Department of Social Security

HC Deb 13 July 1998 vol 316 cc79-126

Mr. Deputy Speaker (Mr. Michael Lord)

I have to tell the House that Madam Speaker has selected the amendment in the name of the Prime Minister.

7.13 pm

Mr. Iain Duncan Smith (Chingford and Woodford Green)

I beg to move, That this House deeply regrets the Government's failure to meet their election pledges to reduce social security costs; believes that this is a direct result of incompetent leadership at the Department of Social Security which has created confusion, contradictory policies and delays and has wasted their first year in Government. Fourteen months into this Parliament, I and all my colleagues believe that the time is ripe for a review of the progress made by the Government and their Ministers in the Department of Social Security. [Interruption.] I knew that the Secretary of State would agree with me; I always set out to be helpful.

Today, we shall simply judge the Government, and the Secretary of State and her Ministers, by their own rhetoric and targets; we shall not invent any for them, but simply go by the ones that they set themselves. I and my colleagues want to see what has become of the Prime Minister's promise that Labour would be the party of welfare reform, that it would design a modern welfare state based on rights and duties going together", and that, ultimately, it would reduce dependency and spending. Those were the promises. Have the Labour Government achieved them, or have they achieved instead incompetence and political inertia? Those are the two charges against them.

Perhaps first we may deal with the charge of incompetence. I shall list some examples of the escalating levels of incompetence at the DSS which have occurred during the past 14 months. Perhaps we could start with the winter fuel payment scheme, which sums up that charge almost as well as any other. The Government spent nearly £1.7 million on an advertising campaign—some £850,000 on the television advertisement alone.

Mr. Phil Hope (Corby)

Will the hon. Gentleman give way?

Mr. Duncan Smith

In a minute.

Yet pensioners were to receive those payments automatically, so the campaign was unnecessary. With pictures of cheques dropping through letter-boxes, the advertising campaign only made it worse. Pensioners were encouraged to believe, and actually believed—when I went around talking to them, many that I met certainly did—that they would receive those payments without having to do anything about it.

Mr. Hope

rose—

Mr. Duncan Smith

I shall give way in a minute.

However, the majority of pensioners collected theirs through the post office, and the advertisement took no account of that reality. Of those lucky enough to receive the cheques, more than 40,000 were sent cheques that bounced because they were out of date. Then, more than 9,000 of those cheques were sent to those who did not even qualify—more than 1,000 of whom were in local authority residential care.

The pressure that the Government put on officials to get things done in a hurry was largely responsible for that problem. Officials that I have met in many of the Benefits Agency offices that I have visited around the country have complained and commented adversely about that.

In May, it was revealed that as many as 100,000 cheques were still to be collected at post offices.

Mr. Kevin Hughes (Doncaster, North)

How many pensioners?

Mr. Duncan Smith

I said 100,000; perhaps the hon. Gentleman's ears need clearing out.

Many pensioners had probably been misled by the advertisements and were still waiting for the cheques to drop through the letter-box. They continued to wait.

Mr. David Hanson (Delyn)

Will the hon. Gentleman give way?

Mr. Duncan Smith

In a moment.

There are also serious question marks over the selection of the advertising agency. Although the agency had been used by the DSS previously, when my colleagues were in government, the difference is that the present Government must have been aware at the time when they placed the campaign that the Labour party had an account with that agency. Why not, then, prevent speculation about why they placed that contract, by going out to competitive tender? They did no such thing. In fact, most interesting of all, they decided to place it without such a tendering process; I believe that it leaves them vulnerable to another charge of cronyism. It links very nicely with what has been going on over the weekend, and a certain amount of "cronygate".

Mr. Hanson

Instead of nit-picking and carping about some of the issues, will the hon. Gentleman tell the House straight: does he support the giving of that fuel grant in the first place? That is what pensioners in my constituency are interested in: the fuel grant received on their doorsteps, in their wage packets, in their bills, paying for those winter heating bills.

Mr. Duncan Smith

That is, of course, if they received them and were able to cash them. I must say to the hon. Gentleman—

Mr. Hanson

Does the hon. Gentleman support winter payments?

Mr. Duncan Smith

I am just about to answer that. In due course, I shall make some very serious charges about this wasted year, when policy has gone missing. In reply to the question of whether we support this, my simple answer is that I would support anything that improves and increases—[Interruption.] Wait a minute. I would support anything that improves and increases the income of pensioners, provided that the Government who do so can afford it. The question remains, can the Government now afford what they are promising pensioners? I shall come to that in a second. I believe that the hon. Gentleman will have less to say on that in due course.

I have left the subject of cronyism and the poor way in which the Government have handled the process of paying pensioners winter fuel payments, but there are many other examples of incompetence. [Interruption.] If the Secretary of State would keep quiet for a second, she might learn some things about how matters have been mishandled throughout the past 14 months by her.

For example, in December 1997, the Secretary of State—the same one who seems intent on making comments from a sedentary position—was the first for more than 20 years not to make the uprating statement in the Chamber, or to speak in the uprating debate. That debate is possibly the single most important thing that happens to the Social Security Department in the year—and she did not come to the House. She sent someone else—two different people, in fact. They were the hon. Member for Manchester, Withington (Mr. Bradley), a junior Minister; and the Minister of State.

In September, the DSS head of information, Steve Reardon, was axed by the same Secretary of State. Apparently, the Secretary of State removed him because he could not read her mind. At first, she seemed to be for a Cabinet pay rise. Then, when the Chancellor expressed the opinion that he was not for a Cabinet pay rise, it appears that the Secretary of State was not for a Cabinet pay rise. Mr. Reardon, a long-standing civil servant held in high regard, apparently could not cope with the pace of Government U-turns. He could check what they were doing, he could follow the turn, but not that quickly, when it happened almost the same day.

However, firing the messenger is not the answer, and spin is not the solution. In November and December, a number of leaks revealed that the Government intended to cut disability benefit and introduce a tax on child benefit. Those leaks continued, with plenty of opportunity for the Secretary of State or her Ministers to say that they were rubbish.

In the new year, the Secretary of State caused unnecessary concern by again floating the idea of an affluence test—I believe that that was when the Prime Minister was in Japan—including the proposal to means-test the basic state pension. Originally the Government were quite keen on the idea of an affluence test but, suddenly, they thought that it would be unpopular, so the Secretary of State was instructed by Downing street to issue a denial. That served to highlight yet again the confusion at the heart of Government.

Mr. Hope

There is nothing to do with social security contributions in that speech. Does the hon. Gentleman's party support the winter fuel payments that this Government introduced? Can he confirm that he would support the increase in child benefit? Those are two substantial welfare reform measures that this Government have introduced in this Parliament.

Mr. Duncan Smith

I see that the Whips' messengers are out in force. I have already answered that question. If the hon. Gentleman was not listening, that is his problem. He should try to pay attention.

I shall press on. In February and March, the Government were forced into a series of face-saving concessions to try to salvage the benefit integrity project. The handling of that project provoked yet another rebuke from Downing street and also from Lord Ashley, the chairman of the all-party disablement group.

Then, the Secretary of State claimed with authority that there were women earning £1 million a year who claimed as much as £18,000 a week in maternity benefits. When journalists challenged that, the DSS had to explain the use of that figure. The Department replied: it's a spurious figure, but it's one she uses to make her point. Like a lot of figures we give, it doesn't reflect real life. The Secretary of State might like to carve that on her Dispatch Box. Perhaps it is a motto that she will take away with her. That is an absurd counter-statement from her own Department, when the Secretary of State uses figures that do not add up.

Of course, there was the Secretary of State's mishandling of the reform of lone parent benefits. Few of us will ever forget the Secretary of State cutting a lonely figure on the Front Bench in December, with no Cabinet colleague to give her support and her own Back Benchers angry about her change of heart on a policy that she had condemned before, and adopted after, the election.

The reason was simply costs. The Chancellor refused to budge. Not once in the run-up to that debate did the Secretary of State or the Prime Minister speak about the principle of the change. They talked about the cost and the need to stay within the budgets that they had inherited—never the principle.

In January, the Government started their road shows. The public were vetted, and only those who were members of the Labour party were allowed to attend. When Labour party members became too troublesome, only those who were good members of the Labour party could come to the road shows. Eventually, even the Secretary of State was not allowed to attend. It was only at the road shows that the Government started to talk tentatively about the principle. Perhaps the Secretary of State would like to give her opinion and tell us whether she supports principle or cost-saving.

So beleaguered had the Secretary of State become that, in March, she broke off an interview with the BBC's "Women's Hour", leaving the studio when an interviewer apparently asked an unfriendly question.

Those examples of incompetence bring us to the serious charge of failure of policy. If the Under-Secretary, the hon. Member for Withington, will listen carefully, he will understand how that leads directly to the failure of his Department.

When the Government were elected, the Prime Minister appointed the Minister of State to his new job, with the all-embracing title of Minister for Welfare Reform. His task was to think the unthinkable. Clearly, the Prime Minister wanted to make people believe that he was serious about a radical reform of social security. We all thought, when he appointed the Minister of State, the man with such a track record, that that might have been his intent. I expect the Minister thought so too.

By late September, the Prime Minister had in his possession the Minister of State's considered views on reform—a Green Paper. It was just such a Green Paper that had been promised as a matter of urgency back in May, yet, far from seeing the light of day, that document was kicked around between the Chancellor and the Prime Minister and later even the Secretary of State. The Government had expressed the intention that it would be published before Christmas. Nick Timmins wrote in the Financial Times: Frank Field, the Minister for Welfare Reform had a publication date of December 7th pencilled in for his green paper. He had clearly been carefully briefed.

However, the Chancellor ensured that the Green Paper did not come out until after he had delivered the Budget, where he signalled a very different set of changes from those outlined by the Minister of State in past publications. The result was an emasculated Green Paper in March, which a number of influential commentators dismissed.

In the Financial Times of 27 March, Nick Timmins, whom most hon. Members respect as a commentator, stated: Almost four months on, the green paper actually manages to tell the public less about what is going on in welfare reform than it has already learnt from the leaking, spinning, and announcements that have taken place. The Sunday Times of 29 March described that as "a missed opportunity" and Melanie Phillips, one of the people whom the Government like to brief, wrote in The Observer: Presenting Frank Field's Green Paper on welfare reform after the budget is back to front politics.…the reason for the disorder is the lack of a coherent approach in Government. That is the real issue—the lack of a serious and coherent approach, with everyone taking a chunk of welfare reform.

A classic example of lack of coherence in the reform process is reflected in the working families tax credit package. People will be paid benefits—credits—even if they are earning more than £30,000 a year. However, the Secretary of State seems to be obsessed by the idea of middle-class dependency, and she will affluence-test the same people to whom she plans to pay that credit—a case of absurdity and confusion.

The saddest part of the saga is the way in which the Prime Minister has walked away from his Minister of State and let the Chancellor continue to concentrate power in the Treasury.

Mr. Malcolm Wicks (Croydon, North)

The Government whose social security policy is under scrutiny have published a strategy paper on welfare reform. Today, they published a paper on benefit fraud. Last week, they published a major document on child support. Will the shadow Secretary of State at some stage in his speech treat us to his views on substance, and will he get out of the gutter?

Mr. Duncan Smith

I have just dealt with substance. Labour Members do not like the fact that there is very little of substance in anything that the Government have yet produced. On the second point, they should not leave so much of what they think in the gutter.

Mr. Wicks

Let us deal with two matters of substance. We all agree, I hope, on the reform of child support. The Government propose a simpler formula and a maintenance disregard to give mothers some of the child maintenance. Does the shadow Secretary of State support those two major measures for reform?

Mr. Duncan Smith

The hon. Gentleman knows very well that, when the Secretary of State came to the House with her proposals for Child Support Agency reforms, I said that, as far as we could make them work, we would support any constructive reforms. I shall deal with that later, if the hon. Gentleman will wait. It is no good his talking about the gutter. Are The Observer, The Sunday Times and the Financial Times all in the gutter? Are all those commentators, who spend their lives considering social security matters, suddenly in the gutter because they disagree with the Government? That does the hon. Gentleman no credit.

Mr. Hope

rose—

Mr. Duncan Smith

No, I have given way to the hon. Gentleman already. I shall make progress.

Beyond the Green Paper, perhaps the single most important issue facing the Government is the reform of pensions. What Melanie Phillips described as incoherence is well illustrated by the pensions policy review process. The Government are boxed in by their pre-election attacks on the basic pension plus proposals, which were described by The Times as the most dishonest act of the campaign"— that is, the 1997 general election campaign. The Government's commitment to the state earnings-related pension scheme conflicts with the Minister of State's views, and has added to the confusion over pension reform.

The Chancellor contributed to the confusion by taxing pension funds early on and devaluing the SERPS rebate by getting rid of advance corporation tax dividend tax credit, raiding £5 billion a year from those funds. That complicated a review of pensions that was already likely to be complicated, and that is, after three consultations and endless leaks, finally to be kicked into the long grass by the Chancellor, perhaps some time in the autumn, even though the Minister, as he knows full well, said that it would be published in the first half of this year.

What is absolutely clear is that this area has been taken over by the Treasury; we know that from the leaks at the weekend about top-up payments. Such announcements always beg more questions than they answer, and it seems ironic that the pensions review is delayed and delayed while the Chancellor leaks his proposals without regard to the process of pension reform. Yet again, the Chancellor is pre-empting another Department of Social Security Green Paper. The two Departments should work together, not against each other.

Mr. Hope

Does the hon. Gentleman realise that there have been more than 2,000 submissions to the pension review from a substantial range of private sector organisations, voluntary organisations and many others? Will he confirm that the number of submissions from Conservative Members is nil?

Mr. Duncan Smith

What is most interesting about the hon. Gentleman's comment is that he has obviously not studied how many submissions came in. There were 2,000 to the first consultation but, by the time of the third, the number had dropped as low as about 10—people were sick and tired of constantly being asked to make policy for the Government. The Government were supposed to make proposals, but they have come forward with none. The hon. Gentleman should read those submissions, because they make fascinating reading—although his intervention was obviously quite facile.

No policy had been more hyped than the Secretary of State's pet project, the new deal for lone parents.

The Secretary of State for Social Security and Minister for Women (Ms Harriet Harman)

Hear, hear.

Mr. Duncan Smith

From the start, the figures showed that the vast majority of lone parents did not want to take part, with 75 per cent. not answering the first letter of invitation to interview and a return to work figure that oscillates, at best, between 5 and 7 per cent.

The right hon. Lady said, "Hear, hear," when I mentioned her pet project, but if she had spent a tenth of the time considering pensions and supporting the Minister for Welfare Reform, we might not have this problem. She has avoided the most serious area altogether, because she feels uncomfortable with it. If she had not been a single-issue merchant, and had got on with running the Department, we would not have the problem on pensions and we may not have had the problem on lone parents.

