HC Deb 10 December 2003 vol 415 cc1087-100

2.3 pm

The Secretary of State for Work and Pensions(Mr. Andrew Smith)

With permission, Madam Deputy Speaker, I should like to make a statement on benefits uprating and the employment measures in the pre-Budget report.

On uprating, I can confirm that national insurance benefits will rise by the retail prices index—2.8 per cent. From next April, retirement pension will go up by £2.15 a week for single pensioners and £3.45 a week for couples. When we came to office, the pension was just £62 a week for a single person. From April it will be £79.60 and £127.25 for couples. In keeping with the Government's aim to provide extra help to poorer pensioners and those who have saved, the pension credit guarantee will rise in line with earnings by over £3 to £105.45 a week for singles and by over £5 to £160.95 for couples. The threshold for the savings element will rise in line with retirement pension. That means that a typical single pensioner will now gain from pension credit on income up to £144 a week, and £212 for a couple.

I am pleased to report that last month, an extra 106,000 pensioners received pension credit. By the end of November more than 2.4 million pensioners were benefiting, with an average household award of £46.40 per week. The application line continues to work well, with 96 per cent. of calls answered within 30 seconds. Each week more and more pensioners are getting this extra money. All of them will gain from the increases I have announced today.

As my right hon. Friend the Chancellor set out, the child element of the child tax credit will rise by £3.50, benefiting 7.2 million children. That means that, by September next year, a single-earner family on half average earnings with two young children will be £3,750 a year better off as a result of all our measures, compared with 1997.

For the fourth year running, non-dependent deductions in income-related benefits will be frozen, benefiting around 180,000 claimants. Most income-related benefits will rise by the Rossi index—1.8 per cent.—in the normal way. I shall place details of the uprating in the Vote Office and arrange for figures to be published in the Official Report.

As well as security for those who cannot work, we are continuing our drive to help into work all those who can. Despite the downturn in the world economy, employment in the UK has continued to grow. We now have more people in jobs than ever before, and for the first time in nearly half a century, the highest employment rate and lowest unemployment rate of the major industrialised countries. That has happened not by accident, but as a result of deliberate choices for economic stability and a new approach to welfare. As the paper entitled "Full Employment in Every Region" which is published today shows, our approach is working. The UK labour market is diverse and flexible. We are better placed than our European competitors to adapt quickly to changes in the global economy.

Through our investment in the new deal and Jobcentre Plus, we have tackled the legacy of mass unemployment. Long-term unemployment, particularly among young people, has been slashed. With 1.7 million more people in jobs, and nearly 700,000 fewer on unemployment benefits, we have saved £5 billion on the costs of economic and social failure. Some suggest that the new deals should be abolished, but those figures show that that would be the wrong thing to do. The new deals have helped over 900,000 people into work. Independent research shows that the programmes can pay for themselves. The new deal for lone parents alone is saving the Exchequer £40 million a year.

Even the strongest labour market will have some people who do not connect with the world of work and who will need extra support to move into jobs. Although the numbers moving on to incapacity benefits each year have been reduced by a quarter since 1997, there remain 2.7 million people largely excluded from the labour market, at huge human and economic cost. A large number of them want to work and could work, if given the right help and support to do so. Last year I announced new measures to help them re-engage with the labour market.

The pathways to work pilots, combining work support, rehabilitation and financial incentives, are already under way in Derbyshire, Bridgend and Renfrewshire. Further pilots start next April. I am regularly updating MPs in pilot areas on progress and have been encouraged by the keen interest shown by hon. Members in this groundbreaking initiative. As part of the pre-Budget report, we are announcing that some basic elements of this approach will be extended from next April. Everyone on incapacity benefits will have voluntary access to support from a personal adviser.

Although our programmes have helped 230,000 lone parents into work since 1997, we want to do more. Research shows most lone parents want the choice of combining paid work with the vital job of bringing up a child, but they face many barriers along the way. One of the biggest barriers is child care. That is why we have created places for more than 1.3 million children since 1997. From next April, we will be piloting better use of school facilities outside school hours and in the holidays to provide affordable child care targeted at lone parents.

Today's pre-Budget report goes even further, with new measures to encourage employers to provide affordable child care, which my right hon. Friend the Chancellor has just set out; free child care for all those on the new deal for lone parents in the week before they start work to help them to make that transition; and free child care for lone parents undertaking work search activity in 12 pilot areas. As we remove those barriers, we will do more to help lone parents find work. Today I can announce extra job search support for parents with older children to help them prepare for the labour market and compulsory action plans for all lone parents.

As well as making work possible, we need to make sure that it pays. From next October, lone parents in a number of pilot areas who move into work will have their wages topped up by £40 a week for a year. We know that workless families in London face especially high housing and child care costs, which mean they can often find themselves little better off in work than they were on benefits. So today I can announce that we will extend the £40 a week top-up across the capital both to lone parents and to couples with children who have been on benefit for more than a year, making sure that work pays.

