turn to the issues that have been uppermost in people's minds during the past week. I refer to the signs that are now emerging from the Government and their supporters about a further agenda for wholesale privatisation of key parts of the welfare state.

The first piece of evidence dates from August 1993, when the No Turning Back group published a series of proposals for changes to the benefits system. Its proposals were in three phases—that is important, because much of what it proposed in the first and second phases has already come to pass.

Mr. Jenkin

indicated assent.

Mr. Smith

The hon. Member for Colchester, North (Mr. Jenkin) nods assent. Of course, he was one of the authors of the document.

In the first phase, the group suggested cutting the period of unemployment benefit entitlement from one year to six months, and equalising the state pension age for men and women at 65. Both those suggestions have been implemented. The second phase suggested allowing management buy-outs of jobcentres. The private sector has been invited to run area offices together with the Benefits Agency. The group also suggested market testing of benefits administration. I shall turn shortly to what is happening about child benefit administration.

The first and second phases of the No Turning Back group document have been implemented. The third phase includes a proposal to give people the opportunity to contract out of unemployment and invalidity insurance and out of the basic state pension. The group said that employers should be made to insure employees against industrial injuries. It suggested abolishing mortgage interest tax relief, rent rebates and rent allowances. Given the Government's record in implementing the first two phases, we can only fear their intentions on the third.

Mr. John Sykes (Scarborough)

How can we be sure that, in six months, those will not be the policies of the right hon. Member for Sedgefield (Mr. Blair)?

Mr. Smith

Those are not the proposals of my right hon. Friend the Member for Sedgefield, and will not be—in six months' time or thereafter.

After the No Turning Back group, the next organisation to get in on the act was the Adam Smith Institute. It held a conference early this month which was chaired by the right hon. Member for Sutton Coldfield (Sir N. Fowler), a former Secretary of State for Social Security and was attended by the present Secretary of State to launch its concept of a fortune account. The idea was that it would be an individual insurance account to replace the basic pension and other national insurance benefits.

It is noticeable that the news release that was published by the Adam Smith Institute to coincide with the conference mentions replacing a state system that is already compulsory but provides poor value for money.

Mr. Jenkin

Hear, hear.

Mr. Smith

The hon. Gentleman says, "Hear, hear," but the Chancellor of the Exchequer did not seem to agree with that proposal. In his speech at the London School of Economics, on 6 February he said: The social security system has been outstandingly successful in providing an income in those periods of life when people cannot earn because of sickness, disability, unemployment, caring for relatives or old age. Those are completely contradictory statements. The Adam Smith Institute says that a state system provides poor value for money, and the Chancellor says that the system has been "outstandingly successful." I agree entirely with the Chancellor, who, on this matter at least, has greater validity than the Adam Smith Institute.

Following hard on the heels of the Adam Smith Institute, we had the news that there is a private sector welfare reform group on the go, meeting representatives not of the Department of Social Security but of the Department of Trade and Industry, and involving the heads of a number of Britain's insurance companies. We have no knowledge of what is happening in those meetings or what proposals are coming forward from them, but it would be interesting to know.

We then had the famous "kids in the office". I have no objection to serious, intelligent thinking about the future going on inside Government—heaven knows, it is rare enough under this Government. I have no objection to the use of impartial civil servants who happen to be members of the Labour party. However, the thinking revealed in the memorandum provided to the permanent secretary and generated within the Treasury was certainly not intelligent. I notice that parts of that Treasury memorandum have, even now, not been dismissed by the Chancellor and, indeed, have been supported by the right hon. Member for Wokingham (Mr. Redwood) and the hon. Member for Bridlington (Mr. Townend), who chairs the Back-Bench finance committee of Tory Members.

What of the specific suggestions in the paper? They echo remarkably the proposals made by the No Turning Back group, and include opting out from the basic state pension and the provision of private insurance for unemployment and sickness cover. Do the Government realise how expensive such proposals would be for those who have to take out private insurance, and how much of a sink system would be left for those could not afford or obtain an insurance offer?

Let us take one example of where the full-blown privatisation, which now seems to be under consideration by the Government, fails: that is, in the Government's drive for personal pensions. We saw an advertising binge some time ago, and misselling that ensured that many hundreds of thousands of people left occupational schemes and took out personal pensions that they would have been better off without. There are still inordinate delays in sorting out the compensation to which they are entitled. Now we see that fees and charges are levied at rates of 25 or 30 per cent. on personal pensions, so that many people see the money they are saving from their hard-earned cash going down the drain.

That does not mean that there should be no private sector involvement, but putting the entire provision out to individual supply by the private sector is not the sensible way forward. There is a world of difference between using the skills of the private sector to improve collective provision and individualising that provision to an entirely commercial transaction. That is the key difference between modernisation of the welfare state and privatisation of the welfare state.

Our proposals for a new framework for second pensions contrast with the Government's hell-for-leather drive for personal pensions, which provide much worse value for money.

Mr. Stephen

Will the hon. Gentleman give way?

Mr. Smith

The hon. Gentleman has already had ample opportunity to intervene.

The same issue can be seen again in the announcements that the Secretary of State made on Friday about the wholesale privatisation of parts of the benefit administration.

Of course there is scope for sensible involvement of private sector expertise in the administration of the benefit system.

On Friday, the Government made three announcements, the third of which is a classic demonstration of how the private sector can sensibly be involved in the administration of the welfare system. The Secretary of State's press release states: The third initiative is to launch the procurement process for an Information Systems/Information Technology strategy to enable greater sharing of data between benefit systems, working closely with the private sector to provide the most up to date technologies, expertise and funding. That is entirely sensible, but why on earth are the Government proposing to put the entire administration of child benefit out to the private sector? Is it badly run? Of course it is not.

It is extremely well run, as the letter from the chief executive of the Benefits Agency to staff at the child benefit centre makes clear: The hard work and commitment of staff in the Child Benefit Centre has been recognised not just within the Agency, with the award of the Benefits Agency Quality Award, but externally too in the achievement of the Charter Mark. Child benefit is effectively and efficiently administered, as the early-day motion tabled by my hon. Friend the Member for Gateshead, East (Ms Quin) clearly demonstrates.

What could be the Government's reason for putting it out to the private sector? Perhaps the administration of benefits has been proved to be better run in the private sector. I invite the Secretary of State to look at the evidence of how the administration of housing benefit in Croydon, Bromley and Wandsworth changed when it was transferred to the private sector.

I also draw attention to the shambles of BET's three-year contract to run the back offices of the Benefits Agency in Lancashire and Cumbria. The consultant's report prepared just a few months ago on the operation of that contract stated: BET's brief was to handle typing, open the mail, run the messenger service, ensure stationery supplies were up to demand and operate security for the Agency's branches across the region. The report concluded that the result was disaster: Benefits Agency staff were left without stationery, and last September BET failed to meet 43 per cent. of the targets set for opening post from claimants. That is the record of private sector involvement in benefit administration, yet the Secretary of State plans to privatise the most efficient part of the Benefits Agency, supposedly in order to save money and improve efficiency.

I am afraid that it is quite clearly not about improving efficiency, because the system is already efficient. It shows that the Secretary of State is driven not by efficiency, but by dogma. Why does he not turn his attention to the parts of his empire where there are enormous failings in efficiency, such as the administration of the social fund that costs 61 per cent. in administration, or the Child Support Agency, where there is £1 billion of uncollected arrears?

I have two further points about the administration of child benefit. First, confidentiality is enormously important. If confidential information is placed into the hands of private companies, one can never be absolutely certain that it will not leak out.

Mr. Lilley

As the hon. Gentleman and his colleagues have been relying on the leaks of confidential documents by public servants in the public sector, is it not absolutely contemptible for him to suggest that people in the private sector are less to be relied on?

Mr. Smith

I know of no instance in which an official of the Benefits Agency in the child benefit centre has ever revealed the personal details of any customer with whom the centre has had dealings. That is the answer to the Secretary of State's question.

A clear path is being mapped out within the Conservative party's ranks for what it sees as the future of the welfare state. First there was the No Turning Back group, then the Adam Smith Institute, then the welfare reform group meeting with the Department of Trade and Industry. Then came the kids in the office doing work at the behest of the Chancellor and his permanent secretary, and then the Secretary of State himself came out with his announcements last week.

Those are all signs of the direction in which the Government want to head. They herald not the sensible sharing of skills and practice between public and private sector, but a wholesale disposal of segments of the welfare state into private hands—not a modernisation of the welfare state, but a privatisation, not a sensible welfare-to-work strategy, but a chopping away, piece by piece and year by year, of citizens' entitlements.

Government policy represents not an endorsement of the social insurance principle that has rightly underpinned the welfare system since the days of Beveridge and Attlee, but a move towards private individualised insurance cover for some, and poorer provision for the rest. In short, that is not a welfare state that is safe in the Government's hands. It is time for a new Government to take over.

Mr. Jenkin

On a point of order, Madam Deputy Speaker. Earlier in the debate, my hon. Friend the Member for Shoreham (Mr. Stephen) referred to a draft core press release issued by the Labour party for use by Labour Members of Parliament. It contains long quotations, seemingly purporting to come from a speech already delivered in this debate in the House of Commons, which it is suggested that Members circulate to their local newspapers.

I draw the matter to your attention, Madam Deputy Speaker, because it is surely a deplorable practice for such a press release to be circulated in draft form in advance of the debate's taking place, and for words to be put into people's mouths that they have not yet uttered in this place.

Madam Deputy Speaker (Dame Janet Fookes)

I am afraid that that is not a matter for the Chair. The hon. Gentleman may wish to take it up in other ways.

4.31 pm

The Secretary of State for Social Security (Mr. Peter Lilley)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: 'welcomes the substantial progress made by Her Majesty's Government in ensuring that the welfare state continues to be affordable by focusing help on those with genuine need or entitlement; agrees that Her Majesty's Government should continue to seek positive and imaginative ways of ensuring that the welfare state continues to be both effective and affordable; supports Her Majesty's Government in striving to make the administration of the welfare state as effective and efficient as possible; notes that the Labour leadership is now criticised even by its own supporters for being vague and ineffectual on welfare issues; condemns the Labour Party's readiness to criticise people who do think radically about social security; deplores the Labour Party's knee-jerk opposition to the improvement of the benefit delivery system; and opposes the Labour Party's expensive and irresponsible plans for a new means-tested system Pension Entitlement and a flexible decade of retirement.'. When the Opposition chose this subject for debate, I thought that, from their point of view, they were making a mistake. Now that we have heard the hon. Member for Islington, South and Finsbury (Mr. Smith) make his speech, we know that they were.

The central issue facing every developed country is reform of the welfare state to make it affordable, and the Opposition have demonstrated that they cannot rise to that challenge because they face it like an ostrich, with their head in the sand, rejecting the need for change, along with every positive suggestion for change and all the savings measures that we have adopted. They turn their eyes against any new thinking. Where they do suggest any policies, those are at best woolly and at worst dangerous. I shall actively encourage people who still think that the new Labour party brings no dangers to read the hon. Gentleman's speech, because then they would realise how dangerous Labour would be if it got into office.

The hon. Gentleman rested his basic attack on four planks, all of which have given way. Indeed, most of them gave way before the debate began. First the Opposition tried a spurious attack on the Government's alleged plans to dismantle the welfare state. The first basis of that attack was a condemnation of the measures that I announced to privatise the administration of child benefit.

That turned into something of an own goal. We seek to make savings by improving the administration of the benefits system because we want to maintain the value of benefits. The Opposition are determined to cut benefits and to take child benefit away from more than a million families, because they refuse to face the need to make savings in the administration. They refuse because they are so dominated by the public sector unions that they are committed to a unionised, monopolised state delivery throughout the system.

Mr. Chris Smith

Will the Secretary of State assure us that any savings that he makes by privatising parts of the administration of his Department, rather than going back to the Exchequer, will be used to upgrade and improve benefit levels?

Mr. Lilley

I should have thought that it was self-evident to anyone who takes a serious interest in the welfare state that the pressures for increased spending are such that we have to make the savings if we are to maintain a decent level of provision for people in need—and that is the Government's objective and why we do not flinch from taking difficult decisions. It is clear why the Labour party flinch from doing so.

The second plank of the Opposition attack was the leaked Treasury document, which was alleged to give an insight into Tory thinking, but turned out to give us an insight into the thinking of a wannabe Labour candidate, who claims, incidentally, according to the Daily Express, to be an "adviser" to the shadow Chancellor of the Exchequer. It would be interesting to know whether the Opposition agree that that civil servant has been an adviser to the shadow Chancellor, or are they casting doubt on her integrity in making that claim in her curriculum vitae?

The third plank was that of the allegedly sinister meetings taking place between leaders of the insurance industry and Government officials in recent months to consider ways to extend private provision in the welfare system. The hon. Member for Islington, South and Finsbury does not seem to be aware that those meetings began not three months ago, as he suggested, but a year ago, when I called together the leaders of the insurance industry to discuss that issue.

Admittedly, the meeting was held privately and in confidence, but because I wanted it to be well informed, I invited the hon. Member for Birkenhead (Mr. Field) and members of the Social Justice Commission. I also invited the former shadow spokesman for social security, the right hon. Member for Glasgow, Garscadden (Mr. Dewar), and I am pleased to be able to say that he accepted. Nothing was discussed at subsequent meetings that was not discussed at that excellent conference on the divide between the public and the private sector in the welfare system.

The final plank was the Adam Smith Institute's proposal for a fortune account. It launched that, not at its recent conference, but at the end of last year, when it published an interesting document developing the idea—on the basis of the Singapore measure—that everyone should have a separate account so that the individual citizen has not just an insurance policy but his or her personal stake in an insurance policy.

When the hon.Member for Islington, South and Finsbury was asked about that subject in a television interview at the turn of the year, he said: that is certainly one of the models we are looking at very seriously indeed … The beauty of that system is, of course, that it provides the individual citizen with not just an insurance policy but their own personal stake in that insurance policy, which they can use as a financial asset and in many cases they use it, for example, for house purchase in Singapore. Far from being some madcap idea that I am associated with, it is an idea proposed by the Adam Smith Institute, and the hon. Gentleman has flirted with it, as he has flirted with so many ideas from far afield.

What has become dramatically apparent, not merely from this debate but from all the debates that we have had in recent weeks, is the Opposition's knee-jerk reaction to any plans to save money and target spending better. Since the start of this financial year, the Opposition have opposed or promised to reverse every measure that I have announced or introduced to focus benefit on those in need. Last week, the Opposition said that they would restore benefits to bogus asylum seekers. That would cost a Labour Government the best part of £300 million a year and rising.