Mr. John Heppell (Nottingham, East)

Will the hon. Gentleman give way?

Mr. Duncan Smith

No, I want to make progress.

Before any understanding of the figures could be gained, the Secretary of State leaped up and claimed success in September last year, a full two and a half months after the project got under way-wow! She claimed a figure of 20 per cent.; 5 per cent., the media said. The media were right. Furthermore, a large number of the 5 per cent. who returned to work would have done so any way, and the Secretary of State never gave us a breakdown for that figure.

That did not stop the Secretary of State continuing to issue press release after press release claiming success and credit when none was apparent. She has told us how much she is spending on the lone parent initiative, but, remember, she said, "Spend to save." She said that the initiative would save money by getting people into work. I have two questions for her, and perhaps she will answer right now: how much, exactly, will it save, and how many jobs will it create? I shall give way if she wants to give me the answers. No, she does not.

Mr. Steve Webb (Northavon)

The hon. Gentleman has criticised the poor response rate to the new deal for lone parents. Is he aware that, when the Conservatives set up their parent plus pilot—of which, I believe, he was a supporter—they budgeted for a lower response rate than has been achieved on the new deal?

Mr. Duncan Smith

The hon. Gentleman raises an interesting point, because, as he will recall, that programme had one simple difference: the Secretary of State adopted the pilot areas, but she failed to take on the qualification programme involved with it. In every area, groups were divided into two and would have been checked from start to finish. Instead of having to rely on general figures from the Secretary of State, the hon. Gentleman would have known by now exactly what created the environment for people to go to work, which policy was the most successful and which were not working.

The Secretary of State has none of that in place, because, from the start, this was a political initiative aimed at saying, "Look, we did something." The Government, however, junked the most important part of the programme, which we had already set up. The hon. Gentleman, if he had checked, would have realised that we included the qualification programmes to check how the programme would work.

Let us deal with the cost, which is perhaps the most important issue. The most damning charge against the Government is the rising cost, given that Labour said that it would increase the share of national income spent on education as we decrease it on the bills of economic and social failure. The record is quite different. The working families tax credit will cost £420 million in 1999–2000, and £1.35 billion in 2000–01. Now we discover that the Chancellor is busy trying to hide £5 billion a year from the welfare bill by changing the way in which he accounts for the annual cost of the WFTC. By a process of smoke and mirrors, he intends to try to slide that money under the heading of accounting adjustments.

Everyone knows that that is an outrageous attempt to pretend that he has reduced the cost of welfare by £5 billion a year. The Office for National Statistics dismisses his claim that WFTC is part of the income tax system, and the Institute for Fiscal Studies said that it was "massively unhelpful" of the Chancellor to try to do that. He stands exposed not only of increasing the cost, but of trying to hide the core cost of £5 billion a year and pretending that he has saved money. That is a classic example of the Government saying and doing anything to pretend to the public that they are achieving their results.

The cost of the lone parent benefit, disability living allowance linking rule is an extra £10 million a year; changes to national insurance will cost £1.2 billion in 1999–2000 and £1.35 billion in 2000–01; the new child support package will cost £170 million in 1998–99, which will rise to £1.1 billion in 1999–2000 and more than that for 2000–01; and winter fuel payments cost £200 million in 1997–98, and will cost £200 million in 1998–99. The Government have never explained where they are getting the money for all that.

Mr. Heppell

Will the hon. Gentleman give way?

Mr. Duncan Smith

No, I am not giving way.

Rather like the Chancellor's 2.25 per cent. projected increase in public spending, the new spending commitment to more than £7 billion appears to be an underestimate, as ever. This is only the beginning of the Government pumping up the whole of the social security budget.

Mr. Hanson

rose—

Mr. Heppell

rose—

Mr. Duncan Smith

I am not giving way; I intend to conclude shortly.

Equally serious is that, in spite of the talk about hand up and not hand-out, and getting people off welfare and into work, more people have been brought into the dependency net by extending the tapers and the raising of disregards in the new working families tax credit. Figures show that as many as 400,000 new families will be brought into dependency as a result of the measures announced in the previous Budget. That is an increase in dependency from the party that said that it would not increase dependency, but would cut it. That serious charge is levelled at the Government, and Ministers do not like it, because every single initiative has been a failure.

The Parliamentary Under-Secretary of State for Social Security (Mr. Keith Bradley)

The hon. Gentleman has been given a note—he has been going on for too long.

Mr. Duncan Smith

I asked my hon. Friend the Member for Grantham and Stamford (Mr. Davies) about the time, so the Minister should sit back on his Bench.

Add to all that the fact that a number of reviews are still to report, and the process of reform almost becomes biblical. Today was another example: Green Paper begets Green Paper begets Green Paper. There is not a policy in sight, with endless review after endless review.

Mr. Heppell

Will the hon. Gentleman give way?

Mr. Duncan Smith

No. The hon. Gentleman has nothing else to add.

The real problem that lies behind all that incompetence and policy failure is that, when the Government look back on their first year in office, they will realise that there has been a tragic waste of the best year that any Government since the war have had to reform welfare. On 28 March, The Economist said: The danger is that the story they record this year is the birth not of a better welfare system but just of a more expensive one. That indictment of the very party that said that it would cut the bills hangs around the Secretary of State's neck.

Mr. Heppell

Will the hon. Gentleman give way?

Mr. Deputy Speaker

Order. The hon. Gentleman has said quite clearly that he is not giving way. Hon. Members must remain seated.

Mr. Duncan Smith

That indictment is becoming clearer as we head towards a public expenditure statement which has already loosened constraints on public spending without there being any constructive reform policies that might, in the long run, lead to better focus and the reduction of the burden of dependency and, with it, the unnecessary cost to the taxpayer. The Minister for Welfare Reform knows that, because that is why he was brought into the Government. It would have been better if he had been given his head properly to propose measures that could have been implemented.

On 1 January, the Opposition rightly offered the Government the chance of a serious debate on welfare reform. None has been forthcoming. Since then, we have been through a series of disappointments, delayed reviews and reviews that seem to point nowhere in particular, with long timetables running out to 2020, as if the next election will not matter. I supported the statement on the Child Support Agency, because it was their only constructive proposal. We have shown that we are prepared to have a serious debate, but the Government are running scared and have not taken up our offer.

During the past year, the Government have had a golden opportunity, but they have wasted it, because they have failed to deal with welfare reform constructively and positively. We charge them with total failure and incompetence, and I am afraid that that charge sticks.

7.39 pm

The Secretary of State for Social Security and Minister for Women (Ms Harriet Harman)

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof: congratulates the Government for their outstanding record in pursuing their efforts to provide opportunities for those who can work and security for those who cannot, to cut expenditure on economic and social failure and to modernise the welfare system. One would not think from listening to the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) that tonight provides an opportunity to debate one of the crucial issues facing the House and the country: welfare reform. The hon. Gentleman failed to address any of the really important questions.

Despite the fact that, according to my hon. Friends, the hon. Gentleman spoke for 26 minutes—it seemed longer—he failed to set out his approach to tackling poverty, worklessness and social exclusion. We heard nothing about his proposals to support children and families. He had nothing to say about proposals to ensure security in retirement for pensioners. He made no suggestions about rooting fraud out of the system or how to tackle the spiralling costs of social and economic failure. He cannot decide whether he thinks that our policies do not work or that we do not have any—he changes from one view to the other.

The hon. Gentleman's so-called allegations—such as the allegation of cronyism—are either untrue or irrelevant. For the record, the company that had the advertising contract to make pensioners aware of the winter fuel payments was on a standing contract initiated by the Conservative Government, so if they are anyone's cronies, they are his. When I took up office as Secretary of State for Social Security, I and my team of Ministers took over a system that was in crying need of reform. Poverty and social exclusion were growing, and yet the costs of social security were rising.

Mr. Duncan Smith

They still are.

Ms Harman

They are not.

The system that we inherited from the Tories left one in five households of working age with no one in work. It left one in four children being brought up on benefits, never seeing the world of work. It left one in four pensioners existing on income support, or, worse, living below the income support level. The Tories wrote off millions of people who wanted to work—wrote them off to a life of dependence on benefits.

Despite profound social and economic change, the social security system still reflected the assumptions of Beveridge's day rather than the patterns of life today and of the next century. The social security system that we inherited was based on the assumption that men were the breadwinners and were in permanent full-time employment—interrupted only by temporary periods of unemployment—and that disabled people would be supported on benefits.

The Tories had not changed the system from Beveridge's assumption that women would be married and would stay married, that the woman's husband would support her while he was working, that his national insurance contributions would provide for her as well as for him if he was temporarily out of work, that she would depend on his income in retirement, and that his insurance would provide for her after his death. The social security system provided security for the man, and the man provided security for the woman.

Beveridge said that when women get married women, they give up gainful occupation. Housewives and mothers have vital work to do in ensuring the continuance of the British race. Even though half those in employment are women, the system that I and my team of Ministers inherited did not expect women to work. Even if the man was unemployed and the woman had no children, she was classed as dependent on him rather than being available for work.

The Tories did not reform the system from Beveridge's expectation that women would be housewives and mothers, and would not bring up children on their own. Even though one in three marriages now break down and every year 100,000 children are born to couples who do not live together, the system that I and my team of Ministers inherited had not woken up to that, and had simply allowed more than a million lone mothers and their children to drift on to income support. Lone mothers have to bring up their children the hard way—on their own, on income support and with no money coming in from the father. That has resulted in mounting costs to the public purse and spiralling costs of social exclusion.

The Tories did not reform the system from Beveridge's expectation that people with long-term health problems or disabilities would depend on benefits but would not work. In Beveridge's day, most jobs involved heavy manual work. People with physical and mental disability or learning disabilities were beset by prejudice, so disability was synonymous with benefit dependence. Now there are 2 million long-term sick or disabled people who work, and 1 million more people who could work and who want to work. The system that we inherited was simply about classifying them and paying them benefit. It gave them no concerted help to get into work.

Beveridge assumed that people's work would provide the foundation of their income in retirement, and that it would only be a short retirement. Yet the system that we inherited left 1.5 million pensioners claiming income support and a further 1 million living below the breadline—not even getting the income support to which they are entitled.

Despite a revolution in the delivery of services—one can arrange most of one's life over the phone, from shopping to mortgages, 24 hours a day—the social security system that we inherited expected people to turn up at the office, queue, fill in pages and pages of forms and ask for the same information three times. No one ever explained or apologised. Few would say that claiming from the social security system was a pleasant experience, and few working in social security would disagree.

After 18 years in government, surely the Tories should have been aware of the profound social and economic changes, and should have understood and acted on them. Instead, the social security system was stuck in the past. The Tories failed to modernise it, and everyone was losing: the people who were written off to benefit dependence and the taxpayer who had to foot the bill.

We promised to modernise the social security system and to make it fair. We set out in our Green Paper the principles underpinning our welfare reform: work for those who can and security for those who cannot. We promised to tackle poverty and inequality, to cut the cost of social and economic failure and to tackle the scourge of fraud. That is what we promised, and that is exactly what we are doing. On the principle of work for those who can, our programme to help the young unemployed into work or training is well under way. Our programme for the long-term unemployed has begun.

But we have done more. The previous Government assumed that there were two groups of people, so only two Government policies were needed. The two groups were, first, people who were required to work and who would be helped to do so—which was considered to be Department of Education and Employment business—and, secondly, people who were not required to work and who were to be paid benefits—which was considered to be Department of Social Security business. They had no programmes for those who were not required to work, but who wanted to work and get off benefits and who could work.

To tackle the problem of workless households, I have looked beyond the employment register and asked who wants to work even though they are not compelled to work, and how we can help them to be better off and lessen their benefit dependence. I have established two completely new programmes, financed by the Chancellor out of the windfall levy: the new deal for lone parents and the new deal for the disabled.

The new deal for lone parents offers lone parents whose children are of school age help and advice into work. The step from the security of income support into work is difficult if they have to do it on their own, even with benefits to back them up in work. They cannot take risks if their children are depending on them. The new deal for lone parents gives them a personal adviser: a friend on the inside track who can advise them about jobs, training, interviews, benefits and child care—all the things a lone parent has to consider when she moves into work. The new deal is making a real difference.

Mr. Quentin Davies (Grantham and Stamford)

I thank the right hon. Lady for giving way, but she knows perfectly well that her "new deal" for lone parents has been a complete shambles. She knows that 75 per cent. of lone parents contacted by the Benefits Agency did not even bother to respond, and that, on all the estimates, much fewer than 5 per cent. of lone parents who are currently on benefit have returned to work. Indeed, some estimates put the figure as low as 1 per cent. Will the right hon. Lady give the House her own estimate of the number of lone parents who will find jobs as a result of the programme? What is her target?

Ms Harman

I do not need to give the House my estimate of the number of lone parents who will find jobs as a result of the new deal for lone parents. We have spent up to £1 million on an independent evaluation—by Social and Community Planning Research—of the additional number of lone parents who are in work and off benefit as a result of the new deal. The interim findings show that there are more lone parents in work than there would have been without the new deal, and that, if the new deal had been operating across the country— beyond the eight pilot areas—a further 10,000 lone parents would have been in work, and not on income support, as a direct result of it.

The hon. Member for Grantham and Stamford (Mr. Davies) presented me with a number of figures, which were mentioned on the radio by his hon. Friend the Member for Chingford and Woodford Green. Let me tell the House what Social and Community Planning Research said about those figures. It said that the hon. Gentleman's figures were meaningless…leading to an incorrect conclusion".

Mr. Quentin Davies

rose—

Ms Harman

If the hon. Gentleman wishes to intervene again, I will give way to him.

Mr. Davies

At least the figures given by my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) were figures. The right hon. Lady seems to be incapable of setting any targets, or coming up with any figures. Her response to me just now involved a double evasion. First, she shuffled off responsibility for evaluating the worthwhileness of her programme on to some so-called independent agency; secondly, she—who is responsible for the expenditure of public money in this regard, clearly has no business plan, and clearly has not worked out in her own mind what kind of public expenditure—

Mr. Deputy Speaker

Order.

Mr. Davies

She has not worked out what kind of public expenditure is worth budgeting—

Mr. Deputy Speaker

Order. The hon. Gentleman must take his seat when I am on my feet. His intervention has been too long.

Ms Harman

The hon. Member for Grantham and Stamford (Mr. Davies) has just astonished the House with his commitment to lone parents—a commitment that he did not find it possible to voice during all the years when his party was in government, and which he has mentioned for the first time during its time in opposition.