As my right hon. Friend the Chancellor said, we will also offer extra support for all jobseeker's allowance claimants aged 25 or over by piloting a mandatory, intensive work-focused course at the six-month stage of unemployment, as well as by providing extra help for those on benefits to enter self-employment. To improve the choices available to older people, those in receipt of pension credit will be able, on a voluntary basis, to access the full range of our employment programmes.

Together, today's PBR measures build on our successful approach and help to continue our drive to full employment in every region. For all those excluded from the labour market, housing benefit reform has an important part to play. From April 2004, people on housing benefit who move into work will no longer be required to submit a full new claim. We have started pathfinders of the local housing allowance in the private rented sector to be introduced in nine areas, allowing people to know in advance what benefit support they will receive. As soon as we can, we will apply a similar approach in pilots in the social rented sector. That will promote greater choice and responsibility and bridge the gap between benefit and work by allowing tenants to budget for their own rent.

In conclusion, today's statements show that this Government are delivering on our pledge of work for those who can work and security for those who cannot. Our measures will ensure that we make further in-roads into child and pensioner poverty, extend the opportunities of disabled people and reform welfare so that rights, responsibility and opportunity go hand in hand.

The House and the country will have noticed how few Conservative Members considered the war against poverty to be an issue meriting their attendance in the Chamber, although the six who are present have now neatly grouped themselves on the Opposition Benches. By contrast, Labour Members are determined to win the war against poverty. Our reforms are creating a labour market that works for the many and not the few and which achieves our goal of full employment throughout the UK—social justice and economic strength together, which is a central purpose of Labour in government.

Mr. Nigel Waterson (Eastbourne) (Con)

I thank the Secretary of State for his usual courtesy in providing an advance copy of his statement to me. I should perhaps also declare my interest, in that I have some private pension provision.

Of course, I noticed the Secretary of State's comment about how many Benches are filled, but I also notice that there is a considerable doughnutting of Government Members around him, and very few of them are out of camera shot. I should like to pass on the apologies of my hon. Friend the Member for Havant (Mr. Willetts); sadly, his flight was cancelled and he is therefore unable to be present. The House will have to make do with one brain, as opposed to two brains.

May I inquire of the Secretary of State why this statement has been made on the same day on which the Chancellor's report has been put before us? It is normal practice for the statement to be made a day or so later. Is this a good day for burying bad news or very little news?

The Secretary of State had little or nothing to say about the Child Support Agency. Will he please update the House about the implementation of the new model? How long will people have to wait for the new computer system to work properly and for old cases to be migrated to the new system? Does he share my alarm about the evidence on this subject recently given to the Select Committee on Work and Pensions?

Will the Secretary of State also advise the House what steps he is taking to increase the take-up of council tax benefit, which continues to have the lowest take-up of any benefit? The matter bears heavily on older pensioners in areas where council tax has risen sharply, and especially the south-east, in large measure due to Government policy.

I continue to be impressed by the Secretary of State's touching faith in the effect of the new deal, but he rightly conceded that there are still far too many economically inactive people in this country. Will he also advise the House whether he shares my disappointment and that of many disability groups about the continuing lack of success in helping people with disabilities back into work? We know that about 1 million disabled people would like to work, but they are too often deterred by the artificial barriers in the system. Will he please dispel the anxieties caused by recent press leaks suggesting that the Government are going to have a major crackdown on benefits for people with disabilities?

Of course, we welcome any uprating in benefits. We will certainly not follow the example of the Liberal Democrats, who memorably voted against any uprating a couple of years ago. I noted what the Secretary of State had to say about inflation, but will he please give a cast iron assurance that the changes to the inflation index about which we heard will have no detrimental effect on the uprating of the benefits and that the existing inflation measure will continue to be applied to upratings for the foreseeable future?

We will be very interested in the outcome of the housing benefit pilots to which the Secretary of State alluded. We welcome at least some of the measures to improve child care and access to employment advice for older people, although this Government's record on age discrimination has generally been pretty dismal.

We continue to be in the midst of a severe pensions crisis. A dreadful situation is faced by pensioners who have lost everything because their company has gone down and taken their pension fund with it. Will the Secretary of State tell the House how far the Government have got in trying to find ways of compensating those workers? When will we see the pensions Bill? Will it be this year or next year? Many anxious current and future pensioners will be hanging on his answer.

May I also ask the Secretary of State about the pension credit, about which he had a great deal to say? The latest figures on its roll-out have only just been published. They show that there are still only 106,000 new claimants. The total number benefiting is still less than half the number who are eligible. That is hardly surprising given the recent Daily Express poll showing that a third of all older people had not even heard of the pension credit. More than half had no idea how the system worked or how the system worked or how they should claim their money. Nor should anyone be surprised about that. We have tried to tell the Government that the new system is too complex and involves too much intrusive means-testing, and that many pensioners will be deterred from applying as a result. Indeed, the Government themselves have set a target—it was confirmed the other day by his junior Minister, the Under-Secretary of State for Work and Pensions, the hon. Member for Liverpool, Garston (Maria Eagle)—under which 1.4 million of the poorest pensioners will not claim at all. Can he please confirm that that is still his working assumption?