Mr. Chris Smith

When did we say that?

Mr. Lilley

I will give way to the hon. Gentleman if he is saying that he is not committed to restoring them. What a moral cripple the hon. Gentleman is. What humbug he has displayed at the Dispatch Box, saying that it was the end of civilisation to withdraw those benefits. He is now casting doubt on a future Labour Government's commitment to restore them.

Mr. Smith

I am glad that the Secretary of State has sat down, because we could do with less childish abuse across the Dispatch Box. We have said clearly that we will speed up the processing of asylum applications and use the money that we save by doing so to restore a proper benefit arrangement for people who are in need and genuinely seeking asylum.

Mr. Lilley

If the availability of those benefits attracts so many people, as it will, that it is impossible to speed the process, as we have found, it will cost what suggested it would, or Labour will leave our present system as it is.

Last week, it was £300 million on asylum seekers. The week before, the Opposition opposed plans to reduce housing benefit to households where someone has gross earnings of more than £200 a week. That would throw away £35 million a year. The same week, they opposed my plans to align increases in allowances for children with the start of the school year. That will save £115 million, and they are throwing it away. The week before that, they opposed plans to reduce benefits for parents who seek to avoid their responsibilities for pursuing child maintenance, which would save £15 million a year.

In June, the Opposition opposed plans to restrict reduced earnings allowance to people of working age, as Parliament had always intended. That would save £30 million a year. They are throwing that away. In May, they opposed plans to align the mobility component of disability living allowance more closely with the care component and with most other benefits that are withdrawn during hospital stays. That is another £40 million that they would throw away. In April, they opposed measures to narrow the gap between benefits for single parents and for two-parent families. Over time, that could save as much as £600 million a year.

In just over four months, the Opposition have rejected well over £1 billion of savings without giving any indication of how they would replace the lost money. On top of that, they reject more than £750 million of efficiency savings from the change programme that I introduced. They have repudiated more than £1.75 billion of savings.

Mr. Paul Flynn (Newport, West)

What the Secretary of State refers to as savings is taking money from the pockets of the poorest people in society, including, as we heard, the miners who came here today. He is taking money from the meagre income of disabled pensioners. Is he proud of that?

Mr. Lilley

The hon. Gentleman has a long and proud record of advocating increased expenditure on almost everything, but he is not a Front-Bench spokesman. Labour Front-Bench spokesmen pretend that they would not spend any more on social security but would cut it more effectively than would we.

Mr. Peter L. Pike (Burnley)

While the right hon. Gentleman is on this theme, does he accept that the people in most need, by the Government's criteria are, those who are on income support? Does he agree, that when such people have used the social fund, it is outrageous that more than 40 per cent. of its costs still go on administration? Should we not get more of that money to the people who desperately need help?

Mr. Lilley

That is right. That is why I am seeking through the change programme to streamline all benefit administration and why I thought that it was extraordinary that it was rejected root and branch by the hon. Member for Islington, South and Finsbury. He has continued to object to every concrete measure in the general programme, despite the fact that the shadow Chief Secretary to the Treasury admitted in a leaked letter that my proposed savings were perfectly feasible.

When it comes down to it, the Government cut administration costs to avoid cutting benefit, and Labour proposes to cut benefits for pupils who stay at school after 16 because it is not prepared to cut administration costs. Labour is not only opposed to all the reforms that I have been introducing recently; it has opposed almost all the changes that I have introduced in this Parliament. It is also committed to increased expenditure. Almost every possible proposal that it has put forward involves increased expenditure, even when dressed up as a savings measure.

Of course, the Opposition are coy about their old pledges. Their document, "Security in Retirement", recently issued by the hon. Member for Islington, South and Finsbury, talks about ensuring that all pensioners, today and tomorrow, share fairly in the increasing prosperity of the nation". When they talk privately to the financial press, they say that that does not mean that they are committed to the old link between pensions and earnings. Pensions will be uprated only in line with prices. When they talk privately to their activists, Back Benchers and constituents, they hint that they are committed to expensive increases in pensions after the election.

No wonder sharp-eyed commentators have called for more clarity. Lady Barbara Castle said: The Labour party's policy statement—Security in Retirement—does not provide a plan of action or detailed and costed proposals about how to achieve adequate pensions … In too many respects the document is ambiguous and inconsistent … Labour must commit itself to the earnings link … But there is no such commitment in the document. I know that the hon. Member for Bolsover (Mr. Skinner) will warmly support her campaign to persuade constituency Labour parties to commit the Labour party to that pledge.

Whether or not the Labour party implements its old pledge, it is certainly committed to new, expensive and dangerous pledges. The first is a guaranteed minimum pension. That was proposed by the leader of the Labour party in his party conference speech last October. He made it a defining characteristic of new Labour, and said: The aim of our policy is to guarantee a minimum income that provides dignity in old age. That is New Labour. Of course, we already guarantee a minimum income of more than £100 for a couple via income support. If Labour's minimum pension guarantee were only 10 per cent. higher, it would cost £3 billion a year, discourage saving and extend means testing. As Lady Castle and Peter Townsend pithily put it: It is difficult to see how in practice the Minimum Pension Guarantee would differ from Income Support … it is the same old hated and unworkable means test in disguise.

Mr. Bernard Jenkin

My right hon. Friend missed one element of the equation. If many more people were put on to means testing, by the measure that the Opposition tend to use, many more people would be in "poverty". The system they advocate undermines the statistical basis on which they attack the Government.

Mr. Lilley

My hon. Friend is right. The Opposition are being hoist by their own petard. As they refuse to make any savings on administration, they would probably have to cut benefits elsewhere and doubtless, on the same measure, claim that they were reducing poverty.

The other main Opposition proposal is to introduce a flexible decade of retirement, allowing people to draw their pension at the age of 60 instead of 65. People can already defer taking their pensions and be rewarded by a 7 per cent. increase for every year that they defer. However, 90 per cent. of people take their pensions at the first opportunity. If they continue to do so under Labour's proposal, it would cost £15 billion a year extra. The hon. Member for Islington, South and Finsbury put out a press release to criticise me when I last pointed out that his document says that that will be done only in a way that will mean no extra cost to the Treasury. The only way that the right to a pension can be extended by five years with no extra burden to the Treasury is by reducing the value of the pension. I will happily give way to Opposition spokesmen if they can suggest one.

Mr. Dennis Skinner (Bolsover)

Use the same formula that was introduced by the Government most recently for Ministers and Members of Parliament.

Mr. Lilley

Unfortunately, that was not costless to the Treasury, which is why the Government opposed it. I would still be happy to give way to the Opposition's pensions spokesmen so that they can tell us, in qualitative terms, how they can make the flexible decade of retirement no extra burden on the Treasury without cutting the basic rate of pension. It cannot be done, and the Opposition ought to realise it.

My ultimate objective is an affordable welfare state which provides decent benefits to those who need them and are genuinely entitled to them. Therefore, my first objective is to save money without affecting benefit levels. That means cracking down on fraud and streamlining administration. Most organisations in the private sector have achieved dramatic improvements in efficiency. I believe that we can do likewise, especially if we learn from and, where appropriate, work with the private sector. That is why I launched my change programme, which aims to achieve a 25 per cent. increase in efficiency. That means savings worth £0.75 billion.

The hon. Member for Islington, South and Finsbury condemned my programme as damaging, dangerous and impossible when I announced it. His colleague the shadow Chief Secretary concluded that it was perfectly feasible. None the less, he has continued to attack each concrete step forward that I have announced. Indeed, he declared on the "Today" programme that he has an "ideological" objection—I use his word—to private participation in the administration of benefits. That would seem to mean that Labour would not continue to use the 19,000 sub-post offices, all of them private, to deliver benefits. I take it that it is not Labour's intention to nationalise them.

If not, how does the hon. Gentleman reconcile the continued use of a private sector delivery mechanism with his ideological objection to the private sector playing any part in the administration of the core benefits provided by the Department? The fact that the hon. Gentleman says mutually contradictory things on odd and even days of the week does not help the House elucidate exactly what he is committed to.

My second objective in reforming the welfare state has been to focus benefits on genuine need. Savings from my reforms will reach £5 billion a year in the next Parliament and £15 billion a year thereafter. The Opposition have opposed them all. They have not told us where they would get the extra money, so they start off that far behind, with that obligation to raise taxes. Finally, it is essential to encourage self-provision. We believe in a welfare society in which both the state and the private sector play full roles.

The role of the private sector is already enormous. Eighty-five per cent. of employers run their own sick pay schemes. Fifteen million households, that is two thirds, have life assurance, and 1.3 million people have permanent health policies. We have friendly societies with 8 million members which manage funds worth about £3.25 billion. The proportion of people who have insured their mortgages against periods of sickness or unemployment is rising sharply.

All that private provision is capped by the enormous private pension provision in Britain, which has enabled us to build up some £600 billion of pension funds to pay for future pensions. That is not only more than any other country on the continent has built up in similar funds, but more than all the other countries of the European Community put together have bothered to save and invest to meet the growing number of pensioners in the years to come.

Mr. Stephen

Is it correct that the unfunded liability of Germany will be equal to its gross national product by 2030? By contrast, have not we in Britain built up a vast fund—my right hon. Friend tells us that it is £600 billion—which not only will provide security for people in their old age but provides an enormous fund for investment in British productive industry?

Mr. Lilley

My hon. Friend is absolutely right. That is the case. It is something in which we take great pride and on which we have been determined to build by introducing measures to encourage further growth of occupational and personal pension schemes. If they did not exist, and if none of the private provision that I mentioned earlier did not exist, we would have to pay out some further £25 billion a year to take over on behalf of the state what is currently provided by the private sector. That would increase the state's budget by about a third.

So it is absurd to take the "ideological" position—I use the word of the hon. Member for Islington, South and Finsbury—of hostility to the development of private provision not only for administration but for general provision of insurance and saving products to allow people to boost their position in times of need.

The Labour party has finally destroyed any claim it ever had to be able to reform the welfare state. It has set itself rigidly against any serious change or reform. It opposes every savings measure. It is opposed even to making savings on running costs. It is opposed to sensible private sector involvement even where it will give value for money. It repudiates any expansion of private sector provision of benefits. The reason why it does so is clear—a mixture of ideological hostility to the private sector and subservience to the public sector unions which insist on monopoly state provision, and which, of course, sponsor so many Front-Bench Opposition Members.

As I said at the beginning of my speech, welfare reform is the key issue worldwide. We are leading Europe in sensible and imaginative reforms. I believe that welfare reform will be a key issue at the next election. The voters will utterly reject the Labour party's ostrich-like approach to the issue and endorse our sensible steady, caring and effective approach.

4.55 pm

Mr. David Winnick (Walsall, North)

When the Secretary of State talks about reform of the welfare state, he means substantial undermining of the welfare state. That is how he conceives reform. However, he was right in one thing. He said that the matter would be decided at the general election. Indeed it will—the sooner the better.

It is always useful when we have such debates to recognise that there is a fundamental difference between the Government and the Opposition on state provision in welfare and related matters. The Secretary of State nods in approval. At one time, the situation was different. In the early post-war years, when the Labour Government built up the welfare state—one of the greatest blessings that this country has known—the Conservative party took a different view. It took the view that, if it was to win back and hold on to office, it had to accept what had been legislated for between 1945 and 1951. For some years in government, the Tories more or less accepted the welfare provisions. That changed about 30 years ago.

The Tory party has been under mounting pressure from right-wing think tanks to do away with a great deal of what was achieved by the Labour Government in the early post-war years. For example, in 1990, before the Secretary of State occupied his present position, what I describe as the wrongly named Adam Smith Institute argued in a pamphlet that unemployment benefit should be privatised. That led to quite a row in the House at Social Security Question Time on 2 July that year.

A pamphlet, with which the Secretary of State perhaps privately agrees, argued that unemployment benefit should be a matter for the private sector, not the state sector, and that sudden increases in unemployment, which would be a burden on the private sector, could be dealt with by not paying unemployment benefit in the first few weeks. That was suggested as one way of saving money.

The pamphlet also said that people should be able to tide themselves over short periods. When people with family responsibilities and the rest of it, including my constituents, lose their jobs, few of them are in a position to tide themselves over until they can find another job without unemployment benefit and, where appropriate, income support. Bearing in mind the low pay that so many people receive in this country, that is hardly surprising. The people who write such pamphlets live in a different world. They do not live in the real world that we know about and a large majority of our constituents have to endure.

It is interesting that the pamphlet six years ago said that unemployment benefit should be paid for less than 12 months. I am sure that those who were responsible for the pamphlet will be pleased that the Tory Government have implemented that aspect of it by introducing the jobseeker's allowance, an entirely unjustified measure to reduce unemployment benefit from 12 to six months. When the constituents of Conservative Members become unemployed, I wonder how many of them will applaud what the Government have done with the jobseeker's allowance.

Mr. Sykes

Why can the hon. Gentleman not persuade Opposition Front Benchers to promise to reverse the measure?

Mr. Winnick

The question comes from two quarters. Tory Members want us to make commitments so that they can then ask where we shall get the money to pay for them—of course they will. Likewise, somewhat to my surprise, the Liberal spokesperson, the hon. Member for Rochdale (Ms Lynne), made the same point. If the Liberals stood a chance of forming the Government, they would understand the position, which my hon. Friends on the Opposition Front Bench already understand.

The state pension is vital for millions of people: it is not some sort of extra, but the core amount for millions of people who retire. If there is any dispute about that, I refer the House to a parliamentary reply about the state pension that was recently given by the Under-Secretary of State for Social Security, the hon. Member for North Hertfordshire (Mr. Heald), on 11 July. Anyone who suggests that the pension does not amount to a large proportion of a retired person's income should consider that written answer. It said that 72 per cent. of pensioner households relied on the state pension for 50 per cent. of their income—quite a large amount—and 51 per cent. of pensioner households in the country relied on a state pension for 75 per cent. of their income.

Mr. Nigel Evans

Why should we take lessons from a Member of Parliament whose party twice stopped the Christmas bonus for old-age pensioners?

Mr. Winnick

It is rather an impertinence—

Mr. Sykes

Apologise.

Mr. Evans

Apologise.

Mr. Winnick

If there are any apologies to be made, they should come from the Conservative Government who, in 1980—I was in the House when it happened—decided that they would no longer increase the pension in line with earnings, and pensioners lost out. Before I am asked again the inane question why the Labour party does not make a commitment, I can say that I have already given my response.

The Labour Front-Bench team recognises that, when there is a Labour Government, Labour Members will use every opportunity to try to see to it that pensioners' income is substantially increased whenever possible. I do not notice any pressure being exerted by Tory Members on Ministers to increase the state pension other than in line with inflation. That is an important difference which the country recognises: the commitment of Labour Members to improve the living standards of those who have retired.