In fact, I did give a figure. If the new deal for lone parents had been working nationally beyond the eight pilot areas, an additional 10,000 lone parents would have been in work and not on income support. The new deal is making a real difference.

I am immensely proud of the work of our personal advisers. Although not highly paid, the staff are highly motivated, and have worked with determination, sensitivity and initiative. I am grateful to the Opposition for giving me an opportunity to place on record the great debt that we owe to the pioneer personal advisers. Most are women, many are mothers and some are lone mothers themselves. They have changed the face of social security, and their work means that today more lone parents are now in work and off benefit than would be the case otherwise.

Let me also place on record our thanks to lone parents organisations such as Gingerbread and the National Council for One Parent Families. Unlike the Opposition spokesman, those organisations care about lone parents; unlike him, they know what they are talking about. They helped to design our new deal for lone parents, and to design the training for our personal advisers. Above all, however, we need to recognise the lone parents to whom being a good mother means providing for children as well as caring for them. Such parents want to work not only to give their children a better standard of living than they could provide on benefits, but to show them that life is about work, not just about dependence on benefits. They want to work because—like other mothers—they know that they can contribute to society by working, as well as by rearing children.

Lone mothers who have found work through the new deal are, on average, £39 a week better off than they were on benefits, and their benefit dependence is reduced by £42 a week. They are better off, and the taxpayer is better off. That is the approach of welfare to work: a hand up, not just a handout. The new deal for lone parents will become national in October.

Mr. Oliver Letwin (West Dorset)

Laying aside all party-political broadcasts for a second, will the right hon. Lady tell us whether she would genuinely regard it as a success if her programme led to 1 per cent. of lone parents returning to work?

Ms Harman

I will not set targets. I have said that we will set targets once we have received the final result of the evaluation. No Government acting sensibly set targets before they have completed the pilots and the evaluation.

Mr. Duncan Smith

With respect, the right hon. Lady just said that she would not set targets, but she has given a figure of 10,000, and she is talking about a 1 per cent. figure. She is going national, without any idea of where the success lies. If she is going national—if the process is no longer experimental—she must surely tell us what the target is. Is it 1 per cent.?

Ms Harman

The 10,000 figure was not a target; it was what Social and Community Planning Research findings showed would be the number of additional lone parents in work had the new deal been extended nationally. The body also says that the size of the difference has increased gradually over time, and can be expected to continue to increase. I have said that we will set our target when we have the full results of the evaluation.

This is welfare reform in action. The working families tax credit will help to make work pay even more for lone mothers; the national child-care strategy and the child-care tax credit will make it even easier for lone mothers to work by ensuring high-quality, affordable, accessible child care for all; and family-friendly employment policies, including extended maternity leave and reformed maternity pay, will help women and men to combine their work and family responsibilities. The hon. Member for Chingford and Woodford Green made a good deal of my comments about statutory maternity pay, but his Government never reformed the statutory maternity pay system—a system that leaves the lowest-earning one fifth of women without the cover provided by statutory maternity pay.

I have made it clear that fathers, as well as lone mothers, have a responsibility to their children. The reform of the Child Support Agency—a policy ably developed by my noble Friend Lady Hollis, which I announced to the House last week—aims to ensure that fathers pay for their children. Our child maintenance premium will ensure that, for the first time, 700,000 children will be £10 a week better off through their fathers' maintenance. That, together with our unprecedented increase in child benefit, will make children better off, and will strengthen fathers' parental responsibility.

Let me say to the hon. Gentleman and his hon. Friends that, whatever the hon. Gentleman says—for all his puff and bluster, and his jousting with figures—he knows that this is modernisation for good, and that no Government will ever go back on the system that I have created.

We are also modernising the welfare system for people with disabilities. Most disabled young people in my constituency, and their mothers, tell me that they want the same as everyone else. They want to work like everyone else, to take pride in their work, to make friends at work and to earn their living at work. They want to contribute to society, not just to take. That is why my right hon. Friend the Secretary of State for Education and Employment and I, with finance from the windfall levy, have extended the new deal to the long-term sick and disabled. That is welfare reform in action.

That has four strands: active advice and support for those seeking work; taking the disincentives to work out of the benefit system and extending to the disabled the incentives formerly available only to the registered unemployed; making work pay for those whose earnings are depressed by disability; tackling discrimination with tough new standards for employers, and giving employers incentives to extend opportunities to people with health problems or a disability.

In October, we begin the first of 12 pilot projects to offer, through jobcentres, personal advisers along the same lines as the new deal for lone parents. Those pilots will cover 250,000 people on incapacity benefit, who are among the many hundreds of thousands of people who were written off by the previous Government to a life of dependence on benefit. However, we know that it is in the voluntary sector that there is great expertise in helping people with disabilities and health problems, so we are awarding grants to partnerships of voluntary organisations and employers to pilot ways in which to help disabled people to get and stay in work.

This Thursday, the Secretary of State for Education and Employment and I will announce the 10 successful bids for the first tranche of partnerships. Our approach is to provide the opportunities and support for people who want to work to do so; the social security system that I inherited denied sick and disabled people those opportunities. Worse, to get the unemployment figures down, the Tories encouraged people off unemployment benefit and on to incapacity benefit. Classifying them as incapable of work solved the problem of the Tories' rising unemployment figures, but it increased the number of workless households, and wrote them off to a marginalised life on benefit.

About 1 million people on incapacity benefit are capable of at least some work. Under the Tories, if they took a risk and got a job, they were punished if it did not work out: they could go back on benefit, but be up to £40 a week worse off than when they were previously on benefit. Therefore, I have changed that, so that, if their job does not work out within the first 12 months, people can go back to the same rate of IB that they left. That encourages people to move off benefit into work, rather than penalising them.

We are piloting the extension to those on incapacity benefit of the jobmatch payment and the jobfinders grant, which are currently available only to those on jobseeker's allowance. Those on incapacity benefit face the same expenses as those on JSA in moving into work after a long time on benefit, so they should get the same help—the hon. Member for Chingford and Woodford Green and his hon. Friends never supported that. We are also helping people with health problems or disabilities to be much better off in work than on benefit, with our new disabled persons tax credit.

For a disabled person with a child under 11, moving from incapacity benefit to the disabled persons tax credit in work could mean that they are better off by £36 a week, and that their benefit dependence will be reduced by £71 a week. It is a hand-up, not just a handout. They are better off, and the taxpayer is better off. We are tackling social exclusion and investing in opportunity. That is our welfare reform in action.

All that, and the tough stance against discrimination that has been taken by the Secretary of State for Education and Employment, amount to a radical programme of welfare reform that recognises for the first time the aspirations of people with disabilities, and acknowledges for the first time that their rights include the right to work.

Mr. Malcolm Wicks (Croydon, North)

With my right hon. Friend the Minister for Welfare Reform, I have met young adults in Croydon with very serious learning difficulties—some have Down's syndrome—who are now in work, but some of those in residential care seem to suffer from a particular poverty trap, because, to get their residential care cost, they have to stay on income support. It is a technical matter. I am not expecting an answer now, but will the Department of Social Security look closely at that matter, so that those young adults with serious learning difficulties can work full-time, not just part-time?

Ms Harman

My hon. Friend has raised an important point, and we will certainly look into it. The system is full of disincentives to work for people who are on incapacity benefit, or are disabled because there was never an expectation that they would want to work or could work. I thank him for raising the matter.

I have talked about welfare reform being about work for those who can, and I turn to security for those who cannot. That brings me to pensions. It is a great concern that many of those heading to retirement face a drop in income that is far greater than it need be. It is a great scandal that many of the poorest people in Britain are pensioners—people who have worked hard all their lives, and now struggle to make ends meet.

For tomorrow's pensioners, we will reform the pension system, so that it tackles the growing inequality of income in retirement; extends occupational pensions to the many—up to 1 million—who currently do not join them; provides access to second pensions through our new stakeholder pensions for those who have no access to an occupational pension and for whom private pensions can be very poor value for money; provides second pension entitlements for those who care for an elderly or disabled relative or for children while they are young; and ensures that the growing number of the self-employed are properly provided for.

We will set out our pensions reform in a Green Paper, arising out of the work of the Under-Secretary of State for Social Security, my hon. Friend the Member for Southampton, Itchen (Mr. Denham), by the end of the year, but today's pensioners, particularly the poorest, cannot wait.

Hon. Members will remember that, while we were in opposition, pensions was an issue of some controversy within the Labour party. I was clear then, and I remain so, that we must recognise and take action to help all pensioners. We have done so with the cut in VAT and the winter fuel payment of £20 for every pensioner household, but I was also clear, and I remain so, that our priority must be to get help to the poorest pensioners—those on income support and those who are entitled to income support but not receiving it.

For pensioners on income support, we gave a winter fuel payment of £50.

Mr. Webb

The right hon. Lady rightly stresses the urgency of helping the poorest pensioners who are not claiming their income support. Does she accept that, on 1 May, when the Government came to power, half those 1 million pensioners were already claiming a means-tested benefit—housing benefit—and that local authorities throughout the land have lists of those 500,000 people, ready to hand over to central Government? Why is it going to take until the end of this year to get a Green Paper on something that could have been done 18 months ago?

Ms Harman

The hon. Gentleman raises an important point: it is possible to find out who is not claiming and get help to them. If I may, I will tell him how we are progressing on that element of the pension review in due course.

Mr. Tim Loughton (East Worthing and Shoreham)

Will the right hon. Lady give way?

Ms Harman

I am not going to give way.

We estimate that about 1 million pensioners are entitled to income support, but do not receive it. The previous Government were never interested in that. They did not even know the figures until I asked a parliamentary question. At first, the figure was that 800,000 pensioners were not receiving the income support to which they were entitled, and that rose to 1 million. That was a major failing of the previous Government—to leave 1 million pensioners not on the breadline, but below it. Again, I have taken action.

In April this year, I established, in nine areas, pilot projects to find ways in which to identify the poorest pensioners who are losing on their income support. In those pilot areas, we are searching our computer data and that of local authorities to identify those over pension age who look as if they might be eligible for income support but who are not registered as claiming it.

A personal adviser will then contact those pensioners, visit them and sort out their income support. The interim results of the research on those pilots shows that pensioners want help to find their way through the system—they cannot do it on their own, they do not want to wait in social security offices to get help, and they have simply no idea where to start. Our interim evaluation shows that some pensioners are losing 24p a week on unclaimed income support, and that others are losing up to £51 a week.

That is an indictment of the system that I inherited, and we are changing it. I visited one of the projects, in Paisley, Scotland, and met some of the pensioners and their personal advisers. The pensioners were delighted and relieved to be getting the extra help they need. The personal advisers were doing an excellent job—they, too, are changing the face of social security.

Our action is about ensuring that there is work for those who can and security for those who cannot, and getting benefits to those who are entitled to them. We are also stopping benefits going to those who are not entitled to them. I shall conclude by telling the House how we are transforming delivery of service and tackling fraud.

Social security reform has to deal not only with who gets money and how much they get, but with how the service is provided. That work is being ably led by the Under-Secretary of State for Social Security, my hon. Friend the Member for Manchester, Withington (Mr. Bradley). We are pioneering one-stop shops, so that those who are claiming do not have to go from the jobcentre, to the social security office and then to the council.

We are sorting out the forms, so that we do not ask those who are claiming three times for the same information, most of which we already have. We are also piloting telephone claims services for pensioners, introducing a new complaints system, and tackling fraud—work which was being ably developed by the Under-Secretary of State for Social Security, my hon. Friend the Member for lichen but is now being carried forward by my right hon. Friend the Minister for Welfare Reform.

In November 1997, I launched the benefit fraud inspectorate—which has already published its first report, on housing benefit fraud in Blackpool. Today, my right hon. Friend the Minister for Welfare Reform published a Green Paper on fraud, which he is working on tackling.

In this debate, I have explained to the House—at some length, for which I apologise—actions that amount to a major programme of welfare reform that is already up and running. After 18 years of the system going in the wrong direction, we never expected to turn it round overnight. However, substantial welfare reform is under way in every part of the social security system. It is practical action—making a real difference to people's life—which is what matters to my constituents, and to those of other hon. Members on both sides of the House. That is a record on which I and my ministerial team are proud to be judged.

8.11 pm

Mr. David Rendel (Newbury)

I do not think that any hon. Member would dispute the fact that, since the general election last May, there has been a great deal of confusion and even dissent at the Department of Social Security. We have seen open rebellion by Labour Members on the issue of lone parent benefit cuts, and a complete lack of long-promised policies to tackle the causes—as opposed to merely the symptoms—of pensioner poverty. We have seen, as recently as last week, the failure to produce a fair and workable solution to the problems of child support caused by the complex nature of human relationships. We have seen also what should have been key projects implemented in a disastrous manner.

It was therefore interesting to hear the Secretary of State concentrate in her speech almost entirely on the policies that she still intends to introduce in the future, rather than on the level of incompetence with which she and her colleagues have handled their portfolio in the past year. That latter point is the main subject of today's motion by the Conservatives.

Let us take, for example, the benefits integrity project. What a misnomer that was. The project's main outcome seems to have been to accuse unfairly many who have acted with complete integrity, only for those accusations to prove to be completely unfounded. The project that was supposed to evaluate entitlement to disability living allowance, and thereby to restore integrity, has managed simply to strip away the dignity of many of those who were investigated.

The Social Security Committee's report was uncompromisingly damning in its assessment of the project, and the project's outcome is now widely acknowledged as a failure. The Department of Social Security failed to uncover almost any fraudulent claims. Meanwhile, many of the most severely disabled people had their benefits reduced or even stopped. Some people—perhaps primarily Labour Members—seem to think that the Prime Minister is capable of walking on water. However, even he hit problems when the Government's solution to patients who are quadriplegics was to tell them to rise from their beds and work.

It is to be hoped that the newly established disability benefits forum will achieve its aim. It would be nice to think that it will go some way towards rebuilding trust between those who are disabled, their organisations and the DSS itself. However, I suspect that it will take a very long time to rebuild that trust. I should be grateful if the Secretary of State told us, in line with the report's recommendations, what action she has taken to review the rules of conduct and good practice for general elections, to minimise the risk of such errors of judgment occurring in future.

Then there are smart cards—which are not so smart, as it turns out. The £1.5 billion contract awarded, in 1996, to ICL to computerise benefit payments at post offices is currently running two years behind schedule. By March 1998, only 40,000 claimants were using the new system, compared with the 19 million people nationwide who should have been able to use it. Although it is claimed that the system will eradicate £150 million in fraud each year, the DSS has already incurred huge costs in consolidating all its benefits payments on to one central database, to make it compatible with the Post Office automation system. Although the costs may well be as much as £200 million—rather more than the Government are expecting to regain in combating fraud—the DSS is still waiting, as it will be waiting for at least another two years, for potential savings in reduced fraud to be made.

