HC Deb 05 July 1999 vol 334 cc624-6
5. Mr. Ben Chapman (Wirral, South)

What action his Department has taken to improve the situation of poorer and working families. [88027]

The Secretary of State for Social Security (Mr. Alistair Darling)

In April, we increased child benefit by the largest amount ever. In October, the working families tax credit will be introduced, helping an extra 500,000 families and providing an income guarantee for every family in full-time work of at least £200 a week. Those reforms, together with other tax changes, will mean that a family on £13,000 a year will be better off by up to £2,500 a year.

Mr. Chapman

Does my right hon. Friend agree that the situation we inherited when the Tories left power— one in three children being brought up in poverty—was an absolute disgrace? Although I warmly welcome the Government's commitment to eradicate child poverty within a generation, what practical steps are being taken now to help the plight of children? That is what concerns people most.

Mr. Darling

I agree with my hon. Friend, which is why we have been increasing child benefit by large amounts—a record amount last year and this. In addition, the working families tax credit, which the Conservatives are pledged to abolish, will mean that, because of the Labour Government, a family on £13,000 a year will be £2,500 better off than they would otherwise have been. That measure makes the case for welfare reform: it will make work pay, provide security for those people about whom we ought to be concerned and ensure that we eradicate child poverty within a generation. The Tories did absolutely nothing about that when they were in government.

Mr. Julian Brazier (Canterbury)

Will the Secretary of State confirm that the working families tax credit will have an impact on families also drawing housing benefit, whatever his long-term plans for benefit reform may be? Hundreds of thousands of families will face a combined tax and benefit withdrawal rate of 89 per cent. Such conditions will hardly encourage them to help themselves.

Mr. Darling

The hon. Gentleman—unwittingly, I suspect—makes the point that further reform is necessary. The working families tax credit reduces the effect of marginal rates of taxation for poorer families, but he is quite right: housing benefit also needs to be reformed—not only because its administration is inefficient and expensive and because it is open to fraud and abuse, as all of us know, but because it acts as a disincentive to many people who ought to be in work. Unfortunately for him, he is making the case for further reform of the benefits system. I repeat what I said earlier: we have made a start, but there is a great deal more to do to ensure that the benefits system, as well as providing security for those who cannot work, makes work pay.

Ann Clwyd (Cynon Valley)

I think I can anticipate my right hon. Friend's reply, but I shall ask my question nevertheless. There is a real sense of grievance among my constituents who previously received reduced earnings allowance, which, as we know, was abolished by the Tories. In opposition, we made strong criticisms of that abolition, and there is a real sense of betrayal—I do not think I am putting it strongly enough—among the people who came to my surgery this weekend saying that they are £30 to £40 worse off as a result of that. Will my right hon. Friend look at this matter again?

Mr. Darling

I am well aware of the point that my hon. Friend makes. She is quite right that, suddenly and unexpectedly, the Conservatives cut the rate of REA, which miners thought they would receive after had they retired. The problem is that that benefit was meant to replace people's income when they were in work. That is clearly difficult for people who have entered into commitments. I say my hon. Friend, as I have said to many of her colleagues, that I am prepared to look at this matter, as I am prepared to look at all parts of the benefits system, but I do not want to raise her expectations or those of her constituents and I am not giving an undertaking that I will be able to resolve the problem to everybody's satisfaction. I think she understands that.

Mr. David Rendel (Newbury)

Does the Secretary of State accept that it is particularly important for poor working families that their children should remain dependent for as brief a time as possible and should get jobs as soon as possible after they finish their education? Does he not therefore think that it is time he did something about the young people who are sometimes held up for five months before they receive national insurance numbers, thanks to the failure of the NIRS2 system? A number of businesses are refusing to give those young people jobs until they have national insurance numbers.

Mr. Darling

Many young people go straight into jobs on leaving school, but we want to ensure that many more go into higher education to achieve better skills and qualifications. Secondly, the new ONE service, which will bring together the Employment Service and the Benefits Agency, will mean, for the first time, that someone of working age will receive advice immediately on entering the system.

Thirdly, I am well aware of NIRS2 problems, which we inherited from the Tories—[HoN. MEMBERS: "Oh, come on."] The Tories signed the contract, and they must take complete responsibility for a system that did not work. The problems are being overcome. I am glad to hear that the hon. Member for Newbury (Mr. Rendel) supports our general thrust; that is why I find it hard to understand why he wants to take his party into closer allegiance with the Conservative party.

Mr. Frank Roy (Motherwell and Wishaw)

On the point about working families, my right hon. Friend will know that Scottish schools are on holiday. While teachers are paid during the holidays, cleaners and dinner ladies are not—and nor are they entitled to jobseeker's allowance or any other benefit. Does the Secretary of State have any plans to redress that unfair anomaly?

Mr. Darling

I am fully aware that Scottish children are on holiday—and that we are not. I am aware of the problem to which my hon. Friend refers. About two months ago, a commissioner's decision stopped the Department of Social Security paying benefit to the dinner ladies in question. The case has been appealed to Scotland's supreme court, the Court of Session, and we should receive a definitive ruling before too long. Many dinner ladies may be entitled to some help from the Benefits Agency, and if they are in any doubt, they should contact the local agency. I shall keep the situation under review, particularly once we have received the Court of Session ruling.