I do not accept that the private sector can provide adequate pensions for the large number of pensioners. In his concluding remarks, the Secretary of State paid lip service to the private sector and all that it can do. It cannot provide anywhere near adequate pensions for the large number of people on low pay—I am talking not about 100,000 or 500,000 people but about millions of people.

I do not believe that the private sector is interested in such people. The private sector cannot provide pensions for those people who are often in and out of work through no fault of their own or for the long-term unemployed. Ministers and Tory Members refuse to recognise that, time and again, it is the state that provides the core support that people would not otherwise have. That is why the Labour party is committed to building up the welfare state, and that is why reforms have been carried out by successive Labour Governments.

Many people were actively encouraged to opt out of the state earnings-related pension scheme and to take up personal pension schemes—we know what has happened to a large number of those schemes. Many Conservative Members would not, on reflection, try to defend or justify such schemes—I leave aside pension swindles and the other matters that we know about.

I want the state pension to be improved. I hope that it will be possible for the Labour Government to do so in the way previously undertaken. I understand the difficulties and I shall not say from the Back Benches what I would not be able to say from the Front Bench. To make commitments at this stage would only play into the hands of the present Government.

We owe a responsibility to the retired population and to all those people who have had difficulties in the past, certainly before the second world war, in finding work. We have a commitment as well to those who worked in the post-war years, believing that, when they retired, they would have an adequate pension on which to live.

I sometimes get the impression that Conservatives believe that it is undignified to rely on the state, and that one should always have one's own private means. I shall relate a personal experience, when I felt no loss of dignity when I had to rely on the state. As some of my hon. Friends know, I was recently in hospital and, having paid my insurance contributions all my employed life, I felt no indignity when I relied on the hospital and the medical staff—I relied on them for my life. I was very pleased at what the medical staff were able to do when it came to my NHS operation, which I hope will have lasting effects. I felt no indignity because I did not reach for my chequebook; I had paid already and will continue to pay through my national insurance contributions, as I am fortunate enough to earn my living—many people in this country are denied that opportunity.

That episode illustrates the welfare state. Unlike other countries such as the United States where there are private insurance schemes—many of which are inadequate—in this country, when I required state help, it was there. Conservative Members will probably say that the NHS continues. I know that the Secretary of State does not have direct responsibility for the NHS, but he is a member of the Cabinet.

One of the lessons that. I learned—if I needed to—from first-hand experience during my first two days in hospital earlier this year involved the tremendous financial pressures under which the hospital operated. There had to be negotiations between hospitals when patients needing needed to be operated on, which was not dignified—I shall use the word, as I have used it earlier—for the surgeons and others involved. We should have no complacency about what has happened to the NHS in the past 17 years.

The Treasury leaked document gives a good sign of what the Government are thinking. It shows that civil servants respond to the Government; they do not respond to this Government by writing a report on how to restore full employment or how to restore adequate state provision. The leaked document, whether the work of Treasury kids or others, is genuine—the Secretary of State would not wish to deny it—and is based on Government thinking. It is the duty and responsibility of civil servants to act accordingly and to place on paper the options that are open to the Government. given their political line

The welfare state, which I described earlier as one of this country's great blessings, has undoubtedly been undermined. The NHS has been undermined; pensions have been undermined. People's security has been undermined—the security people felt because, when, in their old age, they were no longer able to look after themselves, they would be able to go to a local authority home. We know that that no longer happens in most instances—increasingly, one has to pay for oneself. If someone does not have a spouse and is an owner-occupier, his house will be sold from under him.

Mr. Stephen

How can the hon. Gentleman say with a straight face that the NHS has been undermined, when he knows perfectly well that it now treats more patients to a higher standard than ever before in this nation's history?

Mr. Winnick

The hon. Gentleman is not facing reality—he should visit a number of hospitals. Drawing on my experience, I told the Secretary of State about the pressure on hospitals; I should add that there is now even greater pressure as a result of the changes that have been made in the past two or three years. If the hon. Gentleman does not accept my word, I suggest that he talk to some of the doctors, surgeons and nurses in the national health service, who will confirm what I have said.

Mr. Sykes

Will the hon. Gentleman give way?

Mr. Winnick

No. I wish to conclude my speech.

The Government have undermined the welfare state in all the areas that I have mentioned—including through the jobseekers' allowance, reduced housing benefits and much-increased prescription charges. My hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) referred to the leaked document and to related matters. In every constituency, especially in marginal constituencies, we have to get the point across in relation to what a re-elected Tory Government would do.

We should have a general election now. If what I am saying is not true, why are the Government terrified? Why are they not calling an election until the last possible moment? They know what would happen if there were a general election now, which is why they are holding on. The Government know that people accept what my hon. Friend the Member for Islington, South and Finsbury, other Labour Members and I have been saying: the welfare state is being eroded and undermined because the Government have no serious commitment to it. When Labour is in office, we will try to help in every way we can the people who elect us to the House of Commons. We have a duty and a responsibility to the ordinary people of our country. A Labour Government will carry out their responsibilities accordingly.

5.11 pm

Mr. Peter Ainsworth (East Surrey)

I congratulate the Opposition on choosing this important subject for today's debate. As my right hon. Friend the Secretary of State for Social Security has said, this is one of the most important topics with which Governments in the developed world are grappling—they are wrestling with the cost of providing welfare against a background of demographics that involves fewer people providing for more people. This is an international trend and it is facing every single Government. It is right for the Labour party to bring this subject before the House.

Mr. Sykes

Will my hon. Friend join me in congratulating the hospital that treated the hon. Member for Walsall, North (Mr. Winnick), as it obviously did a good job? However, will he remind hon. Members that it was not that long ago—perhaps 1978 or 1979—that members of the Confederation of Health Service Employees and other unions were picketing the hospitals?

Mr. Ainsworth

Yes, I remember those dark and terrible days. The hon. Member for Walsall, North seems to be in sparkling form, but, alas, his hospital treatment seems to have done nothing to improve his judgment.

It is important to put any debate on welfare in its proper context. Any welfare state depends on the wealth creators in society. If we impede their ability to prosper—if we hinder their enterprise by excessive regulation, by state interference or by bureaucracy, or if we tax them too highly—they will suffer, as will the most vulnerable people in society who depend on the whole process of wealth creation. The ability of the state to provide depends on the ability of individuals to prosper.

I ask one key question about the welfare state in Britain: is it working? I understand that, since 1949, spending on welfare in this country has increased by 5 per cent. over and above inflation every year—in fact, it has grown by double the rate of the national economy. This has created an enormous burden for this generation and for future generations of taxpayers. The welfare budget is currently costing the average working person £75 a week. Therefore, one would expect the problems that the welfare state was set up to tackle too have been eliminated—but that is far from the case. Despite the excellent efforts of my right hon. Friend to rein back future growth expenditure, the overall rate of expenditure on welfare is projected to increase. It is quite clear from that fact alone that the welfare state is not working as it should be or as was intended.

Any civilised society that can afford to do so should establish the sort of safety net that Beveridge intended when he established the welfare state. There should be a set of basic provisions to protect the poor, the disabled, the vulnerable and the weak in society. Is it right that the welfare industry should stretch so far beyond that? Is it not the case that, to the extent that the state acts as a surrogate for individual responsibility, it diminishes individuals? It closes off options, it increases dependency and, eventually, it undermines humanity's basic right to choice.

The arguments for reducing the scope of the welfare state, for encouraging greater self-reliance, greater individual and family responsibility, are not only economic—important though the economic arguments are—but moral. Some hon. Members thought that the Labour party had grasped this essential point—the hon. Member for Birkenhead (Mr. Field) appears to have grasped it, and he speaks with great authority on the subject of welfare and social services. If he had not grasped that point, he would not be leading his Social Services Committee on a delegation to Chile in September to learn the lessons of the most privatised pensions system in the world. He is at least prepared to explore alternatives and to think radically about these important issues. I think that some of this radicalism lay behind the thinking of the right hon. Member for Sedgefield (Mr. Blair) when he instructed the hon. Member for Islington, South and Finsbury (Mr. Smith) to go out and think the unthinkable.

I fear that very little progress has been made, and I am depressed. It seems to me that one of the things that is unthinkable about the current welfare state is that it should continue as it has over the years—that it should get more and more expensive and not solve the fundamental problems that it was set up to tackle. In so far as Labour policy appears simply to advocate a further increase in spending and more of the same, that is certainly thinking the unthinkable. The Labour party's proposals, such as are visible, increase spending dramatically and do nothing to lessen dependency.

As my right hon. Friend the Secretary of State said, the guaranteed minimum income for pensioners—if set at 10 per cent. above income support—would cost no less than £3 billion more than it currently does. In addition, it would bring more pensioners on to income support, increase costs and increase dependency. The flexible decade of retirement would cost another £15 billion a year, or there would be much lower state pensions.

Far from thinking the unthinkable in the terms that the Leader of the Opposition had in mind, the Labour party is committed to doing away with the excellent reforms that my right hon. Friend has been working on. They are aimed at reducing the cost of welfare and at targeting those in real need. As my right hon. Friend said, they amount to around £5 billion of savings in this Parliament. We are already up to £20 billion on Labour's spending plans but, oddly, we hear of absolutely no plans to increase taxation. I simply do not understand how the Opposition have the gall to come forward with proposals that will cost billions of pounds and not tell a soul how they will fund their proposals.

I began by congratulating the Opposition on choosing this important subject for debate and, as we have heard, they obviously prepared their ground carefully. I suspect that they were inspired to choose the subject by the so-called leaked Treasury document about which we have heard so much. My hon. Friend the Member for Shoreham (Mr. Stephen), among others, has drawn attention to the extraordinary draft press release that seems to have found its way into the wrong hands. It is entitled "Tories Set to Dismantle the Welfare State". It states: Speaking on the day the House of Commons debates the future of the welfare state"— blank— MP for"— blank— spelt out today his/her fears about secret Tory plans to dismantle the welfare system on which we all depend. Last Wednesday we saw the plans that have been under discussion in the Treasury," said"— blank— "It is a nightmare vision". So it continues.

Oh dear. It turns out that the author of the Treasury document was one Helen Goodman, a Labour party activist who is seeking selection in a safe seat in the north of England. When the subject was raised earlier, the hon. Member for Islington, South and Finsbury leapt to her defence and said that everything was all right because she was an unsuccessful Labour party activist who had not been chosen for the safe seat of Barnsley, East. That will not wash.

Mr. Chris Smith

Is the hon. Gentleman seeking to imply that Helen Goodman is not capable of showing due impartiality in her duties as a civil servant? If he is, he is traducing her reputation as a professional civil servant.

Mr. Ainsworth

The hon. Gentleman would do better to address his question to "blank", Member of Parliament for "blank".

The right hon. Member for Dunfermline, East (Mr. Brown) has said of the work by that Labour party activist that it provides an insight into a Tory fifth term that would be not just a lurch, but a stampede to the right. The issue has more to do with the debate between new Labour and old Labour than with the Conservative Government's policy. The lady in question—perhaps because of her embarrassment—seems, properly, not too keen to own up to being a Labour party activist. When she was asked by The Sunday Times whether she was seeking to be a Labour party candidate, she replied evasively several times and finally said: No, I am four months pregnant. Since when was being four months pregnant an effective bar on becoming a Labour party candidate? That is not very new Labour.

Mr. Nigel Evans

New Labour, new labour.

Mr. Ainsworth

I shall resist the temptation to make an inappropriate and politically incorrect jest. The lady was at least thinking the unthinkable in the way that the Leader of the Opposition had in mind, and perhaps that is why she was unsuccessful in her bid for a parliamentary career.

We must continue to work to reduce the welfare bill. It is too high and it is unsustainable. We must work to continue to make welfare and benefits more effective where they are most needed. We can do that by focusing on those who are in real need, by encouraging personal responsibility and by improving incentives to work and to save. The Opposition will do none of that, partly, as my right hon. Friend the Secretary of State has said, because they are too dependent on the public sector unions to get away from the old ways of state provision for everybody and partly too, I suspect, because in many areas they have a vested interest in the dependency cycle and in the votes that come from dependency.

My right hon. Friend the Secretary of State is making excellent progress in delivering a more effective and cost-efficient welfare state. I urge him to continue with his work, because there is much more to do.

5.24 pm

Ms Liz Lynne (Rochdale)

Whenever we talk about the future of the welfare state, value for money is hardly ever mentioned and it has not really been mentioned in the debate today. We have heard a lot about the total cost of the welfare budget, but nothing about what it buys or provides for people.

We have heard so much talk about private provision, but quite apart from the fact that the weakest will fall through the net if we change to private provision, we should consider the cost to the individual. If people have to buy private provision, their bills at the end of the week or month will be far greater than under the welfare state run by the Government. I know that the Government want to cut back on the welfare bill so that they can offer tax cuts before the next election. That is fine, but they should be honest and say how much a change to private provision would cost a family at the end of the month.

Let us take the example of health provision. In America now, people get a lesser service and have to spend more on it. Many Americans find it difficult to manage, but still people say that private provision is the best way forward for welfare benefit. Surely the basic principle of insurance is to spread the cost, and how better to spread the cost than through a Government-run scheme?

The next problem, if we introduced private provision, would be the social consequences. Anyone who thinks that private provision can replace the welfare state should consider the joint study published by the Disability Alliance and the Disablement Income Group entitled "There May Be Trouble Ahead". The report's conclusion is that occupational pensions and health insurance are no substitute for a state disability income scheme, especially for the most vulnerable in society.

Occupational pensions have their place—I do not dispute that—but that place is as an addition to the basic state pension. We believe that income support should be replaced by a top-up to the basic state pension, with occupational pensions in addition, not as a replacement for the current provision.

Other bodies are saying that private provision will not work. The 1994 report by the Social Security Advisory Committee suggested that those most at risk would get either inadequate cover or none at all. The report states: Unless the insurance industry produced a package which, in effect, replicated the wide coverage of risks accepted by the state scheme, we see little prospect of a greater involvement of the private sector in provision for sickness, disability and unemployment in such a way that it would supplant state provision for the majority of the population and for high risk vulnerable groups in particular. So many people have said in the media and in the House that a demographic time bomb is ready to explode because of our aging population, but the reality is slightly different. The Department of Social Security's own statistics show that 15 per cent. of the population were over 65 in 1990 but that 14 per cent. would be over 65 in 2000—a decrease of 1 percentage point. The figure is projected to rise to 16 per cent. by 2020; that is worrying, but it is far from alarming.