No one disputes the important and laudable objective of eliminating fraud. However, those examples illustrate how poor management at the Department has hampered efforts on that front and done little to enhance public confidence in or regard for the benefits system.

Then there was the Public Accounts Committee's report on the failure of the NIRS 2—national insurance recording system—project. The report highlights gross incompetence within the DSS. The Department awarded a contract on the basis of flimsy information and a rushed timetable. It failed to ensure that it was getting value for money, or to make contingency plans for potential delays in the project. It failed also to gain adequate compensation when the project did not start on time. The Contributions Agency itself assessed the proposals by Andersen Consulting as technically only on the margins of acceptability". It is quite clear from the PAC report that the agency's actions went beyond the margins of acceptability.

There have been failures even in implementing policy. Winter fuel payments have already been mentioned in the debate and are a case in point. For a start, the Chancellor's use of the description "pensioner households" caused much confusion at the DSS. Calculating payments using that definition required data correlation in about 15 million computer records, involving 15 qualifying benefits across nine computer systems. It was therefore no surprise to learn that, last winter, administration costs alone were 10 per cent. of overall expenditure.

On top of huge delays in sending out cheques, implementation was such a huge disaster that £1.7 million was spent on what should have been a totally unnecessary advertising campaign, telling people that it was all right to cash the cheques that landed on their doorsteps. Anyone would have thought that one could assume that it is all right to cash a cheque that lands on one's doorstep. The fact is that 40,801 invalid girocheques were sent out with an incorrect date on them; 649 pensioners received two lots of £50 payments; and in 434 cases, both the invalid and the replacement cheques were cashed. I understand that letters have now been sent out "inviting repayment".

What about the so-called crisis in welfare spending? Although for many years there certainly has been growth in welfare spending, growth is now levelling out. As a percentage of gross domestic product, social security expenditure in Britain is forecast to fall. By the Government's own figures, planned social security expenditure in 1998–99 is lower by £588 million than it was projected to be in last year's expenditure plans. The biggest problem that we face with such expenditure is not the total amount, but the failure to target benefits properly on those who need them most.

As has been mentioned, an estimated 1 million pensioners still do not claim the income support to which they are entitled and, as a result, do not qualify for other associated benefits. As my hon. Friend the Member for Northavon (Mr. Webb) pointed out, the names of half those people have been known to local authorities for years, yet the Secretary of State is only just getting around to pilot projects to address the problem.

I should like to raise another aspect of all those failures—the fact that Conservative Members seem to have gained tremendous powers of hindsight since their defeat last year. Several of the schemes in which they correctly identified significant problems have at their root the way in which they were established under the previous Administration. In the case of the benefits integrity project, NIRS 2 or smart cards, it is no good their standing up and accusing the new Government of mismanagement, without acknowledging their own part in the problem. The Conservatives would do well to remember that some of the projects were set up years before the election.

In respect of the benefits integrity project, the Social Security Committee report described as "regrettable" the failure of the former Minister of State to consult disability organisations. Further, it stated that it was "totally unacceptable" to have formally launched the BIP before the general election and before incoming Ministers had had the opportunity properly to assess the project that was then set in motion. Perhaps the most important point to recognise is that many of the mistakes associated with the BIP occurred at the inception of the project. They date from the moment at which the previous Government failed to consult disability organisations, and ploughed on with the project without regard for the people it was targeting.

If we are talking about incompetence, Conservative Members might care to look a little more closely at the so-called incompetence index that they published last month. It was drawn up as an illustration of ministerial incompetence at the Department of Social Security. It refers to cold weather payments instead of winter fuel payments, which are a very different matter. If one is complaining about incompetence, it is important not to be incompetent. People who live in glass houses should not throw stones.

As the debate has developed, it has become increasingly clear that it is the second social security debate introduced by the Conservatives in two weeks that is rapidly turning into something of an own goal.

Mr. Wicks

I did not plan to intervene, as I hope to catch your eye later, Mr. Deputy Speaker, but to be fair, past Ministers under the previous Administration dealing with the benefits integrity project made it clear that there should be consultation with organisations representing those with disabilities. That instruction was ignored by civil servants in the interregnum between the previous Administration and the present one. The Select Committee—its Chairman is here—did not attach blame to past or present Ministers.

Mr. Rendel

I am grateful to the hon. Gentleman for his intervention, but I shall continue with the important point that I was making, which is still valid. The Conservatives have to take much of the blame for what has gone wrong. The motion, which attacks the Labour Government for their incompetence, must be one of the most hypocritical that any Opposition party has ever dared to bring to the House. As such, it does not deserve and will not get any support from the Liberal Democrats.

It is true that the Government did not start with the best hand. The Secretary of State was right when she said earlier that the Government had inherited a social security system that was in a mess. Indeed, in social security, as perhaps in no other sector, most of us felt that the Government had a right to say as they came to power, "Things can only get better," but that was before we had lone parent benefit cuts, council tax benefit cuts, the benefits integrity project and the incompetent handling of the NIRS 2 project.

Unbelievable as it may seem, in the very area where there was total cross-party agreement that reform was needed, the Government succeeded in doing what most people would have thought impossible—making things worse. It is no credit to the Conservatives, most of whose plans have now been implemented by the Government with dire results, but it is certainly no credit to the Government either. If, as expected, the Secretary of State is soon removed from her post, it cannot be said that many Opposition Members, or, I suspect, Labour Members, will be sorry to see her go.

8.24 pm

Mr. Terry Rooney (Bradford, North)

When I read the motion last week, I wondered what on earth was going on. I could not believe the words on the Order Paper. Then I realised that there must have been a mind block among the Conservatives—they had forgotten about last year's general election, thought that they were still in power and were referring to their last year in office.

When we talk of confusion, contradictory policies and incompetence, the jewel in the crown must be housing benefit. In 1982, when my local authority received guidance from the Department, it was told that it would probably require six staff to administer the new benefit. Within 12 months there were 154 permanent staff and 48 part-timers—somewhat more than six. As for being contradictory, for many years Housing Ministers were deregulating rents, forcing up council rents and lowering grants to housing associations—which also drove up rents in that sector—while social security departments were picking up the bill. Short-term thinking led to long-term debts; there was no co-ordination or co-operation.

Before the Social Security Act 1988, there used to be a wonderful document called the yellow book—a simple volume detailing social security. The 1988 Act introduced the blue book, which comprised 17 volumes detailing the law relating to social security. In addition, there was the adjudication officer's guide, which now consists of 24 volumes. That is the legacy of 18 years of Conservative government.

The most outrageous provision in the 1988 Act was the brainchild of the former Prime Minister. The social fund was a wonderful new system of lending money to the poor to pay for their most basic needs. It now has administration costs of 37 per cent. of money that it handles. By any stretch of the imagination, that is incompetent and contradictory.

Moving on to the 1990s, who can recall with glee the disability living allowance, which is both incompetent and contradictory? It is contradictory to the principles of care in the community and is an example of incompetence on a grand scale in its establishment, implementation, organisation and administration. The classic example, which I shall not dwell on because it hurts, was the Child Support Agency. After three major pieces of legislation in seven years, only one in eight single parents get the full maintenance to which they are entitled.

It took until 1996 for the previous Government to recognise that legislation was required to deal with fraud. It took them 17 years to introduce legislation to tackle that major issue. In the same year, they introduced incapacity benefit and the dreaded, discredited, disjointed all work test—a terrible way to assess whether people were capable of work.

The biggest indictment of all of the previous Administration has to be their treatment of the staff who work in the Benefits Agency. When the Conservatives left office, there were some 62,000 staff in the Benefits Agency. More than 5,000 of them were temporary and 13,500 had fewer than five years' service. There was a constant drain on the staff, as people were totally disgusted with the way in which they were treated. Training budgets were slashed, and training became a business unit, which had to attract customers from different parts of the Benefits Agency. As that was in the middle of the three-year plan to reduce running costs by 25 per cent., no one bought in training, and the staff became further and further removed from the legislation that they were being expected to implement.

As a result, decision making went down the pan; it became hit and miss. The incidence of violence against staff was intolerable. Morale was at rock bottom. Decision making went out of the window—so many people appealed against wrong decisions that they now have to wait 10 months for a tribunal. For seven successive years, the National Audit Office failed to sign the Department of Social Security accounts because of confusion, contradictory policies and incompetence.

The Conservative party legacy was inertia in the Department, the dead hand of dependency on claimants and an inactive service that did nothing to help people, but merely served the bureaucracy. Between 1979 and 1997, the social security bill increased in real terms by £43 billion—the only commensurate increase was that in the numbers of people living in poverty. The service did nothing except to drive people further into desperation. For the Conservative party to table such a motion after its 18-year stewardship of the social security system is the height of hypocrisy.

8.31 pm

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

I welcome the opportunity to have another debate on this important subject. In tabling the motion the day before the House is told the outcome of the departmental spending review, the Conservative party show a brilliant sense of timing. Arguably, the most important thing that the Secretary of State does in any year is to have a battle with the Treasury over the departmental budget. We should see the results of that tomorrow, so to discuss social security tonight on an Opposition Supply day is premature, to say the least.

Many interesting things have happened in the past 12 months. The Government's welfare-to-work scheme is very important, especially in the long-term cultural shift that I hope it will achieve. It is not pejorative to say that the jury is still out on the scheme's success, but the policy is courageous—the Government have taken the debate a long way—and I wish it well.

The Government badly misjudged their policy on single parents, and they have wholly failed to correct their mistake. The Green Paper contains much that is of interest. The success measures, in particular, are an interesting tool for future policy development, although it remains to be seen whether we have got them right. Nevertheless, they represent an interesting departure, and I hope that the whole House will apply its collective mind and will to making the best of them.

I wish the Minister well in his deliberations on pensions reform. The delay in the deployment of policy is beginning to become a wee bit worrying. I am known as someone who is always in favour of hastening slowly and taking the appropriate amount of time to get things right, but there are worries that the delay is becoming a paralysis.

We must not forget the recommendations of the pension provision committee, which is admirably chaired by Tom Ross. There are two sides to pensions policy; the Minister is interested in developing stakeholder plans, but we must also remember the current pensioner population. Some of the committee's recommendations provide important lessons that we should all take on board. I see some Labour Members waving copies of the report, so I look forward to their contributions.

The introduction of tax credits also represents an interesting and potentially important departure, although the detail may thwart some of the Government's more laudable aims. In particular, there are some real misgivings about the details of the proposed disability tax credit for disabled people.

Much has happened, and much has yet to evolve from the Government's plans. I want to look forward and to concentrate in particular on the Government's plans to work with the Benefits Agency to promote the notion of modern service, which I believe to be an important part of the Government's programme. The administration of benefits must be simplified; administrative systems must be put in place that can deploy modern benefits efficiently. The system must be transparent to claimants and proof benefit eligibility gateways against the fraud about which we are all rightly concerned.

I am nervous that the comprehensive departmental spending review will say that the Department will have to pay for its administrative budget through savings from fraud. The Government are now saying that estimated losses to fraud have increased from £4 billion to £7 billion, but that figure is notional—I would dearly love to see the methodology tightened up, so that the data were more robust and policy makers could make more rational and sensible decisions.

To tell local authorities that, if they drive down fraud by 50 per cent., they can keep 10 per cent. of the money they save is to invite them to look for fraud. However, as the Select Committee's report on the disability living allowance showed, there is a fine line between inaccuracy and fraud. People may not intuitively perceive that they need to report changes in circumstance, so they may claim benefit to which they are not entitled, but whether that is fraud depends on whether they are deliberately deceiving the system. It is hard to know how central Government can produce a policy to deal with fraud, but we must be careful about saying that fraud costs £7 billion and that everyone is at it, which stigmatises people who need to claim benefit.

We must adopt a balanced approach. We should concentrate on the prevention rather than on the detection of fraud, and I welcome the fact that the Green Paper does that. However, fraud will not be detected until the administrative budget can pay for data matching, home visits and all the other mundane, run-of-the-mill matters that any ordinary private business would have to attend to if it were to have any chance of solving such problems.

I fear that tomorrow the Treasury will say that the programme of change and the 25 per cent. reduction in administrative budgets over three years—which is now beginning to bite into the bone, not the fat, of the Benefits Agency area offices—will have to continue.

It is absolutely essential that, in applying for benefits, people can act as they do when they buy an insurance policy. They phone up and speak to operators who have a screen in front of them. The form is filled in and sent out to be signed; when it returns with the accompanying documents, it is processed. That is the way in which modern commerce deals with the equivalent of a benefit application. With its current budget, the Benefits Agency is light years away from that level of service.

It is senseless for jobseeker's allowance to be spread across the Department for Education and Employment and the Benefits Agency. It is madness for the Department to act as a gateway and the agency as a processing arm. That is yet another example of how the previous Government could never make up their mind. I do not care which way it goes, but the Department or the agency should be assigned the whole process.

In a Benefits Agency office the other day, I saw an officer holding a sheet labelled "Workaround 115". A workaround is what the staff have to do to make the computer system get round a procedure that it was not designed to do in the first place. Cheat sheets show staff how to get round the inadequacy of the software. They spend more time on finding workarounds than on almost any other task.

My hon. Friend the Member for Newbury (Mr. Rendel) mentioned the plastic benefit card. The delays are worrying, in terms of both efficiency and combating fraud. It is a classic case of a project that should be given high priority.

Mr. Duncan Smith

Today, I received a reply to a specific parliamentary question about what action was taking place: the Minister said that there was none.

Mr. Kirkwood

I hope that the Government will consider the issue, which I do not think is in any way party political. I remember the former Secretary of State, the right hon. Member for Hitchin and Harpenden (Mr. Lilley), waving a plastic benefit card in a splendid photo-opportunity, but he would not look quite so splendid if he did it again now, and neither would any current Minister. I hope that something will be done soon.

The access to corporate data schemes—the so-called Accord system—are also in danger of going wrong. I want to try to encourage Ministers to look differently at the project. As I understand it, it is no more or less than a procurement exercise. If we cannot get the three private sector consortiums to come up with a complete redesign that goes right through from the local office to the over-arching system, buying a new set of computers and a software application to be used locally will not realise the potential of the experiments.

I am in favour of benchmarking, and a lot can be learned from the private sector, but we must be careful about the proprieties of the contribution of Benefits Agency staff. I hope that I am wrong and that the Accord process is not simply a way of enhancing service delivery at area level. I hope that it will be an intrinsic part of the future development and simplification of the whole benefits programme.