Hon. Members may claim that the problem will be the proportion represented by the work force as compared with retired people, but that figure is not so bad as we have been led to believe by all the people in the media and the politicians who have gone on television talking about a demographic time bomb. There will not be a sizeable increase until the year 2020. After that, however, the increase will be substantial.

I accept that there is a problem, but it will not begin to bite for another 24 years. That being so, we should plan rather than panic. Unfortunately, however, people are panicking about the budget for the welfare state. Some are running from one television studio to another. Many commentators are saying that we face a crisis and others are writing to that effect in the press. But we are not at that stage. The problem will not be reached until 24 years have passed, when there will be more people of pensionable age than of working age.

We must defend the basic principle of the welfare state. At the same time, we must make the system more efficient and effective. We must have a war on waste, and one consideration should be benefit overpayments. We know that income support overpayments amounted to £546 million last year alone, mainly due to official error. The Government must recognise that problem. There are all the other benefit overpayments. We must cut overpayments and benefit fraud, and I welcome some of the measures that the Government are taking to reduce benefit fraud.

We must also have a proper back-to-work strategy. Some politicians say that such a policy would slash the social security budget, but they seem to forget that more than half that budget is directed to pensioners, so there would not be the dramatic slash that some envisage. At the same time, we must not lose sight of the need to get people back into work.

It will not be an easy task to return people to work. No one in any political party argues to the contrary. There will be no real savings in the short term because child care and proper training cost a great deal of money, but a policy to return people to work will be a good investment for the future, and we must look to the future—especially to the year 2020. Investment must take place now to ensure that we can afford our pensions bill and the welfare state generally in the future.

One way of getting people back to work cheaply is the benefit transfer scheme whereby employers are paid the benefits that would otherwise go to keeping someone unemployed. Another approach is to merge income support and family credit so that people are always better off in work. The family credit taper could operate with one merged low-income benefit.

We must help disabled people into work. Many say that that is not a priority, but I believe that it is. We greatly need a civil rights for disabled persons Bill, and Liberal Democrats are committed to that. We must ensure that we get disabled people into work. It would also cut the benefits bill. It makes sense to help disabled people with transport and other access problems.

Child benefit must be protected. The Labour party is desperately wrong in proposing to cut child benefit for 16 to 18-year-olds. That will not encourage young people to stay on at school. The key feature of the benefit is that it is received by the mother. How are poorer families to support a young person at school? How will they support their children by providing food and clothes? The bills are enormous.

The Government are also wrong to have in mind privatising the delivery of child benefit. Are we at the start of the slippery slope? Are the Government starting with child benefit because it is fairly easy, but with the intention of moving on to other benefits thereafter? Are they saying that Government Departments cannot run the system well and cheaply? Are they saying that the private sector can run it more cheaply, notwithstanding profit margins? It seems strange that the Department of Social Security does not have its own house in order. I am also worried about the confidentiality of records.

We need definite assurances that those on low pay will continue to be paid child benefit on a weekly basis if that is their preference. I have heard rumours that it is to be paid straight into bank accounts. The Government must understand that many people still do not have bank accounts. People should not be excluded from child benefit because they do not have a bank account. Similarly, it should not be made more difficult for them to receive it: they should not have to run around trying to open an account.

The Government and the Labour party are so keen to cut costs and to save money for the Treasury that they forget the bills that a household faces at the end of the week. They also forget that our welfare state works well—extremely well for some people, including some who are disabled. I strongly believe that the welfare state is under threat from the Government and from those on the Opposition Front Bench. All of us in the House who are like-minded must fight to save the welfare state.

5.35 pm

Mr. Michael Stephen (Shoreham)

It is characteristic of new Labour, as it was of old Labour, to make wild and unsubstantiated allegations. We heard the hon. Member for Walsall, North (Mr. Winnick), who has since left his place, allege that the Conservative party is undermining the national health service. I challenged him by pointing out that the NHS now treats more patients to higher standards than ever before. The hon. Gentleman could not deny that.

Likewise, the hon. Member for Islington, South and Finsbury (Mr. Smith) said in his opening speech that the Government are dismantling the welfare state. What nonsense that is. Are the Government really dismantling a welfare state on which they spend £90 billion a year? That is more than a third of all Government spending—spending which costs every working person in the land £15 every working day. How can that level of expenditure possibly show that the Government do not care about the welfare state?

What do the Opposition want us to spend? Do they want us to spend 100 per cent. of the gross national product on the welfare state? If not, how much do they want us to spend? When it comes to spending, Labour is coy: whenever we challenge Labour Members to say how much tax they would levy and how much public expenditure there would be under a Labour Government, they say, "We are having a review." They have had 17 years to have a review. Is it not about time they came to some conclusions?

We on the Conservative side accept the responsibility of the welfare state. We accept that, through no fault of their own, there will always be people in our society who need the help of the rest of us as taxpayers. We are committed to providing that support, but we are certainly not committed to providing support for scroungers and fraudsters. Nor are we committed to providing support for those who work in the administration of the benefit system just because they are employed there: the benefits system exists to deliver benefits in the most cost-effective way, not just to employ people.

We on the Conservative side accept responsibility to those less fortunate, and that is why we have increased taxes. It is much to our electoral disadvantage to increase taxes, but we had to do so because the alternative was to cut spending on pensions, hospitals, schools and the welfare state. Those vital services had to be maintained by the Government, and they were.

We have also had to increase borrowing. We did it much against our will, and again much to our electoral disadvantage, but we did it because we accept our responsibility to those less fortunate.

Mr. William O'Brien (Normanton)

Perhaps the hon. Gentleman will take into consideration the £17.5 billion that the Government wasted on the poll tax, which failed after one year. What does he say about that waste of money, which was the result of the dogma of the then Prime Minister?

Mr. Stephen

I do not want to dispute figures with the hon. Gentleman. Perhaps we can check them later. However, whether they are true or not, I entirely agree with him that any waste and any inefficiency is to be deplored. There will be mistakes, of course. Mistakes have been made by Labour Governments and by the present Government. I do not say that the Government are infallible. Unfortunately, at the moment the public are inclined to compare the Government with a party of paragons which never makes a mistake, when what they should be doing is comparing the Government with the real Labour alternative.

Private provision has been talked about a great deal and it has its place. Private pension provision has been an enormous success. It has built up a fund of £600 billion to provide security for people in their old age and an enormous fund for investment in British industry. The Government have helped people to make that provision for themselves by giving generous tax relief.

Private provision, whether for pensions, unemployment benefit or hospital care, is only for those who can afford such provision. I and all my right hon. and hon. Friends accept that there will always be people who cannot afford that, and we accept our responsibility for ensuring that they are looked after.

It lies ill in the mouth of the Opposition to complain about the administration of the benefit system when, as my hon. Friend the Member for Ribble Valley (Mr. Evans) said earlier, it was the Labour party that so mismanaged the economy that it could not even pay the £10 Christmas bonus. Meagre as it was, they could not pay it. The Opposition talk about how well they will look after pensioners, but when they are put to the test, they fail, as they have failed in almost every area of policy.

The Opposition talk about the number of people on benefit and allege that the Government have doubled the number. They have forgotten about the recession which laid waste the economies of France, Germany, the United States, Australia, New Zealand, and others, and when they do not forget about it, they blame it on the British Government. That is nonsense.

The Opposition have also forgotten about technology. I am sure that Opposition Members will have visited factories in their constituencies. Five years ago they would have seen people bent over the workbench. Today, the factories in my constituency and theirs have hardly anyone in them. Rows and rows of robot machines are tended by a few people in white coats. Technology has destroyed a whole range of jobs which existed five or 10 years ago.

The Government have had to pull Britain not only through the worst economic recession since 1929 but through the second industrial revolution. That we have managed to do that without cutting spending on the national health service but increasing it, without cutting spending on schools but increasing it, without cutting pensions but raising them year upon year, in the light of those two factors of world importance, shows that the Government have got it right.

We are accused of leaving children in poverty. Opposition Members may not realise this, but the main cause of child poverty is marriage break-up. Marriage break-up is a phenomenon of our time that we all deplore, but to lay that at the Government's feet is fatuous. The Opposition talk about children in poverty in the same breath as their policy, which from time to time they deny, to deprive 16 to 18-year-olds of child benefit.

The Opposition say that we must get people back to work. That is another characteristic of new Labour, as of old Labour—vacuous, well-meaning phrases that mean nothing and contribute nothing to the debate. Time and again, we ask Labour Members how they actually propose to get people back to work and they answer, "We are having a review."

Why on earth should a person under 25 receive housing benefit sufficient to cover the cost of an entire flat when they could share accommodation? Almost all hon. Members here would have shared a flat when we were under 25. It is absurd to expect low-income taxpayers to provide such people not just with shared accommodation but with flats of their own. It is ridiculous.

That leads to the general point that, the closer the standard of living for a person on benefit is to the standard that he would have if he were in employment, the less incentive there is for that person to take employment.

The Government are tackling the problem of fraud. Housing benefit probably suffers from some of the worst fraud. We have all heard of the person who draws housing benefit for a flat, moves out of the flat and in with his girl friend, lets the flat to somebody else and pockets the money. Such fraud must be rooted out.

The Opposition also expect the low-earning taxpayer to subsidise the asylum seeker. We are all prepared to subsidise the genuine asylum seeker, but the Opposition want our hard-working constituents to dig into their pockets to subsidise the bogus asylum seeker: the person who comes to Britain and tells the immigration officer a pack of lies, saying that he is here as a student or a business man, or on holiday, and then three weeks later says that in reality he is an asylum seeker. Such people do not deserve benefit, and I do not think any hon. Member could ask a low-earning taxpayer in his constituency to subsidise such people. It makes no sense at all.

Labour Members talk of pensions at 60. As my right hon. Friend the Secretary of State said, most people, given the chance, will take their pension at the earliest opportunity. That would cost the taxpayer huge amounts of money; yet we hear nothing from the Opposition about where they will find it.

We can sum up the situation by saying that the Labour party has an investment in dependency. It is dependent on those who work in the public sector and deliver the benefits. It has a vested interest in keeping people in dependent poverty. They are the Labour party's constituency. They are the people who the Labour party thinks will vote for it. By contrast, the Conservative party is committed to a safety net for those genuinely in need—a safety net which does not smother people but provides an incentive for them to stand on their own feet. We are committed to a benefit system which is not riddled with fraud and which delivers taxpayers' money in the most cost-effective way.

5.47 pm

Mr. Geoffrey Robinson (Coventry, North-West)

Of all the contributions to today's debate, that by the hon. Member for Shoreham (Mr. Stephen) was one of the more fatuous. I hope shortly to demonstrate that the thrust of new Labour's policy has, for some years now, been exactly the opposite of what the hon. Gentleman implied.

Earlier, the hon. Member for East Surrey (Mr. Ainsworth) made it clear that the leaked document was an anticipation of Conservative policy. If the Government have given up on the United Kingdom's economic performance and accepted that decline is inevitable, it is not surprising that they see a major reshaping of the welfare state as an unavoidable consequence of that failure of their economic policy.

During the Conservative Government's period in office, we have had the lowest growth in GDP and the lowest growth in employment of any of the major European Union countries, and we have slipped from 13th to 18th in the prosperity league. That is hardly a record of which any Government could be proud. They are the three basic indices of prosperity—GDP, ranking in the league and the ability to create jobs. I have not invented the figures. They are published regularly, by the Government and reputable international organisations.

Conservative Members do not want to face up to the fact that, in the foreseeable future, we shall be overtaken by Thailand, Brazil and Indonesia. [Interruption.] Those are the facts. We do not produce them; they are produced for us. Conservative Members may not like those facts, but they will have to listen to them. That is why they are confronted with this radical restructuring, privatisation and downgrading of the welfare state.

The figures make the point for them. Since the Conservatives have been in office, the number of households with no wage earner has increased from one in 12 to one in five—20 per cent. Spending on means-tested benefits has increased from 17 to 35 per cent. Welfare spending on non-pensioner households—it is nothing to do with pensions, where we are relatively well funded; I do not try to deny that fact—has increased by 250 per cent. since 1979.

One can see the massive impetus that has been given to the leaked document. That is why various Conservative Members have come to their point of view, as was made clear in their speeches. The Government will start with the privatisation of invalidity benefit, which is clearly on the cards. I do not think that any hon. Member would try to deny that. They will then move to unemployment benefit, and with the insecurity of time—I say insecurity because it will not be vouchsafe for the Government to implement it—they will even look in due course at privatising the old-age pension itself.

For the Labour party, and for all parties, really—although I was surprised by some of the remarks made by the hon. Member for Rochdale (Ms Lynne), who tried to associate new Labour with the policies of the present Government—that is totally unacceptable. We are not defeatist about our country. We are not pessimistic about it.

We believe that there are still things that can be done to get the welfare system to promote employment instead of being merely a safety net. We must recognise that, if we continue to regard it as such—passive, there just to support—it will never perform its proper function, which is to be a spur to employment. Only by promoting policies in that direction will we ever be able to afford it. Clearly, if the Government continue with their present policies, it will be impossible for us to do so.

Lastly, we must remember that we owe it to taxpayers, who have to pay for it. They do not want a passive system that merely supports a very heavy social security burden. They want us to ensure that we put it to productive use and get down the cost of the system as a whole. That is what we should aim to do. With that in mind, the Labour party has made a number of proposals, many of which still need to be costed and the details worked out, but at least we are considering it. We have not given up on it. Indeed, we believe that we can do it.

Let us take one example—youth unemployment and the long-term unemployed. I think that the House will agree that those are two evils in society. They are things that none of us would like to live with or be part of. None of us likes having to pay for them, and neither does the country—but they exist, and provision is made for them. Unless we tackle them, they will not get any better.

That does not just mean paying for them. It does not mean trying to make the savings that the present Government are trying to make. It is about tackling them at the core, to come up with proposals that will lead to people moving out of welfare and into work. That is why we came up with proposals for youth unemployment, to which the Government immediately say, "How are you going to fund them?"

Mr. Stephen

What are Labour's proposals?

Mr. Robinson

If the hon. Gentleman cannot read, I am sorry. If he does not want to read them, I understand that, but the proposals are quite clear. I am not speaking to the hon. Gentleman; I am speaking to the House, most of which is better informed than the hon. Gentleman.

Mr. Stephen

Come on, tell us what they are.

Mr. Robinson

I am coming to them. Do not worry. Keep calm.

We have made it clear that we shall fund our proposals for youth employment from a very modest levy on the privatised monopolies, which is all they are. The programmes will be directed at getting youngsters back into work.

Mr. Stephen

How?

Mr. Robinson

We will pay a subsidy to private sector employers. Many distinguished private sector employers welcomed our proposals only last week. We have made it clear that they can have a role with the voluntary organisations on the same benefit. We have made it clear that they can be part of our youth employment plan for the community scheme as a whole. We have made all these things perfectly clear. We believe that they can greatly benefit the youth unemployed.

I ask the hon. Gentleman to reflect on one simple fact: in many inner urban areas, in London in particular, black youth unemployment can be as high as 60 per cent. He might believe that that is acceptable, that it is something that, in the quiet of his conscience, he wants to live with, because he is defeatist and he has been there far too long—we all know that—to do anything about it; butt for us it is not an acceptable position.

Mr. Stephen

Of course I believe that there is a problem with youth unemployment. Every hon. Member knows that. What I do not believe is that the Labour party has any constructive policies to do anything about it. and all that the hon. Member has said is just the vacuous nonsense to which I referred in my speech.

Mr. Robinson

The vacuous nonsense was the hon. Member's own speech, and because it was such vacuous nonsense, he could not understand anything in it or after it, and he still does not want to. We have heard no proposals whatever from the Government or Conservative Back Benchers. We have to live with what we have and make peripheral savings where we can, some of which may be welcome—I shall not comment on that at the moment—but nothing goes to the heart of the problem.

The next thing we say is that we must provide opportunities to upgrade skills for all those who are in employment, but, as I have made clear, it must he a two-pronged attack. We have to believe that we can improve our economic performance and not just accept decline in the way in which current Government and Treasury thinking do. We need measures that improve economic performance.

That is why we continue to place overriding emphasis on two aspects: first, investment and the overriding need for it; and, secondly, improving skills. We have set that out in document after document, and in policy statement after policy statement. We await the opportunity to enact them.

Why do the Government do nothing about the poverty trap? It is more in individuals' interest in so many cases to remain on benefit than go to work. That is not something that has just happened in the past two or three years or in this Parliament. It has been growing and getting worse over the last decade or more. Yet the Government still cannot find any innovative or imaginative policies do deal with it. Why not? Because we all know that they are tired, worn out and without ideas. [Interruption.] I challenge the hon. Member for Croydon, North-East (Mr. Congdon) to give us a single idea for dealing with the poverty trap. I shall willingly give way, but he does not have one, so he will not rise.

I now come to the personal tax and benefit rates of people at the lower end of the scale. I happen to believe that, at the top end, one cannot impose penal tax rates. I think that that was a mistake. [Laughter.] I agree, and I have no personal interest. I do not necessarily believe that they should stay where they are, and that is a view that I can present on another occasion, when we discuss tax policy.

Equally, I do not believe that we can expect people at the low end to accept in effect 80 per cent. marginal tax rates, which can occur in some situations. That is why we have come up with a series of proposals to restructure the tax system to give a much greater incentive to those who are at the bottom end.

Those are our policies. They are clear, they are coherent, and they address the heart of the issue. We want to deal with the long-term unemployed, youth unemployment, the poverty trap, the enormous disincentives of high marginal tax rates for those who are at the bottom end of the scale. We say that because the structure of work and employment in this country have so radically altered, which, in themselves, probably have nothing to do with the Government over the past 20 years.

In the past, long-term unemployment was rare. It was hardly known. Jobs were long-term. Jobs were pretty much at standard rates. It was largely men who were at work. Each one of those definitions of the economic situation our country was in some 20 years ago has quite dramatically changed over the last period of the Government in office. I do not attribute that to them, nor do I try to blame them for it. What they have to be blamed for, however, is not realising what is happening and adjusting their policies to take account for it, and to have left us now with the heavy burden of a welfare state that is not attuned to the needs of those who are living off it.

We believe that we can change that. We do not think that our proposal amounts to the dismantlement of the welfare state, which is what the Government want, or that it will lead to its privatisation. What it must lead to is its modernisation. On that, of course, the Government have given up the ghost—and the sooner they give up office, the better.

5.59 pm

Mr. Nigel Evans (Ribble Valley)

I am not so sure about all that. Again and again, it comes down to perception and reality. I am not certain whether we have sunshine and apple pie, but if we listen carefully we can hear the thunder—and a great deal of fudge from the hon. Member for Coventry, North-West (Mr. Robinson).

It is a shame that Labour Members are concentrating on documents leaked by potential Labour candidates rather than looking at the reality of the social security budget, which has been hurtling towards £100 billion. The extra costs imposed on taxpayers are already running at an enormous £15 a day for every working person. We must get to grips with the budget—and that is exactly what my right hon. Friend the Secretary of State has been doing since he took up his post, with the full support of not only all Conservative Members but the 92 per cent. of people who are working and paying taxes. Those people expect the Government to spend their money responsibly, and to ensure that they are not paying too much.

As we know from announcements already made, we shall be curtailing social security expenditure by £5 billion by the end of the century, and by £15 billion by 2030. The hon. Member for Rochdale (Ms Lynne) said that there was no crisis and no need to worry, but we must act now to ensure that we do not waste money that we should be passing back to taxpayers. We must not put that off for another 10 or 15 years, as the hon. Lady seemed to suggest.

Ms Lynne

I said that it was time to plan now, but not to panic. I wish that the hon. Gentleman would get my words right.

Mr. Evans

Now is the time both to plan and to act. No one is asking us to panic. If we waited until the time when the hon. Lady suggested we would start to act, we would be in a panic—and so would every taxpayer who opened his wage packet and discovered how much extra money the Government were having to take for non-essential social security spending.

As I have said in the Chamber before, I hope that there will be no changes in expenditure on child benefit, especially for those whose children—16 to 18-year-olds—are in further and higher education. We want to encourage such youngsters to take advantage of further and higher education. If changes were made, thousands of them would be affected, in all our constituencies. They would be deterred from attending schools such as Clitheroe Royal grammar school in my constituency, and sixth form colleges.

Seven million families receive child benefit for 13 million youngsters. More than 1 million of those youngsters would be affected if child benefit were taken away from them. The last thing we want is for the Government to raid the child benefit kitty to save money so that it looks as though they were being careful. Youngsters who could not proceed to further education could be damaged for life. We should encourage them to take up the opportunity. In effect, a tax of £560 would be levied on all those 16-year-olds, and a tax of more than £1,000 would be levied on 16 to 18-year-olds in further education.

If we accept the principle that child benefit should be taken from that age group, we are attacking the very soul of the child benefit system that has proved so effective over the years. If we accept that principle, there is no reason why child benefit should not be means-tested—or, indeed, removed from children in education per se and replaced by some form of income support. Is this the real agenda behind some of the proposals that we are hearing from Opposition Members?

Currently, 72 per cent. of 16 to 18-year-olds stay at school; in 1979, the figure was only 59 per cent. The number of youngsters with unskilled parents has risen from 20 per cent. in 1979 to 56 per cent. The hon. Member for Coventry, North-West talked of a skilled and educated work force. Would it not be a tragedy if some of those youngsters were denied the opportunity to stay in education just because their parents could not afford it, and if those parents ordered them to go out and get a job irrespective of how low paid it was?

For many families—especially low-paid families—child benefit, as a percentage of their incomes, is far more important than it is for those who earn a great deal more; but they would be hit. The "nearly poor" would be hit. The hon. Gentleman spoke of the poverty trap. If his party implemented its proposal, a fresh poverty trap would be created for many families with youngsters wishing to proceed to further and higher education.

I know that not all Opposition Members believe in the policy. Not all of them believe in clobbering 16 to 18-year-olds and their families. They must speak now: they must not remain silent. During today's debate, there has been a conspiracy of silence among Opposition Members who are not prepared to make real spending commitments. From so many of them, it has all been apple pie and sunshine, but we need to get to grips with real commitments from the Labour party. We need to know exactly what its spending pledges are. There is no point in being presented with a menu with no prices; we need to know all the items and all the prices, so that the public can be made aware of what lies ahead.

One justification that has been advanced for withdrawing child benefit from 16 to 18-year-olds taking advantage of further and higher education is that a number of people benefit who ought not to—youngsters in private schools, perhaps, receiving the sort of education that is frowned on by Opposition Members. Those Opposition Members fail to recognise that a number of youngsters who attend private schools have assisted places, or are receiving bursaries or grants. It would be spiteful to damage such education and deprive youngsters of it.

It is no wonder that the Child Poverty Action Group is against the Labour party's proposal. Child benefit as it is currently paid has proved extremely beneficial and effective. Labour's proposal would mean a tax increase of 5p in the pound for families during the two years in which their youngsters continued in full-time further education.

When we are considering ways of reforming the welfare state, we should not attack child benefit for 16 to 18-year-olds. We have been very productive in saving money in other areas. Hon. Members on both sides of the House have mentioned fraud, and I agree that we need to get to grips with that problem, but we are talking about expenditure of more than £90 billion. Various estimates are thrown around about the true level of fraud—it has been estimated at between £2 billion and £9 billion—but paying more attention to the problem would certainly pay greater dividends, and would have the full backing of the public.

The telephone number on which people can ring the Department of Social Security when they know that fraud is taking place should be more widely available. Every pound saved in that way can be targeted more efficiently towards those who desperately need benefits, or returned to those who paid in the first place—the taxpayers. I hope that more benefit claimants will use identity cards bearing photographs, so that they can show that they are entitled to benefit.

Housing benefit has been mentioned time and again. It seems to have gone completely out of control. More checks are needed on claimants to ensure that the money goes to those who genuinely need it. We must end the scams that we read about in the newspapers, in which thousands of pounds of taxpayers' money is ripped off every week by people who ought to be put away rather than allowed to steal money from taxpayers and those who deserve benefit.

We have again heard much about all the wonderful sights that Opposition Members expect to see if the nightmare happens and the right hon. Member for Sedgefield (Mr. Blair) gets his hands on the key to No. 10. We want to control expenditure through the reforms that have already occurred in the social security and welfare systems, but we also want as much encouragement as possible for the economy to grow. I think that is what the hon. Member for Coventry, North-West spoke about. He is a business man, and if he took an honest, stark look at the proposals by his leader, he would see that they will merely add to the welfare system and the social security budget.

The social chapter, the 48-hour directive, a minimum wage and the differentials that people would start to claim would have an effect. It is not just a question of £4 or £4.50, or whatever the figure per hour would be, because differentials would grind their way through the system. No wonder the right hon. Member for Kingston upon Hull, East (Mr. Prescott) has talked about a massive shake-out in the economy if a minimum wage is introduced. That will be the real problem.

Germany has more than 4 million unemployed, France has more than 3 million, and in Spain youth unemployment is about 30 per cent. Those are horrific figures and, if we introduced Opposition policies, unemployment, which has been falling dramatically for over two years, would go up again. That would add to the social security budget, and we would have to turn yet again to the taxpayer and ask him for more money to dole out to other people.

We need to take measures that will continue to attract inward investment. Deregulation must continue, so that businesses are able to flourish, take people into work and use some of their profits to train the work force and invest in people, which has been particularly successful. Those are the measures that we should take, but we have heard drivel from Opposition Members about policies that would increase the social security budget. We know what the Opposition stand for, because they have not changed their spots. New Labour would mean new spending and new taxes for everybody.

6.12 pm

Mr. John McAllion (Dundee, East)

This is a more serious debate about an extremely serious subject than might be deduced from speeches by Conservative Members or from the general attitude that they have displayed.

At the start of the debate, my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) spoke about the reality of poverty and inequality in Britain today, and there was an immediate response by Conservative Members. One of them piped up that at least the poor were richer than they used to be. He had no sooner closed his mouth than another said that at least the poor were not dramatically poorer than they used to be. Another Conservative Member tied himself in statistical knots trying to prove that poverty does not exist in Britain, that it is all a matter of definition.

In terms of complacency, smugness and dismissiveness about poverty, Conservative Members should be utterly ashamed of themselves. I remind them about the reality of poverty. Some months ago, I had the privilege of attending the national poverty hearings which were organised by Church Action on Poverty. They were held in Dean's yard and were different from any hearings that I had ever attended. They were attended by about 300 leading figures. As well as hon. Members, there were leading churchmen and heads of national charities—the sort of people who normally talk about the poor and make decisions about them. However, on that occasion, they were there not to talk but to listen, because on the platform were poor people from every corner of Scotland, England, Wales and Ireland.

One by one those people described what it is like to be poor in Britain in the 1990s. Almost any one of those contributions would have shed light on our debate, but one sticks in my memory. It was made by a disabled single mother on income support who lives in an inner-city area of London. It is the usual sort of poor area to be found in inner cities throughout the country and they are characterised by poverty, crime, vandalism and drug taking. Her son had special educational needs but, because her local education authority was strapped for cash—or should I say starved of cash by the Government—it could not meet her son's educational needs other than through its residential budget.

The woman was told that, if she wanted her son's needs to be met, he would have to be taken into local authority care and put in a residential home. She explained to the meeting that she had no choice; that she was a concerned mother who wanted the best for her son; and that the only way she could get that was to put him into local authority care. Her son was very young and she described how difficult it was to explain to him that his mother was putting him into care, forcing him to live in a local authority home.

Of course her son did not understand why his mother was turning him away and putting him into local authority care, and she spoke about the damage that was done to the relationship between her and her son. She was not describing a scene from a 19th century novel by Charles Dickens or from a third-world country but speaking about what is happening in Britain here and now. She depends on the welfare state and is not worried about its cost: she is worried about how poor it is at looking after people.

Mrs. Teresa Gorman (Billericay)

What kind of mother would push her child out into care and not want to look after him at home? Even if she could not give him the best of everything, she should still want to care for him, and the welfare system would help her to do that. It is a travesty for the hon. Gentleman to give such examples.

Mr. McAllion

If the hon. Lady had come to the national poverty hearings and had taken the trouble to listen to poor people, she would understand what kind of mother that woman was. She is a caring mother who cares about her son, and she wanted the best for him. She was forced into her action by people such as the hon. Lady and her hon. Friends in government. She should not try to talk down the poor. This country has too many people like the hon. Lady and her hon. Friends.

I am trying to get Conservative Members to understand what we are debating when we speak about poverty. At the heart of the debate is the cold question whether we can afford the welfare state in its present form—whether it is sustainable and affordable. In his tawdry contribution, the Secretary of State said that the central issue facing every developed country was the reform of the welfare state to make it affordable. There is nothing new or surprising in Tory Ministers making such statements.

Hon. Members have mentioned the infamous Treasury kids whose document expresses the unthinkable—the break-up and the privatisation of large parts of the welfare state. There is nothing new in that document, because the break-up and privatisation of the welfare state has begun. That can be seen in the private finance initiative in the health service. A whole new generation of privately owned and privately managed hospitals will replace the existing network of NHS hospitals if the Tory party is re-elected to government.