The Green Paper on fraud was published today. My local authority has been struggling in an attempt to work out how it can take part in the so-called benefits verification framework, which would allow it to bear down on council tax and housing benefit fraud. I am told that the estimated cost for the council to introduce the framework is about £110,000, while the Department's subsidy is only £16,000. The council estimates the recurring cost at £250,000 per annum, for which it will receive a maximum of £40,000 from the Department, if it does everything 100 per cent. the way that the Department wants.

I do not know how accurate those figures are, but they are frightening. The scheme is voluntary at the moment, and there is no way in which we can persuade local authorities to get involved if that is the difference between what they are offered and what they estimate that the cost will be. Everyone can see the need for the scheme, although it may be that the Department has gold-plated it. The practice is everything: it is all very well having fancy Green Papers and great plans—we all support them—if cash-strapped local authorities cannot implement them.

There is a lot of work to do, and with a wee bit of good faith we can make some improvements. The Government need to be realistic about how we need to spend to save. The Treasury acknowledges that. We need to put more capital expenditure into the benefits system so that we can simplify it for the long-term benefit of everyone, including the claimants.

8.46 pm

Mr. Malcolm Wicks (Croydon, North)

It is a privilege to follow the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood)—my hon. Friend—whose chairmanship of the Social Security Select Committee we all appreciate, given the challenging agenda that we have.

I always welcome a debate on social security, although my first instinct was to regret the fact that the official Opposition had not tabled a motion that looked to the future, wanting instead to dwell, in a very partisan way, on the immediate past; but, on reflection, it is useful to have an opportunity to scrutinise carefully the mismanagement of the Department of Social Security over the past 20 years, because in considering future challenges we need to understand what has gone wrong in the past.

There is a sense in which the time span is even longer, although there is no time to dwell on all the history. It is half a century since the foundation stones of a modern welfare state and a modern social security system were laid. The first key foundation stone was a relationship between work and welfare, which is a modern theme and challenge, and in those days the assumption—of Keynes, Beveridge and many others—was that we could afford a decent social security system only if the foundation stone was full employment. Many politicians of all parties accepted that. The roll call includes not only Bevan, Attlee, Beveridge and Keynes, but Conservative leaders such as Harold Macmillan, who, leading Governments in the earlier post-war period, recognised that full employment was important.

The second foundation stone was an ethical one, involving national insurance. It was said that all citizens had a duty and a responsibility to pay contributions into a community chest, and had the right to draw out of that chest in times of need, both when they were old and when they became sick or unemployed.

At a time when we are trying to recreate a sense of honesty and fairness in our systems, it is useful to look back to that age. There was a safety net—national assistance, which is now called income support—based on a means test, but it was meant to be for the few, not the many, to coin a phrase. It has turned out very differently.

I welcome the Opposition's debate. The abandonment of the goal of full employment during the Thatcher era was crucial. Suddenly, the state did not agree with Macmillan and Attlee and other, wiser people. It was no longer the job of the state to maintain full employment. It was thought that the market would try to create full employment, but it was not the Government's job to do so.

The Thatcher Governments sought to set people free from the state, but, with growing poverty and inequality, the paradox was that many more people found themselves totally dependent on the state for their income during the Thatcher and Major years than ever did in the wicked days of social intervention. The number of those dependent on income support doubled during those years, from one in 12 of the population to one in six. The irony is that Thatcherism created the very dependency state from which it had promised to set people free. Perhaps some apology should be made from the Conservative Front Bench.

One of the most appalling statistics I have ever read came in an answer to a parliamentary question late in the previous Parliament. I asked how many babies in Britain were born to parents on income support, or on family credit because their wages were low. The answer was one in three. We all aspire to do well for our children, but the poorest in Britain are the new-born. What kind of society is that?

We need a debate on the mismanagement of social security over recent years. The social security budget is distorted if we spend less on insurance benefits and more on means testing. Some 35 per cent. of social security spending is devoted to means-tested benefits. In 1979–80, the figure was quite high at 16 per cent., but it doubled during the Conservative years, and with that came poverty traps and disincentives that all of us should deplore. Fraud also grew because of the growth of means testing.

Sadly, former Governments lowered their guard against fraud by cutting the number of home visits, which was a cardinal error. Criminals—those who make multiple claims, and landlords who defraud the system of thousands of pounds a week—saw a new market for their operation. It is controversial to say so, but the climate of division and greed that existed during the Thatcher and Major era, when there was, apparently, no such thing as society, led to a culture of dishonesty among some people. If it was okay to defraud the tax system, some thought, it was also okay to defraud the social security system

The new Green Paper on benefit fraud is crucial to undoing much bad work. Its emphasis on deterrence, detection and prevention is important. In creating new benefits such as the working families tax credit, which the Select Committee is currently considering, we must try to design fraud out. That is easier said than done, but fraud must be one of the criteria in policy design.

Mr. Webb

The hon. Gentleman mentioned the growth of means testing. Is it not simplistic to say that that means testing is always bad? The working families tax credit is family credit by any other name, although it will be accounted for differently. It is still income-dependent. As well as increasing that category of means testing, the Government will help pensioners to claim more income support, which will mean more spending on means testing. Both those policies are presumably welcome to the hon. Gentleman.

Mr. Wicks

The hon. Gentleman knows that I am anti-means tests by instinct. I am a universalist, and if that is old-fashioned, tough. The working families tax credit is an ingenious new method of targeting without the crudities of a means test. Income taxation is a means test, but the Chancellor is developing a new way, through what some of us know as fiscal welfare, to target the poor, not just benefit the rich, through tax reliefs and allowances.

On issues regarding old age, I welcome attempts to use data matching and local authority records, as the hon. Member for Northavon (Mr. Webb) has suggested, to help people—often in their 70s, 80s or 90s—who should be claiming income support. Like the hon. Gentleman, I have an interest in alternative methods of helping the elderly, and I wonder whether there should be a pension premium—perhaps on a cohort basis so that it could be phased out—for people over 80, who tend to be the poorest among our elders.

Mr. Letwin

The hon. Gentleman has a distinct and welcome penchant for honesty. Can he honestly persuade himself that the working families tax credit does not involve a means test?

Mr. Wicks

The Select Committee is considering how the credit will work, and I see it as at least the beginning of an attempt to use the tax system to target people on low incomes who have caring responsibilities, such as parents, without the crudities of a means test.

Mr. Letwin

It is not the tax system. At the negative end of the tax system, there is a withdrawal rate, exactly as there is for means testing.

Mr. Wicks

Questions remain about the withdrawal rate, but withdrawal is being done far more sensitively than with some of the crude means tests of the past. We are in a new phase in the history of social security. Can we use the tax system for fiscal welfare that targets the poorest? There is a way to target without having the crudities of the old-style means test. The Select Committee is examining working families tax credit as honestly as it can. I am glad to be called honest by the hon. Member for West Dorset (Mr. Letwin); he will receive no solicitor's letter from me for saying that. However, we must keep an open mind.

In further honest pursuit of the Conservative record on social policy and mismanagement of social security, let us consider pensions mis-selling, which is one of the great scandals of the post-war period. Apologies are often in fashion now; tonight might provide an opportunity for the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) to clear his party's conscience about pensions. We all know what happened. The previous Government suddenly discovered personal pensions and sought to persuade all sorts of people to buy them. That persuasion was readily taken up by pension companies that mis-sold personal pensions to people who were seriously concerned about security in their old age.

The arithmetic in this area is breathtaking. I consulted the Library for a briefing. The Financial Services Authority is trying to sort out the scandal. It reckons that 640,000 people will be covered under phase 1 of its work. That is likely to cost the pensions industry £4.5 billion, which equates to an average of about £7,000 per person. The FSA is now on to phase 2, under which 1.8 million people will be covered. It reckons that those 1.8 million people comprise 985,000 transfers—people who transferred their company pension entitlements into personal pensions, which is nearly always a mistake—682,000 non-joiners who were eligible to join a company scheme but who were advised to take out a personal pension instead; and 154,000 opt-outs who were persuaded to leave occupational pension schemes in order to start personal pension schemes.

It is now estimated that the pensions mis-selling scandal will cost the industry £11 billion. I have met many of the people—such as nurses, police officers and teachers—who are behind that disturbing arithmetic. They had decent occupation pension schemes but were persuaded by salesmen, acting as a kind of army for Tory Ministers, to move out of occupational pension schemes and into personal pension schemes. It seemed attractive at the time, but it turned out to be not fairer but fouler.

We all know that child maintenance is a difficult subject. However, from the start, many people—including myself—warned the then Tory Government that they were making mistakes regarding child support, not in terms of the principle of parental responsibility, which we all support, but in terms of the mechanisms. A particular mistake was that there was nothing for the seven out of 10 lone mothers on income support or for their children. The decision to knock £1 off income support for every £1 of child maintenance collected led some to dub it an Exchequer support agency rather than a child-centred policy. It is about time that children got a look in, and I am pleased that they will as a result of the new Green Paper. This is a case study in social security mismanagement. The Conservatives had stewardship of the system for many years, and child maintenance was an incompetent shambles. Some honesty—I use that word again—is in order here.

One of the great features of that period was the way in which it affected the expenditure of public moneys. We know that the Government have great priorities in terms of education, health and social care. We are devoting one third of total public spending to social security. At the beginning of the Tory reign, that figure was one fifth. There are major challenges ahead, and I know that the rhetoric is easier than the practice. However, I think that the Tory years are associated with galloping poverty. The challenge for the new Government⁁I see the policies being put in place—is to promote opportunity.

The Conservative years are associated historically with mass unemployment. The challenge for Labour is to promote training and work: what we call the new deal. The Tories introduced and defended, year after year, the catastrophic Child Support Agency. The challenge for my colleagues on the Front Bench is to introduce a fair and efficient child-centred child maintenance service. I think that the policies in the Green Paper are correct. I only add modestly that a change to the agency's name would herald a new era.

Mr. Loughton

The people's Child Support Agency.

Mr. Wicks

I thank the hon. Gentleman for that sensible contribution.

The Tory years are associated with increasing fraud in our social security system. I take the point raised by the hon. Member for Roxburgh and Berwickshire that the difficult issue is how to say that fraud is wrong but that it is right and proper for people to collect benefits to which they have a claim. That is a difficult operation, but we must do it. It is all about bringing honesty and integrity into the system.

Over the past 18 years, until May last year, what we called social security was more an indicator of social insecurity in terms of the money spent and the distortions regarding means testing, disincentives and dishonesty. My colleagues on the Front Bench face a major challenge in creating a system that we could truly describe as social security.

9.3 pm

Mr. Howard Flight (Arundel and South Downs)

I cannot believe that the Secretary of State thinks that what has happened in the past year is even close to what the citizens of this country expected of the Labour Government in terms of social security reform. People expected vision from the Minister for Welfare Reform. They expected a radical approach that they thought would come more easily from a Government of the left than from a Government of the right. People expected a reduction in the cost of social welfare, which they expected to be more focused on those in need, and in the unnecessary cost of recirculating citizens' taxes back to them. They expected an updating of, and clear decision on, national insurance.

The hon. Member for Croydon, North (Mr. Wicks) said that expenditure went up from a fifth to a third of all Government expenditure. That was essentially because of changes to the global economy. Continental Europe has had even worse rises in unemployment and welfare expenditure. A Government who feel that membership of the euro is likely to be helpful in achieving Keynesian full employment have got that one very wrong.

It is not only a matter of the painful level of unemployment of the early 1990s, and, indeed, the early 1980s, when economies were restructuring. We are at a relative cyclical low. As in America, unemployment is below 5 per cent., but we go on pumping in more than £100 billion per annum. The mounting expenditure is not predominantly the result of high unemployment.

I cite also the perspective of the majority of the country, the majority of middle-of-the-road, average, husband-and-wife families bringing up two children. They expected reforms that did not leave them paying more and more for other people and subsidising the bringing up of other people's children. They expected a fairer deal for themselves. Many of them voted against the previous Government. They felt that they picked up the bill for many things that had gone wrong in our society over the past 15 years.

I was appalled by what the Secretary of State had to say. She almost seemed to be saying—I am not quite sure what she was saying—that the key reform was to help lone mothers and to modernise the welfare system to take account of the fact that women worked and that an increasing number of women brought up children by themselves. I do not believe that that is what the country expects of the Government.

There are two aspects to the subject of single parent families. First, there is the breakdown of marriage. The community fully supports and sympathises with wives and mothers abandoned by their husbands. The other aspect is the voluntary choice to have children alone. I do not believe that women who make that choice have the support of society. As far as possible, society would wish children to continue to be brought up by a two-partner unit, whether formally married or not.

The reality is that £7 billion of expenditure has been added, and another 400,000 people have been brought into dependency. The redistribution agenda of the Chancellor of the Exchequer, and not the Minister for Welfare Reform, has guided what has happened so far. The radical thinking of the Minister for Welfare Reform has been somewhat stillborn. I would be sad if that thinking had no chance to bear fruit before the next general election.

I want to focus on some aspects of the working families tax credit, which unfortunately encourages some of the problems mentioned by the hon. Member for Croydon, North. It is axiomatic that a society that can afford it can make otherwise unviable family units viable by the transfer of resources. Society can do that in two ways: either by providing mothers with an income to stay at home and bring up their children, or by paying for child care and so allowing mothers to work. Those are forms of subsidy which are of equal inherent value and there is no moral argument for choosing one over the other, but the Labour reforms clearly favour the latter course—to pay for child care and allow mothers to work.

It is both unwise and unfair not to take the view that a mother who stays at home to bring up her children is doing just as worthwhile and valuable a job in society. I believe that mothers will respond by working, even if the work they do is not implicitly of greater value to society than the work of looking after their children, which they will hire other people to do.

What is wrong are the system's disincentives to sustain the relationship between the parents of children. The measures have increased the income to those without a partner, and the rate of withdrawal of subsidy has been lowered. The net effect is that, if a woman's husband or partner is earning the average wage of £330 per week, unless he spends less than about £100 a week on his own personal expenditure, he is of no value to that family—the father on the average wage is of no value to the mother and their children. That comes about because the 55 per cent. withdrawal from husbands' after-tax income is subtracted from family credit. If the husband leaves, the wife receives the couple's married allowance. There is massive incentive to cheat, because, if two people are not living together as husband and wife for tax and welfare purposes, they are better off by £107 per week—38 per cent. better off.

The bottom line about what is wrong is that the working families tax credit is based on family income, whereas income tax is based on individual income, but the two systems have been intermixed. If a couple can present themselves as one absent parent and one lone parent with an income of £250 per week, the state will make them better off than a couple who are together with an income of £450 per week. Can that be right? I thought that new Labour and the Prime Minister were committed to the family unit and to sustaining it, but the biggest welfare reform of the past year appears to introduce both a major disincentive for having a two-parent family unit and a major incentive to commit fraud.

Yes, mothers will be better off and they will be encouraged to work, but the marginal value of a husband has been substantially reduced. That is the price of three features of the system: first, that the benefits are paid to families, rather than to individuals; secondly, that families receive a higher basic income; and, thirdly, that the rates of withdrawal will be lowered. Once those aspects are factored in, the net effect is as I have described. There is cross-party agreement on the need to get rid of poverty traps, yet, post-family credit, the number of households now facing marginal tax rates of 50 per cent. rises from 800,000 to 1.3 million; and, according to the Institute for Fiscal Studies, the figure has the potential to rise to 2 million. The Government have enormously increased such disincentives.

I believe that people expected the Government to act urgently on their stakeholder pension proposals. There are about 7 million or 8 million people without pension arrangements, but the Government have boxed themselves in. They would have been wiser to support the previous Government's proposals. What has happened? The Green Paper has been deferred again and again.

I suggest that the problem is that the Labour party is having difficulty in biting the bullet that stakeholder pensions will have to be compulsory if they are to work. If they are not compulsory, it is clear that people will not willingly sacrifice some 12 per cent. of today's income when they know that the state will have to look after them if they do not do so. The Government have had advice to that effect from almost all the professional bodies that they have consulted, but they are reluctant to introduce compulsory arrangements, so they are dithering.

When I talked to people who voted for the Labour party at the previous election, I found that many—in particular, surprisingly, young people—are most disillusioned by the Government's failure to get on with pension reforms and their stakeholder pension proposals.

It is a great disappointment to the country and to hon. Members in all parts of the House that a Government with such a large majority and mandate have failed to get on with the welfare reforms that they painted in a vision for the nation. They have been sidetracked into the Chancellor's specific redistribution programme, and I fear that they have now lost the initiative until the next election.

9.15 pm

Mr. Phil Hope (Corby)

We are debating an Opposition motion which claims that the Government have wasted their first year in office and failed to reform the social security system. I find that an intriguing notion when we compare our inheritance from the previous 18 years of Conservative stewardship of the welfare state with the action that has been taken by the new Government in their first 12 months.

We have inherited a mess from the Tory Government. Millions of children are growing up in poverty. Millions of pensioners are living below the poverty line. There has been rising inequality between the richest and poorest pensioners and, if nothing changes, that will continue. Thousands of disabled people were written off to live on invalidity benefit with no hope for the future. Millions of lone parents were made scapegoats by the Conservatives simply because they are lone parents and left with no hope for the future. The establishment of the Child Support Agency, as I am sure all hon. Members know from their surgery experience, has created massive despair and distress among families throughout the country. There was also the scandal of pensions mis-selling, which the Conservative party encouraged and failed to stop when it realised the magnitude of the disaster that it had caused.

The Conservative party's 18-year stewardship was not only incompetent but vindictive, divisive and self-destructive. Indeed, it would have gone further. A pamphlet, entitled "Who Benefits?", written by the shadow Secretary of State for Social Security, the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith), shows that, if the Conservatives had remained in government, they would have called for the effective abolition of the welfare state. The hon. Gentleman stated: We envisage a future system where welfare is paid out of private insurance contributions for the affluent majority, alongside a state benefit system which protects and caters for the needs of those for whom private insurance is not an option. In effect, there would be one rule for the rich and another for the poor.

Mr. Loughton

Does the hon. Gentleman agree with the Prime Minister's comments in the foreword to the Green Paper that was published in March, which state that the Government intend the welfare state to remain a low-grade safety net for the destitute"?

Mr. Hope

The hon. Gentleman has failed to understand, or even to read, the Green Paper on welfare reform, which is one of the most radical documents to emerge from any Government this century. It takes forward a programme of welfare reform that will enhance people's lives and help not just those who have to rely on the welfare state for their income but the whole community. It is essential that a welfare state not only meets the needs of those in poverty but has the full support of the whole community—[Interruption.]

Mr. Deputy Speaker (Mr. Michael J. Martin)

Order. The hon. Member for East Worthing and Shoreham (Mr. Loughton) must behave himself.

Mr. Hope

Thank you, Mr. Deputy Speaker.

Having inherited that appalling crisis, the Government have had to do two things simultaneously: first, they have had to act immediately to tackle the poverty that they inherited; and, secondly, they have had to lay down the foundation for a new direction for the welfare state in preparation for the next millennium.

Mr. Rendel

I am interested in the idea that the Government acted immediately to overcome the poverty that they inherited. Is that why they cut lone parent benefit?

Mr. Hope

It might have been helpful if the hon. Gentleman had waited until I had finished speaking about the action that the Government have taken in their first 12 months in office to tackle the crisis that they inherited from the Conservatives. For example, in the Budget we increased child benefit by £2.50 a head per week for families whose oldest child is under the age of 11. That is the highest increase since child benefit was introduced.

We have introduced the working families tax credit and the child care tax credit, which, combined, mean that the poorest 20 per cent. of families will be on average £500 a year better off. For young people whose lives were decimated by the Conservatives and who were thrown on the scrap heap when they left school, we have introduced the new deal, which provides them with jobs, training, opportunities and hope for the future.

For parents, we have introduced the national child care strategy, which will provide affordable and accessible child care. It will enable parents—whether they are lone parents or two-parent families—to work and earn income to lift their families out of poverty. We have provided a new deal specifically targeted at lone parents, which many hon. Members have already said is a successful programme of support to help lone parents to work. The White Paper on "Fairness at Work" spells out a range of family-friendly policies to enable parents to work.

Another group that was hammered by the Conservatives in their 18 years of stewardship of the welfare state is the disabled. We have introduced the new deal for disabled people, to help those who can work to get off the dole and into work. We have introduced the disabled person's tax credit to give disabled people a fair wage, so that they have a decent income on which to live. We have made a commitment in the Green Paper on welfare reform to provide universal disability living allowance and attendance allowance. Moreover, a disability rights commission will be set up to establish firm rights in terms of security of employment and services for disabled people.

We have introduced winter fuel payments of £20 for all pensioner households and £50 for all pensioner households on income support. That is universal support, targeted to meet the needs of the poorest. In addition, we have cut VAT on fuel, which was introduced by the Conservatives when they were in power, and introduced a zero rating on the gas levy.

Those are tangible benefits for disabled people, pensioners, children, parents and young people, all of whom were left in despair by the previous Government. Naturally, we must plan for the long term. Action is needed not just to tackle poverty here and now, but to prevent poverty from returning in the future.

I have already referred to the welfare reforms outlined in the Green Paper published earlier this year, which contains clear principles and a new direction to eliminate poverty in the future while tackling poverty today. The Green Paper on the Child Support Agency also introduces radical reforms. One of its outcomes will be to raise the incomes of parents on benefit by £l0 a week, as they will get the first £10 of maintenance that is paid. That is extra money for the caring parents in a relationship.

There is to be a new Bill on pension sharing to help divorced women and to ensure that they are not disadvantaged when they reach pensionable age. As other hon. Members have said, we also have new proposals to tackle benefit fraud.

Much more important, the combination of all those measures—active communities, programmes, welfare state support and the new deal—will mean that people will be in work, self-sufficient, with incomes that make work pay. There will be voluntary action, with active citizenship and new schemes such as the millennium volunteers, which my right hon. Friend the Secretary of State for Education and Employment is introducing, and which will engage young people—and older people, in years to come—in actively supporting and regenerating their community. Reform of the welfare state is not only about income, but about people's lives—people having the confidence, ability and independence to live positive lives.

Much remains to be done. I look forward to the Green Paper on pension reform—which will introduce the new, value-for-money stakeholder pension and the new citizenship pension, which will cut the routes to pensioner poverty for women—because we need a pensions strategy for the future that can cope with a slowly aging society without placing a burden of unsustainable costs on our children.

I believe that, far from its having been a wasted year, as the Conservative motion suggests, the Government have begun to tackle the poverty that we inherited from the previous Government. They have also laid the foundations for wide-ranging reform to regenerate the lives of the families in most need and build a new welfare state, which has the support of the whole community.

9.25 pm

Mr. Oliver Letwin (West Dorset)

The debate has been most interesting, because of what it has revealed about the gap between analysis and delivery. The hon. Member for Croydon, North (Mr. Wicks) gave an eloquent disquisition on what he regarded as the major disadvantages of the welfare system that the Government inherited. Although many of us do not go the whole way with him in his attribution of cause, many Opposition Members, as well as Labour Members, would agree with him that the welfare state, as the Government encountered it on coming to office, was deficient.

The Minister for Welfare Reform wrote a series of pamphlets and books describing what he saw as the root cause of that deficiency. Many Conservative Members read those words, and I believe that we even understood them. More—we were persuaded by much of what is in them that, at root, there is a severe disadvantage in a welfare system that is a compound of means tests, a compound of disincentives and a compound of misincentives.

We understood that, when the present Government came to power, with the present Opposition in place, there was an historic opportunity—an opportunity to follow on from that analysis by delivering a new type of welfare state, a welfare state that would not be a compound of such disincentives and misincentives because it would not have a plethora of means tests attached. It would have learnt the lessons of the past.

What has been interesting about the debate is the fact that no Labour Member has even attempted—I know that the Minister wants to speak urgently; perhaps he will make such an attempt, but I doubt it—to argue that the past year shows even the beginnings of such a radical overhaul. On the contrary, the Secretary of State told us at considerable length about marginal acts—acts which, on her reckoning, will affect 1 per cent. of lone parents, or which will slightly ameliorate the circumstances of old-age pensioners by helping them to pay their heating bills. They may or may not be important measures. They may or may not work. In any case, they cannot conceivably be represented, and they were not represented by the Secretary of State or by any other Labour Member, as deep or radical measures to change the structure of the welfare state.

That is sad, not only because the Government might have made such radical changes, but because the official Opposition would have worked with the Government to do that. It was perhaps the first time in British history since the war when a Government and an Opposition largely shared an analysis, and might have worked together to convert that analysis into action. That opportunity has been missed.

It is worse than that, because, as my hon. Friend the Member for Arundel and South Downs (Mr. Flight) amply illustrated, in many respects—from the best of intentions, as has so often been the case—the Government have actually worsened the misincentives and disincentives. The apparatus of the working families tax credit and everything that goes with it deepen the extent of the disincentives to work and the misincentives vis-a-vis the family. My hon. Friend could have gone on to provide other examples. If I had the time, I would do so myself.

The tragedy is that the actions of the DSS over the past year have been governed by something outwith the Department that has nothing to do with the vision of the Minister for Welfare Reform. What is that outside force? It is, of course, the Treasury. What has happened to the Government is sad, but not unusual. The Department of Social Security has been bowled over and pushed to the ground by a Chancellor who has his own agenda, which has nothing to do with welfare reform in the radical sense.

I fear, therefore, that there will be no change and no eloquent defence from the Under-Secretary, because there cannot be change in the face of the force of the Chancellor, and there cannot be eloquent defence when the Under-Secretary knows that he would never be allowed to do anything that the radical programme of his right hon. Friend might have suggested that he should do. That is one of the great sadnesses which, for many Opposition Members, will abide throughout the lifetime of this Government.

9.30 pm

Mr. Quentin Davies (Grantham and Stamford)

This debate, although much too short, has proved to be revealing. We have had some interesting and memorable contributions

The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), who is generally regarded as an extremely able Chairman of his Select Committee, made a number of good points, several of which I agree with. He made some telling criticisms of the Government and one or two criticisms of the Conservative party. I do not accept, however, that we should not have chosen today for the debate. He said that we should have waited for the Chancellor's statement tomorrow.

The official Opposition understand the Labour Government a good deal better than the Liberal party evidently does. The Labour Government always bypass Parliament; they never make policy statements to Parliament first. If one wants to know what policy statements will be made, one must read the press over the previous few days. If one wants to hold a debate while the matter is still active in the public mind, one must hold it the day before, not the day after, the relevant statement. If the hon. Gentleman wanted to know what the Chancellor will say tomorrow, all he had to do was read the Sunday newspapers yesterday. That is a regrettable state of affairs, and I agree that it is part of the perversion of the government of this country that has been brought about by the new Labour Government. I deeply regret it, but we have unfortunately to respond to such realities, unpleasant though they are.

The hon. Member for Croydon, North (Mr. Wicks), as he always does on such occasions, made a thoughtful speech, with feeling and considerable experience of these matters. I agree with much of what he said. My instincts, like his, are against means-testing. There is an interesting divide in the House. The hon. Gentleman, and my hon. Friends and I, are against means testing, as is the Minister for Welfare Reform.

In his book "Making Welfare Work", the Minister for Welfare Reform states: A political party must first recognise how dire the problem is, acknowledge its scale, and set out a strategy which aims to replace means-tested dependency. On one side, we have an interesting coalition between the right hon. Gentleman, the hon. Member for Croydon, North and Opposition Members, and on the other side the Secretary of State and the Chancellor.

My hon. Friend the Member for Arundel and South Downs (Mr. Flight) made an excellent speech, setting out in graphic detail the perverse effect of the welfare system on the family, and its equally perverse effect in encouraging cheating.

The hon. Member for Corby (Mr. Hope), who seems to have left the Chamber, made a speech which, I imagine, was delivered to him by Millbank tower. When he spoke of 18 years of Conservative government decimating people's lives, he was so over the top as to be utterly ludicrous. No more need be said about him.

My hon. Friend the Member for West Dorset (Mr. Letwin) made a characteristically forensic speech and, in a few minutes, succeeded in showing up some of the fatal contradictions in the policy positions taken up by the new Labour Government—and they will prove fatal.

Much the most revealing speech was made by the Secretary of State. I fear that it was clearly a valedictory speech, and it would be inhuman not to sympathise with someone who is about to be fired, for whatever reason. It is only right to allow anyone who is about to be fired a certain latitude in what she says by way of self-justification.

The right hon. Lady said, "No one will ever go back on the system that I have created." That was a pretentiousness too far. She obviously has a vision of the history of welfare in this country which involves Lloyd George, Beveridge, Chamberlain, Macmillan—I am glad that the hon. Member for Croydon, North mentioned Macmillan in that context—and then Harman. Perhaps she has a vision of the welfare history of the human race which involves Bismarck and Beveridge—and Harman. No doubt she regards her achievements of the past 14 months as eclipsing everything that all those statesman of the past ever dreamed of achieving.