Future health services will be delivered by private companies profiteering on the backs of contracts that have been taken from NHS hospitals. That is already happening, and the kids in the Treasury do not have to write about it. The Government are doing it at Stonehaven in Scotland, for example. There is competitive tendering throughout the health service, and swathes of the NHS are disappearing into the private sector. Privatisation of care for the elderly proceeds apace in every part of the country. Local authority homes have been forced to shut so that elderly people can be transferred to private-sector nursing and residential homes where the workers and the cost of care are cheaper.

The jobseeker's allowance is the latest in a long list of Government changes to deprive the unemployed of benefits to which they used to be entitled. In the Government amendment, the aim is to seek positive and imaginative ways of ensuring that the welfare state continues to be both effective and affordable". That sentence could easily be replaced by a sentence which said, "to seek ways of privatising the welfare state." That is exactly what it means, and that is what the Government are about.

It is often forgotten that arguments about the affordability of the welfare state are as old as the welfare state itself. There have always been fainthearts who argue that the country cannot afford a welfare state. At least those who argued that back in the 1940s had more weighty arguments on their side than those who argue it in this day and age. For example, last week, during the debate on the economy, the Chancellor told the House that the British economy was now entering its fifth year of economic expansion. He said that living standards were rising, unemployment was falling, output was up, inflation and interest rates were low, investment prospects were good and profits were up. In other words, everything in the economic garden was rosy.

This afternoon, at Question Time, the Prime Minister said that the country is in the best economic circumstances that we could hope for. Yet, having been told about that prosperous economy, suddenly we hear that we cannot afford the welfare state that we have had for the past 50 years.

Let us compare the allegedly favourable circumstances that we now have with the circumstances that faced the Labour Government who created the welfare state in 1945. At that time, John Maynard Keynes described the circumstances as the equivalent of a financial Dunkirk. During the war, Britain had lost a quarter of its entire national wealth—a loss estimated at that time at £7,000 million. It had sacrificed its export trade, which was down to £400 million in 1945. It had been forced to sell off many of its overseas assets. At the same time, it was required to import goods costing £1,200 million a year just to maintain wartime levels of consumption. It faced a vast burden of overseas indebtedness—£1,750 million was owed to Egypt, and to India and other Commonwealth countries. It faced a balance of payments deficit which was estimated at £1,200 million over the first three post-war years.

The Labour Government inherited a country and an industrial and economic infrastructure which were ravaged by war and geared for war. They faced massive problems of demobilisation and reconstruction which no Government have had to confront since. To cap all that, the lend-lease agreement with the United States, which was worth £1,350 million a year, was suddenly cut off after victory over Japan.

History would have understood if that Government, facing those economic problems, had backed off from their commitment to establish a welfare state. Far from backing off, the Labour Government went forward even more enthusiastically in their determination to do that. Let us remind ourselves of the scale of the changes introduced. They introduced not just a social revolution but a socialist revolution.

That Government introduced a free and comprehensive national health service to be funded not out of insurance but out of general taxation. They rehoused millions of displaced people through a public programme of new and renovated housing. They introduced a comprehensive national insurance scheme for sickness, unemployment and old age, all based on a clear principle of universality. There was a 44 per cent. increase in the basic rate of insurance payments, a new maternity benefit, the scrapping of the six-month limit on unemployment benefit, a new benefit for widows, old-age pensions above the levels recommended by Beveridge in his report, industrial injuries benefits which were 70 per cent. above existing levels, and a new system of national assistance to help the poorest and most vulnerable groups in society.

In the best of economic circumstances, it would have been a difficult task to introduce those changes, but that Labour Government introduced them in the face of the worst economic circumstances imaginable.

We are often told that the golden rule of borrowing is that the Government should borrow only to invest and never to finance current expenditure. It is often described on both sides of the House as "spending wisely". I thank God that nobody had heard of that rule in 1945, because the welfare state into which I was born and from which I and many millions of others have benefited was created by that Labour Government's determination to build on the back of borrowing. They negotiated a multi-billion dollar loan from the United States Government, and, on the back of that loan, established the national health service, launched the massive house building programme and set up the comprehensive system of social insurance from the cradle to the grave which is so familiar to many people in this country today.

I am not suggesting that today's welfare state can be sustained simply by increasing levels of borrowing. Public borrowing is already out of control because of the Government's incompetence. In present circumstances, it would be economic and social madness massively to increase the level of borrowing. However, I suggest that, if today's Government showed the same political will and determination as that Labour Government in 1945, new solutions, appropriate to our times, could be found to fund the needs of the welfare state. I will mention just a few of them.

Mr. Jeremy Corbyn (Islington, North)

Does my hon. Friend concede that one of the greatest problems facing Britain today is the vast gap between the rich and the poor and the fact that, according to OECD figures, it is the fastest growing gap between rich and poor in any industrialised country? Does he agree, therefore, that what we need is increased Government income from a higher rate of taxation for the very richest within our society?

Mr. McAllion

That is a fair point, and I was about to come to that.

Nobody would suggest that taxation should be increased for the vast majority. It has already been increased to penal levels by the Government. What about the small minority who have grown fat on the tax cuts of the 1980s? The richest tenth of the population have seen their real incomes increased by 61 per cent. through the 1980s and into the 1990s. Under a fair and progressive tax system, would it not be right for those people to start to pay out more of the wealth that they were given for nothing during those years? Would it not be right for the redistribution from the poor to the rich that occurred under the Tory Government to be reversed under a Labour Government through the medium of the welfare state?

I am being told that I should finish, so I do not have time to outline the other ways that could be used to fund the needs of the welfare state. There are other—[Interruption.] If the Minister for Social Security and Disabled People wants to speak to me afterwards, I will be happy to give him further details. However, he should not get too near me. For once, I have realised the value of the red line on the Floor of the Chamber that keeps me apart from Tory Members. Some of the comments that I have heard from Tory Members today have been so incendiary that it is lucky that they were a good distance away from me.

The intellectual climate in which these debates are held is important. One of the things that we are often told is unrealisable today is what is known as equality of outcomes. It is no longer meant to be practical to argue that in this society we can afford equality of outcomes for everybody or that we should all get the same share of the country's wealth. We are told that there should be equality of opportunity, which allows for inequality of outcomes. That is the Government's argument, but I cannot agree with it.

I am from Scotland, and one of my heroes is Jimmy Maxton, the red Clydesider, who was one of the greatest Members that the House ever had. Throughout his career, he wanted to see a welfare state established in this country. At the end of his career, he was asked, "What does socialism mean to you?" He said: Socialism means nothing to me if it does not mean that as I have a house to live in, you also have a house to live in; that as I have food to eat, you also have food to eat; that as I have education, recreation and leisure, you also have education, recreation and leisure. Jimmy Maxton had never heard the phrase "equality of outcomes", but that is what he was talking about. That is what the welfare state is about. Nobody in this society should be denied the benefits that come from the wealth that is generated. It should be shared as fairly and equally as possible. We want to see a welfare state that begins to put right the wrongs that have been done over the past 17 years. That will not happen unless there is a change of Government and, thank God, there will be a change of Government soon.

6.18 pm

Mrs. Teresa Gorman (Billericay)

I should like to congratulate my right hon. Friend the Secretary of State on his determination to see that the £90 billion that we spend on our massive welfare programme is correctly spent. I welcome his stringent attitude to his job arid compare it favourably to the sloppy, sentimental and patronising attitude of the Labour party to people who depend on welfare in one way or another. The Labour party treats them as if they are somehow different from the rest of humanity, are unable to look after their lives and manage their affairs and must be treated as wards of the state.

I remind the Opposition that charity begins not only at home, but in the home. It is the Government's duty to foster the citizen's responsibility for looking after his own family. That includes elderly relatives, many of whom are cared for and loved by their families and are not left to languish and depend on the state. It also includes responsibility for children as they grow up and when they leave school and start looking for work.

When I left school, I did not expect the state to support me. I regarded it as my duty—so did my parents—to find work. In those days—which were not all that long ago—young people expected to take jobs on modest wages which enabled them to contribute towards the family budget. We should be nurturing such a society, not one that allows able-bodied people to languish on welfare, contributing nothing to the general budget of the country.

There are far too many examples of that. The Opposition may call it the poverty trap; in my opinion, welfare is too generous in allowing people to remain in what is technically defined as poverty. One of the most sensible remarks that I have ever heard was by the Chief Rabbi, who said that poverty should be a vale of tears through which people pass, not a land in which they dwell. The Opposition seem to wallow in the idea that people dwell in poverty. They treat it as if it were their constituency.

Mr. Corbyn

Will the hon. Lady give way?

Mrs. Gorman

No. I do not have sufficient time.

The Opposition always back up their remarks with extreme examples of hard cases and then suggest that we should make laws accordingly.

In my constituency, I meet young people living in subsidised accommodation provided by the state. I have met hairdressers who do not want to work because they get only £50 a week and have to rely on tips, and young men who trained as chefs but gave up work because they did not want to work unsocial hours and they could live on the welfare state. Such behaviour is wrong, and we have to wipe it out.

In particular, we have to deal with fraud. In one minute flat, I want to mention three examples that I hope my hon. Friend will address. First, more than one case of fraud involving birth certificates has been brought to my attention. People working in the welfare system identify children who die soon after birth, but have been registered. They obtain copies of their birth certificates and, 15, 16 or 18 years later, use those certificates fraudulently to obtain benefits for themselves. They are defrauding the system of millions of pounds.

Secondly, people are fraudulently claiming carers' allowances. Their elderly relatives are being cared for in institutions, but they continue to claim carers' allowances. Thirdly, there is housing benefit fraud, which has been addressed on a number of occasions.

My right hon. Friend is quite right to find ways of making the system more efficient. When the Conservatives took office in 1979, we took on a load of neanderthal nationalised industries that were making massive losses. They were over-administered and ineffectively run with featherbedding and other practices. If my right hon. Friend can do for the welfare state and the massive budget he handles what the Conservative Government did for those nationalised industries, he will have done the country a great service. I congratulate him on his efforts and ask him not to be too timid in facing down the Opposition.

6.33 pm

Mr. Keith Bradley (Manchester, Withington)

It has become almost customary to say that we have had a wide-ranging and interesting debate, but for once it is absolutely true. Speeches from hon. Members revealed the stark difference between the views of the Conservative party and the Labour party. The public will understand those views at the general election, when they will be faced with the choice between defending the future of positive welfare state and supporting the way in which the Tory party continues to dismantle and privatise it.

In reminding ourselves of the purpose of the debate, we make no apology for recognising the strand of thought that has flowed from the No Turning Back group, the Adam Smith Institute and other organisations with which the Secretary of State has some sympathy to the Treasury document entitled "Strategic Considerations for the Treasury". Ministers and Conservative Back Benchers have tried to rubbish the contents of that document by attacking an individual civil servant rather than properly addressing the issues in that report.

It is interesting that tonight Conservative Members have reinforced rather than allayed the fears that the document recognised. It is clear that the Government plan to tackle the economic decline identified in the report by the wholesale privatisation of the welfare state, affecting state pensions, insurance benefits, unemployment benefits and much more. In a nutshell, it is about dismantling and privatising the welfare state.

We do not need to go into further detail about, for example, "The Fortune Account" proposed by the Adam Smith Institute. As the document stated, it is not a welfare entitlement but merely a savings account. The benefit that it confers reflects the contributions that have been made; it is not a Government promise of a defined benefit. That demonstrates the Government's thinking on these matters.

The Treasury document also admits that, contrary to claims by the Secretary of State in his famous speech in Southwark cathedral, the poor have been getting poorer and inequality has been widening. There is considerable evidence—which Conservative Members have tried to undermine—in excellent reports by the Rowntree Trust, among others, and in the detailed examination by The Independent on Sunday only this weekend of the new and authoritative report by the United Nations that reveals that Britain is now the most unequal country in the western world. The gap between rich and poor is as great as in Nigeria.

Mrs. Gorman

That is stupid.

Mr. Bradley

The hon. Lady says from a sedentary position that it is stupid, but it is an excellent report of an authoritative study by the United Nations. No Conservative Member has even attempted to undermine its contents. [Interruption.] They can only mutter from a sedentary position that it is nonsense.

We shall hear more about that report and the Government's reaction to it. Statistics in the human development report published last week demonstrate that inequality has grown sharply under the Conservatives and that the poor in Britain now have to live on much the same incomes as their equivalent in Hungary and Korea. Are the Government proud of that?

Do the Government further recognise that the claim by the then Prime Minister, now Baroness Thatcher, in 1988 that Everyone in the nation has benefited from increased prosperity has proved not to be the case? Statistics show that the poorest people's share of Britain's national income shrank in the 1980s for the first time since the second world war. What is worse, their poverty deepened. The real income of the poorest tenth of the population plunged by 20 per cent. between 1979 and 1993, while the richest tenth increased their takings by 61 per cent. That is the real inequality that confronts our people.

What have the Government done about that? They have launched repeated attacks on vulnerable groups. They claim that it is all about targeting, but closer examination reveals that it is not about targeting but about reducing benefit to vulnerable people who desperately need it. I need only cite one or two examples, such as—

Mr. Lilley

When the hon. Gentleman gives us his examples, will he tell the House whether he proposes to reverse them, or whether he thinks that they are basically acceptable to a future Labour Government?

Mr. Bradley

What we are doing is showing clearly what the Government have done; that is the purpose of the debate.

Let us take an example. When incapacity benefit was introduced, the Government said that it would lead to better targeting, by means of a more effective medical test. Fine. Although we argued against the nature of the medical test, we accepted that there was a need to examine the way in which the benefit operated. Yet what did the Government do for the people who passed the new medical test? They cut the benefit to which they were entitled. Now we have two groups of people with exactly the same degree of disability who receive different levels of benefit—one group on invalidity benefit and the other on the new incapacity benefit. Is that what the Government are about?

Another example is the reduced earnings allowance, about which we have heard much today. Delegations have been to Parliament today, and I make no apology for bringing up the subject again.

Mr. Allan Rogers (Rhondda)

I wish that, when my hon. Friend talks about reduced earnings allowance, he would use the old term "special hardship allowance". Conservative Members have implied that some form of gratuity is being handed out to people, whereas those of my constituents who receive reduced earnings allowance are people who, as a result of working in coal mining, for example, contracted a disease, or were maimed, often in their early twenties, and who have had to suffer a lifetime of bringing up their families on extremely reduced incomes. The Conservative Members who have given us the benefit of their "Mein Kampf" fantasies should bear in mind that we are talking about people who have given their lives, and sometimes parts of their bodies, for the sake of the energy needs and the productivity of this country.