The Secretary of State's imagination matches the extent of the disappointment felt by her colleagues about what she has achieved over the past 14 months, because she was given the important task of delivering three major new Labour promises. The first was comprehensive reform of the welfare system, the second was to decrease the share of national income spent on the bills of…social failure"— a reduction of the proportion of national income represented by social security spending—and the third was to deliver a range of enormously bold, extravagant and, I fear, entirely cynical promises to the older members of our society, and to old-age pensioners in particular.

What has the Secretary of State delivered? She has delivered a memorable administrative failure. We have heard this evening about cheques going out and bouncing, and cheques going out two or three times and being cashed, costing the public purse a lot of money. That may seem like small beer, but it shows the general spirit in the Department which she is supposedly administering.

We heard most from the Secretary of State about the one project that she appears to have brought forward—the new deal for lone parents, which so enthused lone parents that three quarters of them did not even bother to respond to letters inviting them to interview. We have agreed that the success rate is about 1 per cent. or, at most, 1.5 per cent. The right hon. Lady was extremely revealing in refusing to tell me, following an intervention, what are her targets; if she has none, she clearly has no control and no way of measuring the success or otherwise of the project. She has reinforced the impression gained by many of us over the past few months that this is nothing more than a gimmick, and a rather cruel gimmick, at the expense of single parents.

On comprehensive welfare reform, we have had a joke—a vacuous document called, again pretentiously, "New Ambitions For Our Country: A New Contract For Welfare". There is no new contract in the content, which is full of platitudes and questions, but has no substance at all. We shall never know whether the Minister for Welfare Reform had a real project in the paper that he put up to the Prime Minister last September, which was emasculated. Such a project is certainly not what has been provided to the British public.

What has happened in respect of reduced social security spending? The Labour Government are more than a year into their term of office, and they have gone in the opposite direction. The working families tax credit could cost up to £4 billion, and although getting people to claim benefits to which they are entitled, such as income support for pensioners, may be a desirable objective, it has a positive cost—about £2 billion, on the Government's own figures. All those measures increase social security spending, whereas the Government were elected to reduce it.

Where are we after 14 months? The Government are going backwards: they are not fulfilling their programme. They have an even longer distance to travel in their remaining three or, if they are lucky, nearly four years in government. The scepticism in the country about whether they can fulfil those objectives as well as the other pledges in their manifesto is steadily increasing.

The right hon. Lady was appointed to fulfil a third set of objectives: the promises to older people. Throughout the last Parliament, the Labour party held out the prospect that, if they were returned to office, they would index the state retirement pension to earnings and not to prices.

Ms Harman

No, we did not.

Mr. Davies

The right hon. Lady shakes her head because it was not in the manifesto, but she knows that that is what hundreds of her colleagues were saying for years before the last election and during the election campaign. That has been a sad disappointment to millions of people who voted for the Labour party at the last election, and who had subtly been led to believe by all the spin doctoring that a Labour Government would index pensions to earnings, whereas they never had the faintest intention of doing so.

The Labour party said in its manifesto: We will support and strengthen the framework for occupational pensions." It has done exactly the reverse of its explicit manifesto commitment.

Shona McIsaac (Cleethorpes)

Will the hon. Gentleman give way?

Mr. Davies

I cannot give way to the hon. Lady now. If she had tried to intervene a little earlier, I would have been happy to give way to her.

Shona McIsaac

On a point of order, Madam Speaker. I understand that the hon. Member for Grantham and Stamford (Mr. Davies) receives remuneration from National Westminster Securities. National Westminster sells pensions. I believe that he should not have put his name to the motion, nor should take part in the debate if he intends to mention pensions. At the very least, he should declare that interest to the House.

Madam Speaker

Those are matters for the Commissioner and not for debate. I presume that the hon. Member for Grantham and Stamford (Mr. Davies) has entered that information in the Register of Members' Interests.

Mr. Davies

Of course that interest is registered. Occupational pensions are not usually referred to in such debates. Many people have them, but I do not have one with National Westminster. If the Labour party was so worried about my remarks that it put someone up to make such a footling, time-wasting point, I must have been scoring a few runs.

Whereas the Labour Government were elected on an explicit programme of strengthening the framework for occupational pensions, they have done the exact reverse. They have taxed occupational pensions in an unprecedented fashion. They are taking £5 billion a year out of personal and occupational pensions through the abolition of the dividend tax credit. They discriminated against occupational pensions as against personal pensions by not increasing the SERPS rebate to occupational pensions. It is not surprising that, as a result of a year of the Labour Government, the occupational pensions movement is declining. That is a great tragedy for our future, and one more broken promise.

The Labour manifesto said that we need higher levels of saving to provide decent retirement incomes. Once again, the Government have broken their promise. They need higher levels of saving, but they have taxed savings. That is hardly sensible.

The House hears almost every day of a new, broken Labour promise. We have heard of at least two today. Much of the talk today, of course, has been about a broken promise involving tuition fees but, over and over again, promises to older and more vulnerable people have been broken.

Let me close with one final new Labour broken promise. On 18 August 1995, the then shadow employment Minister wrote to a number of organisations representing the interests of retired people, saying: Tony Blair has asked me to respond to your letter…regarding age discrimination in employment, in my capacity as Shadow Employment Minister…the next Labour Government will introduce legislation to make age discrimination illegal, just as discrimination on the grounds of race and sex are today. We have not heard a word about that commitment, 14 months into the new Labour Government.

I ask the Under-Secretary, the hon. Member for Southampton, Itchen (Mr. Denham)—who will wind up the debate, and who has responsibility for pensioners, or purports to—to tell the House now whether that commitment is still valid, or whether it is one of the many promises that the Labour Government have broken. Those promises have been broken cynically, but not with impunity, because the public are not so easily fooled. If the record of the past 14 months continues, there is no doubt that there will be a record of broken promises at the time of the next election such as no voter has so far seen.

9.45 pm

The Parliamentary Under-Secretary of State for Social Security (Mr. John Denham)

After that speech, I begin to fear that rumours of a black market in Viagra may well be true. I hope that the hon. Member for Grantham and Stamford (Mr. Davies) will calm down before he goes home.

This has been a surprisingly good debate, in which a number of substantial contributions have been made. As we would expect, my hon. Friend the Member for Croydon, North (Mr. Wicks) provided a good historical overview, and was able to set the record of the last Administration in a wider context. My hon. Friend the Member for Bradford, North (Mr. Rooney) spoke of the importance of—among other issues—the staff employed by the Benefits Agency to the delivery of the welfare system that we want. My hon. Friend the Member for Corby (Mr. Hope) set out the history of the last Administration very clearly, and the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), the Chairman of the Social Security Select Committee, made a series of valuable contributions.

The hon. Member for Arundel and South Downs (Mr. Flight) also made some interesting points that were worthy of consideration. Although I do not agree with his prediction of the behaviour that would result from the working families tax credit, his was a thoughtful speech. His speech was about what the Government were doing. The premise of the debate called by his right hon. and hon. Friends was that the Government were not doing anything, and the only two speeches that were devoid of content, point or substance were those made by Opposition Front Benchers.

The hon. Member for Newbury (Mr. Rendel) summed it up very well when he said that, yet again, an Opposition day debate on social security had turned into an own goal. I noted the speed with which Conservative Members left the Chamber as soon as the opening speeches were over. I do not think that I have ever attended an Opposition day debate, in six years as a Member of Parliament, at which the only two members of the party that called the debate who were present were on the Front Bench. That, I think, is a measure of where the debate was leading at the opening—although a number of hon. Members in all parties developed it into quite a useful discussion.

It is a shame. The procedures of the House give the Opposition a chance to scrutinise and criticise the Government's record, and I do not think that any Government—certainly this Government—should be concerned about that; but these debates are a test of not just the Government's record, but the Opposition—of whether they have anything to say, whether they have a case to make and whether they can tell us, as they singularly failed to do, what they would have done.

The motion criticises welfare spending. The Conservative party should know because, under the previous Administration, social security spending spiralled and the costs of economic and social failure soared. The cost of social security soared by £43 billion in real terms—[Interruption.] Let me tell the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) what we said in our manifesto: We will increase the share of national income spent on education as we decrease it on the bills of economic and social failure. Over this Parliament, this Government will keep that election manifesto commitment—I am confident that we shall do so—but he must justify the previous Government's record.

Nearly 20 years ago, taxpayers knew that 25p in every pound that the Government spent went to health and education and 23p to social security. By the time that we were elected last year, 31p in every pound of Government spending was going on social security, but it would be wrong to judge the previous Government just by what they spent. What matters just as much is what happened to millions of people—to individuals, to parents, to children. Not just the cost, but the number of people who were being failed soared.

The number of people on income support doubled from one in 12 to one in six. By the time the previous Administration had finished, twice as many households had no one in work as when they were elected. The number of children being brought up on benefit had doubled: 2 million children of 1 million lone parents alone were being brought up on benefit. Nearly 1 million extra people of working age were receiving incapacity benefit.

That was a welfare system that was not working. It was not working for our society—a society that bore the costs of social exclusion, of young people who thought that they had no stake in our society. It was not working for taxpayers, who had to pay the bill. It was not working for many of those who had to rely on it.

We knew that that was not the welfare system that people in Britain wanted—whether they were paying for it, or dependent on it. We knew that the benefit system alone could not be the route out of poverty for so many children of so many parents on benefits, and I believe that they knew it was not the route out of poverty too.

We knew that 2 million disabled people of working age were working, but that another 1 million disabled people wanted to work. However, no one was giving them the chance to work, to enjoy equal rights and to feel that they were being treated as full members of society. We knew that the system was not working for those people who could not be expected to work because of their health or disability, or because they were retired. We knew that people who had to turn to the welfare system found that it did not seem to be working for them.

Too many people came to believe that they had more opportunity to commit benefit fraud than of earning an honest living. The previous Administration said that they wanted a benefit system where people helped themselves; they did. The organised gangs, the crooked landlords and, sadly, a minority of individual claimants helped themselves, and the previous Government did nothing about it.

The benefit system treated people only as claimants, not as individuals with hopes, aspirations and ambitions for themselves and their families. People did not get what they were entitled to. Perhaps 1 million pensioners, after a lifetime of work, bringing up families and living through war, did not receive even the income support to which they were entitled.

Therefore, as soon as we were elected, under the leadership of my right hon. Friend the Secretary of State for Social Security, with a whole ministerial team—

Mr. Quentin Davies

Will the Minister give way?

Mr. Denham

The hon. Gentleman did not give way in his speech, so I do not intend to give way in mine.

We set about changing and reforming the welfare system to make a reality of our principles and values: work for those who can and security for those who cannot. The hon. Member for West Dorset (Mr. Letwin) said that we had made and are making no changes, but that is not true.

I make no apologies for the fact that one of this Government's first actions was to invest in new opportunities for people who had been denied opportunities for too long. We invested the windfall tax on the privatised utilities to create new opportunities for young people, for older workers, for lone parents and for the sick and disabled. We gave young people the chance to have a job, to gain skills and to be a full part of society. At the same time—not in the welfare budget, but in the education budget—we invested to raise standards in skills, so that, as today's children grow up, they do not leave our schools with the same lack of skills, education and qualifications that their older brothers and sisters have faced.

We are extending the new deal's opportunities also to older people—who also should not be written off by the welfare system. We have set out to discover the best ways of enabling sick and disabled people to keep their jobs and to return to work. This week, we shall be announcing the first pilot projects in that programme.

In the new deal—which has been championed by my right hon. Friend the Secretary of State—we have said to lone parents, "There is an alternative to receiving benefit until your youngest child is 16. You can have a personal adviser who will work with you in dealing with the complexities of looking for work for the first time in years—to sort out training and child care and to understand working benefits."

In the welfare reform Green Paper, which was introduced in the House by my right hon. Friend the Minister for Welfare Reform, we have stated how the welfare system itself needs to be developed—so that the principle of personal advice tailored to the needs of individuals becomes a reality across the welfare system. We are also establishing schemes that will bring the Benefits Agency and local authorities together so that people are not faced with different systems and bureaucracies that cannot talk to one another.

The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) said that the Government are not moving ahead with technology. I tell him that people can now ring up to claim their pension. Someone will be at a computer screen to enter the information and send out a completed form. That is only the beginning of our plans. In nine pilot schemes—[Interruption.] There is some laughter among Opposition Members. Before implementation of the new system, about 40 per cent. of pension claims made on paper and posted had to be returned for extra information—at an administrative cost to the taxpayer, and a cost in inconvenience to pensioners. Using the new system, over 90 per cent. of new claims are accurate. [HON. MEMBERS: "What about the cheques?"] I shall deal with the cheques in a moment.

It is so symptomatic of the Conservative party's thinking that Conservative Members deride an improvement in service quality that helps to make the welfare system work for individuals and to cut the cost to the taxpayer. Now we know why so little happened over the Tory years.

Opposition Members asked about cheques, and said that people were worried about winter fuel payments not arriving. Under the previous Administration, for 18 years, no pensioner ever worried about winter fuel payments arriving—but they worried about their fuel bills, and about VAT on fuel at 17.5 per cent. Over 18 years, they never made an effort to help every pensioner household with its fuel bills. We have made that effort.

The hon. Member for Grantham and Stamford may think that the fact that one employee of a private company administering benefits transposed two digits and sent out some cheques that were changed within 72 hours should provide the basis for an Opposition day debate, but that just shows the ridiculousness of the Opposition's critique. Conservative Members did not mention a word of how they did not do anything to help pensioners with their heating bills or utter a word of apology for attempting to impose VAT on fuel at 17.5 per cent. They have only words of derision for the changes that we have already made to create a benefits system that works for people. Conservative Members stand condemned by their own words.

I should like to ask Conservative Members a key question. For years, they derided Labour Members when we said that we should use modern technology to help the poorest pensioners. However, one week into our pilot scheme, we identified a Scottish pensioner who was entitled to income support. We encouraged her to claim that benefit and now, consequently, she is £51 a week better off. When Conservative Members tabled today's motion criticising our welfare spending—the House is entitled to know the answer to this question—did they want that woman to stop getting that money? Was it that pensioner whom they intended to criticise? Should that pensioner, so long neglected by the Opposition, go without once again? That is what lies behind their message this evening. Should the lone parents who are on average £39 a week better off, with the taxpayer saving £42 a week—

Mr. James Arbuthnot (North-East Hampshire)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

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

The House divided: Ayes 128, Noes 360.