Mr. Bradley

I am grateful to my hon. Friend for that contribution.

What is clear about reduced earnings allowance is that its recipients were told that they would receive the benefit for life. That is what the documents told them. The Under-Secretary of State, the hon. Member for Monmouth (Mr. Evans)—I see that he is in his place—said on Welsh television that, if people had documents to prove that that is what they were told, their cases would be re-examined, concessions would be made and the hardship would be addressed.

The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans)

rose—

Mr. Bradley

Will the hon. Gentleman confirm tonight that he will do that—yes or no?

Mr. Evans

The hon. Gentleman has not carefully quoted what was said on Welsh television. In fact there are a few, and only a few, people with documents in their possession suggesting that the benefit was awarded for life. That should never have happened, although it may have been justified in a few cases. If there has been an official error, and loss can be established to have resulted from it, there is a scheme for compensation.

Mr. Bradley

I welcome the Minister's intervention. I understood him to have said that, if people who have lost the benefit can prove that they have a document saying that it was awarded for life, they can have it for life—and that is the basis on which we shall proceed.

What I have described are just some of the changes that the Government have already made. Now they are introducing a whole new tranche of changes, including the closure of the benefits line. It is interesting that the hon. Member for Ribble Valley (Mr. Evans) called for a new telephone line on fraud. We welcome that; we have been calling for it year after year, and belatedly the Government now intend to act. But surely it is perverse logic to close at the same time the line that gives people help. There is a need to root out fraud wherever it occurs, but people have entitlements, too.

The benefit buses that used to travel around the country are also to be withdrawn. They were another means of ensuring that people received their just entitlement, so the Government are reducing the information and help available.

As my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) said in his opening speech, now there is to be privatisation of the administration of child benefit, with all the problems—

Mr. Corbyn

Will my hon. Friend give way?

Mr. Bradley

No, I shall not give way, because I must complete my brief remarks.

It is not clear from what the Government have said why they have chosen child benefit—a benefit efficiently administered and well organised by the Benefits Agency, whose administration costs are only 2 per cent. In his opening speech, the Secretary of State did not tell us precisely what savings would be gained from privatisation of the administration of child benefit, and what safeguards would be introduced for confidentiality and other matters of accountability involving the work undertaken by the private service.

We do not oppose the idea of finding out where private companies could bring their expertise properly to bear on the administration of the social security system, but the Government are introducing the practice in pilot areas, so that private companies can cherry-pick the areas of work in which they believe they can make the best profit out of privatisation. That is not the way to proceed.

Similarly, the Government are to deny the poorest people the opportunity of using direct payments in future. That is disgraceful. The private utilities and other organisations encourage most of us to take out direct debits to help us budget, although many of us have the income to be able to organise our payments for ourselves; yet the people with the most meagre of incomes, who greatly need help with budgeting and the payment of bills, will be denied that opportunity by the Government. I urge the Secretary of State to reconsider that disgraceful act.

In the past, we have seen what privatisation without proper control or regulation means. We have heard many examples today, such as the way in which the mis-selling of private pensions without proper regulation has caused hardship and anguish to many people. We have heard similar stories about people who have taken out inappropriate mortgages or endowment policies, without having received proper information and support before the decisions were taken.

Let us consider one example of the range of costs that will be involved if everyone has to rely on private insurance. In January, an interesting "Panorama" programme showed what the real costs would be for families if there were no adequate and effective state provision. For example, life cover would cost £70 a month, plus £40 a month for critical illness insurance and £40 a month for health insurance.

Pension provision would cost £500 per person a month, or £1,000 for a couple. The cost of private education, about which Conservative Members will know more than I, would amount to £1,000 a month. If we add up all those costs, compared with the real, effective and comprehensive state provision, for many families they do not bear thinking about. They will not have adequate provision. They will not be covered. Not only will they fall through the safety net; the safety net will not be there for them in the first place.

That is why the Labour party will be committed to a proper welfare state based on sound social insurance principles, and why the message tonight is simple: the welfare state is not safe in the hands of the Tory party.

6.46 pm

The Minister for Social Security and Disabled People (Mr. Alistair Burt)

At the end of the contribution by the hon. Member for Manchester, Withington (Mr. Bradley), one thing about which we were not clear is what sort of welfare state there would be under

the Labour party. What commitments have we heard the party make this evening to do anything about the matters that Labour spokesmen have raised with such indignation?

I intend to consider as many as possible of the points that have been raised in the debate, but first I shall say a little about the structure of the welfare state as we see it. The Government have faced up to the problems that have been mentioned by hon. Members on both sides of the House, which have produced a rising bill both for benefits and for delivering benefits.

Three years ago, my right hon. Friend the Secretary of State initiated the current debate about the growth in social security expenditure, and spelled out the principles that should underlie an effective and affordable system. Such a system should answer today's needs, not some outdated idea of what people require. It should protect the most vulnerable and focus on those in the greatest need, while bearing down on fraud and abuse. It should encourage independence and improve incentives, it should be affordable, and its administration should be efficient and offer value for money. I venture to suggest that that is still an effective set of principles according to which we can consider the future of the welfare state.

Does the Labour party really believe that the welfare state can somehow stand still? Do Labour Members think that the rising cost of welfare, and the rising cost of administering it, can simply be ignored, and that the taxpayer should, and will, simply go on paying? Do they think that abuse can be heaped on us for what we are doing and are attempting to do with the welfare state, without any commitment about what they would do?

It is precisely because the Government did accept, and continue to accept, that we have a responsibility not to pass on an escalating bill to future generations, because we made the hard decisions, and because we took the risk of breaking new ground, that social security in the future will be affordable. That does not mean ignoring the needs of those who cannot provide for themselves. The Government remain committed to maintaining a safety net that will ensure that the poorest in our society are supported and protected.

Just as we recognised the need to contain the cost of benefits, so we recognised the need to maximise efficiency and value for money in delivering them. Our aim is to save about 25 per cent. of the current £3 billion cost of operating the benefit system—about £750 million off the taxpayer's bill—while providing a service that is as good as or better than the present service and, most important, without resorting to reductions in benefits.

Significant savings can be made from simplified, efficient processes and from making the best use of the most modern information technology. We believe, however, that the only way to ensure maximum cost-effectiveness and value for money is to open up the system to competition: providing efficiency incentives for in-house suppliers, enabling comparison of their performance with each other and with private sector suppliers and moving to private sector administration where that provides better value for money.

Some Opposition Members clearly think that we are rushing into that in the same way as they rush into ill-thought-through plans for the future—plans from which they, as the Opposition, have the luxury of being able to withdraw when they see that they do not work. On the contrary, we have a carefully planned strategy to move in a series of gradual steps towards a mixed economy of provision. We made a conscious decision to start with a relatively simple and straightforward benefit in child benefit, and we shall look carefully at the emerging results of that before we decide which other areas to consider for operation by the private sector.

I assure the House that there is no question of wholesale out-sourcing. There will be a pragmatic, step-by-step process, with testing and assurance at each stage, built on the principles that I mentioned. Out-sourcing will take place only where we are satisfied that there are real gains to be made, because the private sector can offer greater expertise or value for money. I should stress that that does not mean that we believe that our own staff have failed. We recognise that they have delivered many efficiencies over the years. We do not think that the private sector is necessarily superior in this, but we realise that it can offer expertise in process review and information technology, and has the capacity to make capital investment where it is needed to produce the best results.

There were a variety of fascinating contributions to the debate. The hon. Member for Walsall, North (Mr. Winnick), whom we welcome as a recent product of the national health service, made a series of speeches that he will not mind if I characterise as real old Labour. It is noticeable that he does not always get the response that he wants from the Opposition Front-Bench team. He was challenged about what his party would do on the jobseeker's allowance, and no commitment was forthcoming. He spoke movingly about the pensions link with earnings, but he knows that his colleagues have not decided whether they are going to restore it. He will pray in vain for that.

The concerns raised by the hon. Member for Walsall, North were mirrored in other Opposition contributions. The hon. Member for Dundee, East (Mr. McAllion) spoke with his customary passion and warmth for the people he represents. We are all confronted in our surgeries by people whose experiences are radically different from our own, and we know how miserable and difficult people's lives can be. We are all concerned to find out what we can do to make them different. The only point that divides the hon. Gentleman and me is that I do not believe that means and resources are the only way to deal with some of the problems. The difficulties of the woman he met at the hearings could stem as much from administration problems in her home town, and how to deal with increasing costs and special educational needs, as from anything else.

How is the hon. Member for Dundee, East going to satisfy the problems of the woman he heard at the hearings, if he believes that it is all about resources, but the taxation policy supported by his hon. Friend the Member for Coventry, North-West (Mr. Robinson), who said that he was satisfied with our policy on high-income earners and taxation, is to be the taxation policy for the future, and if the comments of the Leader of the Opposition today when he talked to local government—to the effect that there would be no new resources from local government from central Government—are true? They cannot be satisfied with Labour looking for the ever-empty pocket in the future. They have to be satisfied by the sort of hard and difficult work that we do to make the public pound go further, to introduce the private sector and new ideas, to deliver better for the people whose lives are more difficult.

Mr. Geoffrey Robinson

For the record, I by no means said what the Minister implied. If only the Government were as concerned about incentives to work at the bottom end of the scale as they are about the top end, we should have some changes in the welfare programme to encourage those. Far from being satisfied at the top end, my views are well known and have been made clear elsewhere. Perhaps the Minister will now tell us what he proposes to do to provide incentives at the bottom end of the income scale—incentives for people to work.

Mr. Burt

The hon. Gentleman spoke with great warmth and passion about the existing tax situation for higher income earners, which I can well understand in the circumstances, but I accept what he said. The hon. Gentleman challenged us and asked what we were doing about the poverty trap and getting people back to work. Conservative Members gave him half a dozen examples of what we have done—family credit, the earnings top-up system, child care allowances, and the changes that my right hon. and learned Friend the Chancellor made a couple of years ago, from which 750,000 people will benefit this year—but he did not seem inclined to be that interested in those.

To return to the hon. Member for Dundee, East, there is one way to satisfy the need for revenue costs in his constituency that he did not mention: the tartan tax. The views that he expressed, and the sense that I got from him of the sort of commitment that he wants from his Front-Bench team, ought to be read and understood by many people in Scotland, as an example of what he would really like to do if he came to office. Many voters in Scotland would get a real sense of what Labour control would be like, if the hon. Gentleman could have his way.

Mr. McAllion

Does the Minister not understand that taxes raised in Scotland with the consent of the Scottish people would help the poor in Scotland? That is why Labour is committed to giving a Scottish Parliament tax-raising powers.

Mr. Burt

We all want resources to be used to help the poor. I was pointing out that the hon. Gentleman's care and concern for his constituents cannot be satisfied, in his view, without substantially increasing taxes. He wants to deliver everything through the public sector. He believes that massive resources will have to be introduced to do the job. I do not get any sense of that sort of commitment from his Front-Bench colleagues, and I bet he wishes sometimes that they would speak with half the passion and concern that he brings to debates.

A number of my Conservative colleagues made useful contributions. My hon. Friend the Member for East Surrey (Mr. Ainsworth), in a good contribution which we shall miss for some time, posed the Opposition sensible questions about the future of welfare, but he got no response. My hon. Friend the Member for Shoreham (Mr. Stephen) mentioned the Opposition's unwillingness to declare what they would do. Interestingly, he mentioned new technology, which at one and the same time affects jobs, but gives the social security system challenges, in terms of delivering benefits and dealing with the future. He again mentioned the essential principle behind why we are opening up the social security delivery system to ideas from the private sector and to take more account of new technology.

My hon. Friend the Member for Ribble Valley (Mr. Evans), in his usual forthright contribution, again laid waste to the Opposition on child benefit, pointing out what we have come to know: whereas we have ideas to save money in administration on social security, the Opposition's only concrete idea for saving money has been to save £700 million from 16 and 17-year-olds who would otherwise have received child benefit. I pay tribute to my hon. Friend for his hard work in raising that issue.

In a fascinating contrast to the hon. Member for Dundee, East, my hon. Friend the Member for Billericay (Mrs. Gorman) put another side of the coin when she gave her views of individual responsibility. In essence, there should be no difficulty of reconciling those views in a modern society. The individual has to have a proper opportunity to grow, to develop responsibility and to develop all his or her talents or abilities. That will not produce equality of outcome, but there is no reason why the individual, in pursuing his or her talents or abilities for best, should not also have a community responsibility, which need not always be delivered through the tax system.

The hon. Member for Rochdale (Ms Lynne) made a balanced contribution, which I much enjoyed. She was right to talk about not panicking about the demographic situation in the United Kingdom. The reason the Government do not panic is that we have seen ahead and planned for those changes. We changed the earnings link with pensions precisely because we needed to. There is no evidence that the Opposition prepared for the future in the way that we did.

We have had intermittent fun this evening with Labour's draft press release—a paper full of blanks into which can be inserted whatever one wants. I wondered what it reminded me of, and, having listened to Labour's Front-Bench spokesmen, I now know: it is their draft manifesto. Anything can be inserted into the blanks. Will there be a change of policy? Their answer is, "Don't know, fill it in later." Will they retain what they have just opposed in the House? Their answer is, "Don't know, fill it in later." That is Labour party policy, about which we have heard nothing. The Government have given a concrete demonstration of the future structure of the welfare state. It is well thought through and it will be properly funded. It is the best opportunity that the country can have. Vote for us; leave them alone.

Question put, That the original words stand part of the Question:—

The House divided:: Ayes 235, Noes 275.