Division No. 334]	[10 pm
AYES
Ainsworth, Peter (E Surrey)	Flight, Howard
Amess, David	Forth, Rt Hon Eric
Arbuthnot, James	Gale, Roger
Baldry, Tony	Gibb, Nick
Bercow, John	Gill, Christopher
Beresford, Sir Paul	Gillan, Mrs Cheryl
Blunt, Crispin	Gorman, Mrs Teresa
Body, Sir Richard	Gray, James
Boswell, Tim	Green, Damian
Bottomley, Peter (Worthing W)	Greenway, John
Bottomley, Rt Hon Mrs Virginia	Grieve, Dominic
Brady, Graham	Hamilton, Rt Hon Sir Archie
Brazier, Julian	Hammond, Philip
Brooke, Rt Hon Peter	Hawkins, Nick
Browning, Mrs Angela	Hayes, John
Bruce, Ian (S Dorset)	Heald, Oliver
Butterfill, John	Heathcoat-Amory, Rt Hon David
Chapman, Sir Sydney (Chipping Barnet)	Horam, John
	Howard, Rt Hon Michael
Chope, Christopher	Hunter, Andrew
Clark, Rt Hon Alan (Kensington)	Jack, Rt Hon Michael
Clarke, Rt Hon Kenneth (Rushcliffe)	Jackson, Robert (Wantage)
	Jenkin, Bernard
Clifton-Brown, Geoffrey	Key, Robert
Cormack, Sir Patrick	King, Rt Hon Tom (Bridgwater)
Cran, James	Kirkbride, Miss Julie
Curry, Rt Hon David	Laing, Mrs Eleanor
Davies, Quentin (Grantham)	Lait, Mrs Jacqui
Davis, Rt Hon David (Haltemprice)	Lansley, Andrew
Day, Stephen	Leigh, Edward
Duncan, Alan	Letwin, Oliver
Duncan Smith, Iain	Lewis, Dr Julian (New Forest E)
Emery, Rt Hon Sir Peter	Lidington, David
Evans, Nigel	Lilley, Rt Hon Peter
Faber, David	Lloyd, Rt Hon Sir Peter (Fareham)
Fabricant, Michael	Loughton, Tim
Fallon, Michael	Luff, Peter

Lyell, Rt Hon Sir Nicholas	Soames, Nicholas
MacGregor, Rt Hon John	Spelman, Mrs Caroline
McIntosh, Miss Anne	Spicer, Sir Michael
MacKay, Andrew	Stanley, Rt Hon Sir John
Maclean, Rt Hon David	Steen, Anthony
McLoughlin, Patrick	Streeter, Gary
Madel, Sir David	Syms, Robert
Malins, Humfrey	Tapsell, Sir Peter
Maples, John	Taylor, Sir Teddy
Mates, Michael	Townend, John
Maude, Rt Hon Francis	Tredinnick, David
Mawhinney, Rt Hon Sir Brian	Trend, Michael
May, Mrs Theresa	Tyrie, Andrew
Moss, Malcolm	Walter, Robert
Nicholls, Patrick	Wardle, Charles
Ottaway, Richard	Waterson, Nigel
Paice, James	Wells, Bowen
Paterson, Owen	Whittingdale, John
Pickles, Eric	Wilkinson, John
Prior, David	Willetts, David
Randall, John	Wilshire, David
Redwood, Rt Hon John	Winterton, Mrs Ann (Congleton)
Robathan, Andrew	Winterton, Nicholas (Macclesfield)
Roe, Mrs Marion (Broxbourne)	Woodward, Shaun
Rowe, Andrew (Faversham)	Yeo, Tim
Ruffley, David	Young, Rt Hon Sir George
St Aubyn, Nick
Sayeed, Jonathan	Tellers for the Ayes:
Shephard, Rt Hon Mrs Gillian	Mr. John M. Taylor and
Simpson, Keith (Mid-Norfolk)	Mr. Tim Collins.
NOES
Abbott, Ms Diane	Campbell, Mrs Anne (C'bridge)
Adams, Mrs Irene (Paisley N)	Campbell, Menzies (NE Fife)
Alexander, Douglas	Campbell, Ronnie (Blyth V)
Allen, Graham	Campbell-Savours, Dale
Anderson, Donald (Swansea E)	Canavan, Dennis
Anderson, Janet (Rossendale)	Cann, Jamie
Armstrong, Ms Hilary	Caplin, Ivor
Ashdown, Rt Hon Paddy	Casale, Roger
Ashton, Joe	Caton, Martin
Atkins, Charlotte	Cawsey, Ian
Baker, Norman	Chapman, Ben (Wirral S)
Ballard, Jackie	Chaytor, David
Banks, Tony	Chidgey, David
Barron, Kevin	Chisholm, Malcolm
Battle, John	Clapham, Michael
Bayley, Hugh	Clark, Rt Hon Dr David (S Shields)
Beard, Nigel	Clark, Paul (Gillingham)
Beckett, Rt Hon Mrs Margaret	Clarke, Charles (Norwich S)
Begg, Miss Anne	Clarke, Rt Hon Tom (Coatbridge)
Beith, Rt Hon A J	Clelland, David
Benn, Rt Hon Tony	Clwyd, Ann
Bennett, Andrew F	Coaker, Vernon
Benton, Joe	Coffey, Ms Ann
Bermingham, Gerald	Coleman, Iain
Best, Harold	Colman, Tony
Betts, Clive	Connarty, Michael
Blears, Ms Hazel	Cook, Frank (Stockton N)
Blunkett, Rt Hon David	Cooper, Yvette
Borrow, David	Corbett, Robin
Bradley, Keith (Withington)	Corbyn, Jeremy
Bradley, Peter (The Wrekin)	Cotter, Brian
Bradshaw, Ben	Cousins, Jim
Brake, Tom	Cox, Tom
Brand, Dr Peter	Cranston, Ross
Brinton, Mrs Helen	Crausby, David
Brown, Rt Hon Nick (Newcastle E)	Cryer, Mrs Ann (Keighley)
Brown, Russell (Dumfries)	Cryer, John (Hornchurch)
Browne, Desmond	Cummings, John
Burden, Richard	Cunningham, Rt Hon Dr John (Copeland)
Burnett, John
Burstow, Paul	Dalyell, Tam
Byers, Stephen	Darling, Rt Hon Alistair
Caborn, Richard	Darvill, Keith
Campbell, Alan (Tynemouth)	Davey, Edward (Kingston)

Davey, Valerie (Bristol W)	Hughes, Ms Beverley (Stretford)
Davidson, Ian	Hughes, Kevin (Doncaster N)
Davies, Rt Hon Denzil (Llanelli)	Hughes, Simon (Southwark N)
Davies, Rt Hon Ron (Caerphilly)	Humble, Mrs Joan
Dean, Mrs Janet	Hurst, Alan
Denham, John	Hutton, John
Dewar, Rt Hon Donald	Iddon, Dr Brian
Dismore, Andrew	Illsley, Eric
Dobbin, Jim	Jackson, Helen (Hillsborough)
Dobson, Rt Hon Frank	Jamieson, David
Donohoe, Brian H	Johnson, Alan (Hull W & Hessle)
Doran, Frank	Johnson, Miss Melanie (Welwyn Hatfield)
Dowd, Jim
Drew, David	Jones, Barry (Alyn & Deeside)
Dunwoody, Mrs Gwyneth	Jones, Mrs Fiona (Newark)
Eagle, Angela (Wallasey)	Jones, Helen (Warrington N)
Edwards, Huw	Jones, Ms Jenny (Wolverh'ton SW)
Efford, Clive
Ellman, Mrs Louise	Jones, Martyn (Clwyd S)
Ennis, Jeff	Jowell, Ms Tessa
Etherington, Bill	Kaufman, Rt Hon Gerald
Fearn, Ronnie	Keen, Alan (Feltham & Heston)
Field, Rt Hon Frank	Keen, Ann (Brentford & Isleworth)
Flynn, Paul	Keetch, Paul
Follett, Barbara	Kemp, Fraser
Foster, Rt Hon Derek	Kennedy, Charles (Ross Skye)
Foster, Don (Bath)	Kennedy, Jane (Wavertree)
Foster, Michael Jabez (Hastings)	Khabra, Piara S
Foster, Michael J (Worcester)	Kilfoyle, Peter
Foulkes, George	King, Andy (Rugby & Kenilworth)
Fyfe, Maria	Kingham, Ms Tess
Galbraith, Sam	Kirkwood, Archy
Gardiner, Barry	Kumar, Dr Ashok
George, Andrew (St Ives)	Ladyman, Dr Stephen
George, Bruce (Walsall S)	Laxton, Bob
Gerrard, Neil	Lepper, David
Gilroy, Mrs Linda	Leslie, Christopher
Godman, Dr Norman A	Levitt, Tom
Godsiff, Roger	Liddell, Mrs Helen
Goggins, Paul	Livingstone, Ken
Gordon, Mrs Eileen	Lloyd, Tony (Manchester C)
Gorrie, Donald	Llwyd, Elfyn
Grant, Bernie	Lock, David
Griffiths, Jane (Reading E)	Love, Andrew
Griffiths, Nigel (Edinburgh S)	McAllion, John
Griffiths, Win (Bridgend)	McAvoy, Thomas
Grocott, Bruce	McCabe, Steve
Grogan, John	McCartney, Ian (Makerfield)
Gunnell, John	Macdonald, Calum
Hain, Peter	McDonnell, John
Hall, Mike (Weaver Vale)	McIsaac, Shona
Hall, Patrick (Bedford)	McLeish, Henry
Hamilton, Fabian (Leeds NE)	Maclennan, Rt Hon Robert
Hancock, Mike	McNulty, Tony
Hanson, David	MacShane, Denis
Harman, Rt Hon Ms Harriet	Mactaggart, Fiona
Harris, Dr Evan	McWilliam, John
Harvey, Nick	Mahon, Mrs Alice
Heal, Mrs Sylvia	Mallaber, Judy
Heath, David (Somerton & Frome)	Mandelson, Peter
Henderson, Doug (Newcastle N)	Marek, Dr John
Henderson, Ivan (Harwich)	Marsden, Gordon (Blackpool S)
Heppell, John	Marsden, Paul (Shrewsbury)
Hesford, Stephen	Marshall, David (Shettleston)
Hewitt, Ms Patricia	Marshall-Andrews, Robert
Hodge, Ms Margaret	Martlew, Eric
Hoey, Kate	Maxton, John
Home Robertson, John	Meacher, Rt Hon Michael
Hood, Jimmy	Merron, Gillian
Hoon, Geoffrey	Michael, Alun
Hope, Phil	Michie, Bill (Shef'ld Heeley)
Hopkins, Kelvin	Michie, Mrs Ray (Argyll & Bute)
Howarth, Alan (Newport E)	Milburn, Alan
Howarth, George (Knowsley N)	Moffatt, Laura
Howells, Dr Kim	Moonie, Dr Lewis
Hoyle, Lindsay	Moore, Michael

Morgan, Ms Julie (Cardiff N)	Smith, Rt Hon Chris (Islington S)
Morgan, Rhodri (Cardiff W)	Smith, John (Glamorgan)
Morley, Elliot	Smith, Llew (Blaenau Gwent)
Morris, Ms Estelle (B'ham Yardley)	Smith, Sir Robert (W Ab'd'ns)
Mudie, George	Snape, Peter
Mullin, Chris	Soley, Clive
Murphy, Denis (Wansbeck)	Spellar, John
Murphy, Paul (Torfaen)	Squire, Ms Rachel
Naysmith, Dr Doug	Starkey, Dr Phyllis
Oaten, Mark	Steinberg, Gerry
O'Brien, Bill (Normanton)	Stevenson, George
O'Brien, Mike (N Warks)	Stewart, David (Inverness E)
O'Hara, Eddie	Stewart, Ian (Eccles)
Olner, Bill	Stinchcombe, Paul
O'Neill, Martin	Stoate, Dr Howard
Öpik, Lembit	Stott, Roger
Organ, Mrs Diana	Strang, Rt Hon Dr Gavin
Osborne, Ms Sandra	Straw, Rt Hon Jack
Pearson, Ian	Stringer, Graham
Pendry, Tom	Stunell, Andrew
Pickthall, Colin	Sutcliffe, Gerry
Pike, Peter L	Taylor, Rt Hon Mrs Ann (Dewsbury)
Pollard, Kerry
Pond, Chris	Taylor, David (NW Leics)
Pope, Greg	Taylor, Rt Hon John D (Strangford)
Pound, Stephen	Taylor, Matthew (Truro)
Powell, Sir Raymond	Temple-Morris, Peter
Prentice, Ms Bridget (Lewisham E)	Thomas, Gareth (Clwyd W)
Prentice, Gordon (Pendle)	Tipping, Paddy
Prosser, Gwyn	Tonge, Dr Jenny
Purchase, Ken	Touhig, Don
Quinn, Lawrie	Truswell, Paul
Radice, Giles	Turner, Dennis (Wolverh'ton SE)
Rammell, Bill	Turner, Dr Desmond (Kemptown)
Rapson, Syd	Turner, Dr George (NW Norfolk)
Raynsford, Nick	Twigg, Derek (Halton)
Reed, Andrew (Loughborough)	Twigg, Stephen (Enfield)
Reid, Dr John (Hamilton N)	Tyler, Paul
Rendel, David	Vis, Dr Rudi
Robertson, Rt Hon George (Hamilton S)	Wallace, James
	Ward, Ms Claire
Robinson, Geoffrey (Cov'try NW)	Wareing, Robert N
Roche, Mrs Barbara	Watts, David
Rogers, Allan	Webb, Steve
Rooker, Jeff	Welsh, Andrew
Rooney, Terry	White, Brian
Ross, Ernie (Dundee W)	Whitehead, Dr Alan
Rowlands, Ted	Wicks, Malcolm
Ruane, Chris	Williams, Rt Hon Alan (Swansea W)
Ruddock, Ms Joan
Russell, Bob (Colchester)	Williams, Alan W (E Carmarthen)
Russell, Ms Christine (Chester)	Willis, Phil
Salter, Martin	Wilson, Brian
Sanders, Adrian	Winnick, David
Savidge, Malcolm	Winterton, Ms Rosie (Doncaster C)
Sawford, Phil	Wise, Audrey
Sedgemore, Brian	Woolas, Phil
Sheerman, Barry	Worthington, Tony
Sheldon, Rt Hon Robert	Wray, James
Short, Rt Hon Clare	Wright, Anthony D (Gt Yarmouth)
Simpson, Alan (Nottingham S)	Wyatt, Derek
Singh, Marsha
Skinner, Dennis	Tellers for the Noes:
Smith, Rt Hon Andrew (Oxford E)	Mr. John McFall and
Smith, Angela (Basildon)	Mr. Robert Ainsworth.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.

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

Resolved, That this House congratulates the Government for their outstanding record in pursuing their efforts to provide opportunities for those who can work and security for those who cannot, to cut expenditure on economic and social failure and to modernise the welfare system.