Division No. 210]	[6.59 pm
AYES
Abbott, Ms Diane	Banks, Tony (Newham NW)
Ainger, Nick	Barnes, Harry
Ainsworth, Robert (Cov'try NE)	Barron, Kevin
Allen, Graham	Battle, John
Alton, David	Bayley, Hugh
Anderson, Donald (Swansea E)	Beckett, Margaret
Anderson, Ms Janet (Ros'dale)	Bell, Stuart
Armstrong, Ms Hilary	Bennett, Andrew F
Ashdown, Paddy	Benton, Joe
Austin-Walker, John	Bermingham, Gerald

Berry, Roger	Harman, Ms Harriet
Betts, Clive	Harvey, Nick
Boateng, Paul	Hattersley, Roy
Bradley, Keith	Henderson, Doug
Bray, Dr Jeremy	Heppell, John
Brown, Gordon (Dunfermline E)	Hill, Keith (Streatham)
Brown, Nicholas (Newcastle E)	Hinchliffe, David
Bruce, Malcolm (Gordon)	Hodge, Ms Margaret
Burden, Richard	Hoey, Miss Kate
Byers, Stephen	Hogg, Norman (Cumbernauld)
Caborn, Richard	Howarth, Alan (Stratf'd-on-A)
Callaghan, Jim	Howarth, George (Knowsley N)
Campbell, Mrs Anne (C'bridge)	Howells, Dr Kim
Campbell, Menzies (Fife NE)	Hoyle, Doug
Campbell, Ronnie (Blyth V)	Hughes, Kevin (Doncaster N)
Campbell-Savours, D N	Hughes, Robert (Ab'd'n N)
Canavan, Dennis	Hughes, Simon (Southwark)
Cann, Jamie	Hutton, John
Chisholm, Malcolm	Jackson, Ms Glenda (Hampst'd)
Clapham, Michael	Jamieson, David
Clark, Dr David (S Shields)	Jenkins, Brian (SE Staffs)
Clarke, Eric (Midlothian)	Johnston, Sir Russell
Clarke, Tom (Monklands W)	Jones, Barry (Alyn & D'side)
Clelland, David	Jones, Dr L (B'ham Selly Oak)
Clwyd, Mrs Ann	Jones, Martyn (Clwyd SW)
Coffey, Ms Ann	Jones, Nigel (Cheltenham)
Cohen, Harry	Jowell, Ms Tessa
Connarty, Michael	Kaufman, Gerald
Cook, Robin (Livingston)	Keen, Alan
Corbyn, Jeremy	Kennedy, Mrs Jane (Broadgreen)
Corston, Ms Jean	Khabra, Piara S
Cousins, Jim	Kilfoyle, Peter
Cox, Tom	Kirkwood, Archy
Cunningham, Jim (Cov'try SE)	Lestor, Miss Joan (Eccles)
Cunningham, Dr John	Livingstone, Ken
Cunningham, Ms R (Perth Kinross)	Lloyd, Tony (Stretf'd)
Dalyell, Tam	Lynne, Ms Liz
Davies, Chris (Littleborough)	McAllion, John
Davies, Denzil (Llanelli)	McAvoy, Thomas
Davies, Ron (Caerphilly)	McCartney, Ian (Makerf'ld)
Davis, Terry (B'ham Hodge H)	Macdonald, Calum
Denham, John	McFall, John
Dewar, Donald	McKelvey, William
Dixon, Don	Mackinlay, Andrew
Dobson, Frank	McLeish, Henry
Dowd, Jim	McMaster, Gordon
Dunwoody, Mrs Gwyneth	McNamara, Kevin
Eagle, Ms Angela	MacShane, Denis
Eastham, Ken	McWilliam, John
Etherington, Bill	Madden, Max
Evans, John (St Helens N)	Maddock, Mrs Diana
Fatchett, Derek	Mahon, Mrs Alice
Faulds, Andrew	Marek, Dr John
Field, Frank (Birkenhead)	Marshall, David (Shettleston)
Fisher, Mark	Martin, Michael J (Springburn)
Flynn, Paul	Martlew, Eric
Foster, Derek	Maxton, John
Foster, Don (Bath)	Meale, Alan
Foulkes, George	Michael, Alun
Fraser, John	Michie, Bill (Shef'ld Heeley)
Fyfe, Mrs Maria	Miller, Andrew
Gapes, Mike	Mitchell, Austin (Gt Grimsby)
Garrett, John	Moonie, Dr Lewis
George, Bruce	Morgan, Rhodri
Gerrard, Neil	Morley, Elliot
Gilbert, Dr John	Morris, Alfred (Wy'nshawe)
Godman, Dr Norman A	Morris, John (Aberavon)
Godsiff, Roger	Mudie, George
Golding, Mrs Llin	Mullin, Chris
Gordon, Ms Mildred	Murphy, Paul
Griffiths, Nigel (Edinburgh S)	O'Brien, William (Normanton)
Grocott, Bruce	Olner, Bill
Gunnell, John	Orme, Stanley
Hall, Mike	Pearson, Ian
Hanson, David	Pendry, Tom
Hardy, Peter	Pickthall, Colin

Pike, Peter L	Steinberg, Gerry
Pope, Greg	Stevenson, George
Powell, Sir Ray (Ogmore)	Stott, Roger
Prentice, Mrs B (Lewisham E)	Strang, Dr Gavin
Prentice, Gordon (Pendle)	Straw, Jack
Primarolo, Ms Dawn	Sutcliffe, Gerry
Purchase, Ken	Taylor, Mrs Ann (Dewsbury)
Quin, Ms Joyce	Taylor, John D (Strangf'd)
Radice, Giles	Taylor, Matthew (Truro)
Randall, Stuart	Thompson, Jack (Wansbeck)
Raynsford, Nick	Timms, Stephen
Reid, Dr John	Tipping, Paddy
Rendel, David	Touhig, Don
Robertson, George (Hamilton)	Trickett, Jon
Robinson, Geoffrey (Cov'try NW)	Turner, Dennis
Rogers, Allan	Tyler, Paul
Rooker, Jeff	Walker, Sir Harold
Rooney, Terry	Wardell, Gareth (Gower)
Ross, Ernie (Dundee W)	Wareing, Robert N
Ruddock, Ms Joan	Watson, Mike
Sedgemore, Brian	Welsh, Andrew
Sheerman, Barry	Wicks, Malcolm
Sheldon, Robert	Wigley, Dafydd
Shore, Peter	Williams, Alan (Swansea W)
Short, Ms Clare	Williams, Alan W (Carmarthen)
Simpson, Alan	Wilson, Brian
Skinner, Dennis	Winnick, David
Smith, Chris (Islington S)	Wise, Mrs Audrey
Smith, Llew (Blaenau Gwent)	Worthington, Tony
Spearing, Nigel	Wright, Dr Tony
Spellar, John	Tellers for the Ayes:
Squire, Ms R (Dunfermline W)	Mr. Peter Hain and Mr. Jon Owen Jones.
Steel, Sir David

NOES
Ainsworth, Peter (E Surrey)	Carrington, Matthew
Aitken, Jonathan	Carttiss, Michael
Alison, Michael (Selby)	Cash, William
Allason, Rupert (Torbay)	Channon, Paul
Amess, David	Chapman, Sir Sydney
Arbuthnot, James	Churchill, Mr
Arnold, Jacques (Gravesham)	Clappison, James
Ashby, David	Clark, Dr Michael (Rochf'd)
Atkins, Robert	Clarke, Kenneth (Rushcliffe)
Atkinson, Peter (Hexham)	Clifton-Brown, Geoffrey
Baker, Nicholas (N Dorset)	Coe, Sebastian
Banks, Matthew (Southport)	Congdon, David
Banks, Robert (Harrogate)	Conway, Derek
Bates, Michael	Coombs, Anthony (Wyre F)
Batiste, Spencer	Coombs, Simon (Swindon)
Bellingham, Henry	Cope, Sir John
Bendall, Vivian	Cormack, Sir Patrick
Beresford, Sir Paul	Couchman, James
Biffen, John	Cran, James
Body, Sir Richard	Currie, Mrs Edwina
Bonsor, Sir Nicholas	Curry, David
Booth, Hartley	Davies, Quentin (Stamf'd)
Boswell, Tim	Deva, Nirj Joseph
Bowden, Sir Andrew	Devlin, Tim
Bowis, John	Dicks, Terry
Boyson, Sir Rhodes	Dorrell, Stephen
Brandreth, Gyles	Douglas-Hamilton, Lord James
Brazier, Julian	Dover, Den
Bright, Sir Graham	Duncan, Alan
Brooke, Peter	Duncan Smith, Iain
Brown, Michael (Brigg Cl'thorpes)	Dunn, Bob
Browning, Mrs Angela	Dykes, Hugh
Bruce, Ian (S Dorset)	Eggar, Tim
Burns, Simon	Elletson, Harold
Burt, Alistair	Emery, Sir Peter
Butcher, John	Evans, Jonathan (Brecon)
Butler, Peter	Evans, Nigel (Ribble V)
Butterfill, John	Evans, Roger (Monmouth)
Carlisle, John (Luton N)	Evennett, David
Carlisle, Sir Kenneth (Linc'n)	Fabricant, Michael

Fenner, Dame Peggy	Knox, Sir David
Field, Barry (Isle of Wight)	Kynoch, George
Fishburn, Dudley	Lait, Mrs Jacqui
Forsyth, Michael (Stirling)	Lamont, Norman
Forth, Eric	Lang, Ian
Fowler, Sir Norman	Lawrence, Sir Ivan
Fox, Dr Liam (Woodspring)	Legg, Barry
Fox, Sir Marcus (Shipley)	Leigh, Edward
Freeman, Roger	Lennox-Boyd, Sir Mark
French, Douglas	Lester, Sir Jim (Broxtowe)
Fry, Sir Peter	Lidington, David
Gale, Roger	Lilley, Peter
Gallie, Phil	Lloyd, Sir Peter (Fareham)
Gardiner, Sir George	Lord, Michael
Garnier, Edward	Luff, Peter
Gill, Christopher	Lyell, Sir Nicholas
Gillan, Mrs Cheryl	MacGregor, John
Goodlad, Alastair	MacKay, Andrew
Goodson-Wickes, Dr Charles	Maclean, David
Gorman, Mrs Teresa	McLoughlin, Patrick
Gorst, Sir John	Madel, Sir David
Grant, Sir Anthony (SW Cambs)	Maitland, Lady Olga
Greenway, Harry (Eating N)	Malone, Gerald
Greenway, John (Ryedale)	Mans, Keith
Griffiths, Peter (Portsmouth N)	Marland, Paul
Grylls, Sir Michael	Marlow, Tony
Gummer, John	Marshall, John (Hendon S)
Hague, William	Marshall, Sir Michael (Arundel)
Hamilton, Sir Archibald	Martin, David (Portsmouth S)
Hamilton, Neil (Tatton)	Mawhinney, Dr Brian
Hampson, Dr Keith	Mellor, David
Hanley, Jeremy	Merchant, Piers
Hannam, Sir John	Mills, Iain
Hargreaves, Andrew	Mitchell, Andrew (Gedling)
Haselhurst, Sir Alan	Mitchell, Sir David (NW Hants)
Hawkins, Nick	Moate, Sir Roger
Hawksley, Warren	Monro, Sir Hector
Hayes, Jerry	Needham, Richard
Heald, Oliver	Nelson, Anthony
Heath, Sir Edward	Neubert, Sir Michael
Heathcoat-Amory, David	Newton, Tony
Hendry, Charles	Nicholls, Patrick
Higgins, Sir Terence	Nicholson, David (Taunton)
Hill, Sir James (Southampton Test)	Norris, Steve
Horam, John	Oppenheim, Phillip
Hordern, Sir Peter	Paice, James
Howard, Michael	Patnick, Sir Irvine
Howell, Sir Ralph (N Norfolk)	Patten, John
Hughes, Robert G (Harrow W)	Pawsey, James
Hunt, David (Wirral W)	Peacock, Mrs Elizabeth
Hunt, Sir John (Ravensb'ne)	Pickles, Eric
Hunter, Andrew	Porter, David (Waveney)
Jack, Michael	Portillo, Michael
Jackson, Robert (Wantage)	Powell, William (Corby)
Jenkin, Bernard (Colchester N)	Rathbone, Tim
Jessel, Toby	Redwood, John
Johnson Smith, Sir Geoffrey	Renton, Tim
Jones, Robert B (W Herts)	Riddick, Graham
Key, Robert	Rifkind, Malcolm
King, Tom	Robathan, Andrew
Kirkhope, Timothy	Roberts, Sir Wyn
Knight, Mrs Angela (Erewash)	Robertson, Raymond S (Ab'd'n S)
Knight Greg (Derby N)	Robinson, Mark (Somerton)

Roe, Mrs Marion	Thomason, Roy
Rowe, Andrew	Thompson, Sir Donald (Calder V)
Rumbold, Dame Angela	Thompson, Patrick (Norwich N)
Sackville, Tom	Thornton, Sir Malcolm
Sainsbury, Sir Timothy	Thurnham, Peter
Scott, Sir Nicholas	Townend, John (Bridlington)
Shaw, David (Dover)	Townsend, Cyril D (Bexl'yh'th)
Shaw, Sir Giles (Pudsey)	Tracey, Richard
Shephard, Gillian	Tredinnick, David
Shepherd, Sir Colin (Heref'd)	Trend, Michael
Shersby, Sir Michael	Twinn, Dr Ian
Sims, Sir Roger	Vaughan, Sir Gerard
Skeet, Sir Trevor	Viggers, Peter
Smith, Tim (Beaconsf'ld)	Waldegrave, William
Soames, Nicholas	Walker, Bill (N Tayside)
Speed, Sir Keith	Waller, Gary
Spencer, Sir Derek	Ward, John
Spicer, Sir Jim (W Dorset)	Wardle, Charles (Bexhill)
Spicer, Sir Michael (S Worcs)	Waterson, Nigel
Spink, Dr Robert	Watts, John
Spring, Richard	Wells, Bowen
Sproat, Iain	Whitney, Ray
Squire, Robin (Hornchurch)	Whittingdale, John
Stanley, Sir John	Widdecombe, Miss Ann
Steen, Anthony	Wiggin, Sir Jerry
Stephen, Michael	Wilkinson, John
Stewart, Allan	Willetts, David
Streeter, Gary	Wilshire, David
Sumberg, David	Winterton, Mrs Ann (Congleton)
Sweeney, Walter	Winterton, Nicholas (Macclesf'ld)
Sykes, John	Wolfson, Mark
Tapsell, Sir Peter	Yeo, Tim
Taylor, Ian (Esher)	Young, Sir George
Taylor, John M (Solihull)	Tellers for the Noes:
Taylor, Sir Teddy	Mr. Timothy Wood and Mr. Richard Ottaway.
Temple-Morris, Peter

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House welcomes the substantial progress made by Her Majesty's Government in ensuring that the welfare state continues to be affordable by focusing help on those with genuine need or entitlement; agrees that Her Majesty's Government should continue to seek positive and imaginative ways of ensuring that the welfare state continues to be both effective and affordable; supports Her Majesty's Government in striving to make the administration of the welfare state as effective and efficient as possible; notes that the Labour leadership is now criticised even by its own supporters for being vague and ineffectual on welfare issues; condemns the Labour Party's readiness to criticise people who do think radically about social security; deplores the Labour Party's knee-jerk opposition to the improvement of the benefit delivery system; and opposes the Labour Party's expensive and irresponsible plans for a new means-tested system Pension Entitlement and a flexible decade of retirement.