Of course, Opposition Members would encourage all our constituents who are entitled to apply for the credit to do so, but we fear that the Government will not hit even their own modest targets. It will be a lasting legacy of this Government that they will have raised the proportion of means-testing from 38 per cent. in 1997 to 60 per cent. and even more. The Secretary of State and his Ministers should be worried by the increasing level of anecdotal evidence about the practical difficulties of telling people about this complex new system.

The other day, people from the citizens advice bureaux told me that they are starting to hear stories about the 20-minute phone call that we have already heard about taking as long as an hour or an hour and a half. Those may be isolated cases—I would be the first to concede that we are at an early stage—but if not, it is deeply worrying.

Can the Secretary of State tell me whether he intends to raise the pension credit in line with earnings or with prices in the next Parliament, if this Government should survive? Incidentally, the Minister for Pensions, the hon. Member for Croydon, North (Mr. Wicks) sought to rubbish the independent actuarial advice that we received, which said that a couple would have to save £180,000 during their working lives in order not to be reliant on means-tested benefits. If the Secretary of State does not accept that estimate, will he give the House his figure? Surely, he must have one.

Would it not be a lot simpler and much better for poorer pensioners if the Government were to adopt the Conservative party's policy—which has considerable support among Labour Members of restoring the link with earnings? They need to roll back means-testing, restore dignity to pensioners and, above all, ensure 100 per cent. take-up of pension credit.

Mr. Smith

Let me go through those points in order. The hon. Gentleman's point about the timing of the uprating statement is utterly trivial. If he had done even five minutes' research he would have noticed that last year it was made before the PBR and that in many previous years it took place on the same day because of the overlapping content of the two statements.

On the Child Support Agency, if the hon. Gentleman had studied the second quarterly report that we issued, he would have seen that the rate of case clearances of some 40,000 was three times that of the first quarter. Although the performance of the new computer system has been unsatisfactory, it is improving, but clearly needs to improve further. The hon. Gentleman referred to the Select Committee on Work and Pensions, with which we will of course work closely. It is important that it has a full report on what has gone wrong with the new system, whose fault it is, what is being done to put it right and when it will be working properly; and I will make it my business to ensure that it gets that report.

The hon. Gentleman mentioned take-up of council tax benefit just a few breaths before he derided the pension credit—yet the pension credit, and our promotion of it, is increasing eligibility to council tax benefit and housing benefit, because some 1.9 million pensioners are either getting more support or getting it for the first time.

The hon. Gentleman said that too many people are on inactive benefits. If the Conservatives really want to help those people, whether they be lone parents on income support or disabled people and those who have suffered ill health on incapacity benefit, they will not do it by abolishing the new deal—they will do it only by extending it. Whatever the hon. Gentleman says about the new deal for disabled people, it has helped 20,000 disabled people into work, thereby transforming lives. We need to build on that help, not abandon it, as the Conservatives would.

The hon. Gentleman queried the link between benefit increases and inflation in the future. To repeat clearly what the Chancellor said, pensions will continue to be uprated with the retail prices index and, during this Parliament, pension credit will be uprated with earnings. The introduction of the new measure for Bank of England inflation-targeting purposes makes no difference to that whatsoever.

The hon. Gentleman asked about the pensions Bill. That is a very important measure to boost occupational pension security, to help people to move more flexibly into retirement and generally to improve provision for people who are planning for their later years. The Bill will be brought before the House as soon as it is ready. The hon. Gentleman would not expect us to do so before it was ready—indeed, I suspect that he would be at the forefront of our critics were we to do so.

I was interested that the hon. Gentleman did not mention—perhaps he has not had time to see it—the important announcement made today by the Inland Revenue in association with my right hon. Friend the Chancellor's statement, whereby we are inviting the National Audit Office independently to scrutinise our assumptions on the 1.4 million cap. This whole package of radical simplifications—rolling eight tax regimes into one and more access to 25 per cent. lump sums—will lead to a terrific reduction in costs. I would have hoped that the hon. Gentleman and his colleagues might welcome that in the interests of building a consensus, but we heard nothing about it.

On pension credit, the hon. Gentleman was, unwisely, tempted to deride my figure of 106,000 extra recipients. Perhaps he had not noticed that that was just for the month of November. Take-up is accelerating and going very well, and I am confident that increasing numbers of pensioners will receive pension credit and that we will beat the 3 million figure that the shadow Secretary of State said that it would take us six or seven years to hit. We will do it much quicker than that.

The hon. Gentleman referred to his party's proposals. The whole country must know by now that his and his right hon. and hon. Friends' sums simply do not add up. Even on their own figures, they would have a £500 million black hole by year four and need £10 billion more within 10 years. No wonder the shadow Chancellor had to admit that they face what he called further painful decisions to show how on earth their half-baked policy, which the shadow Secretary of State himself described as wild and uncosted, can be made to appear sustainable. We will take no lectures from them, given their record. With Labour in government, the basic state pension has gone up in real terms by more than £5 for a single pensioner and by more than £8 for a couple—that is more than the Tories chose to put it up by in all their 18 years in office.

Mr. Steve Webb (Northavon) (LD)

I thank the Secretary of State for his courtesy in providing a copy of the statement in advance.

Briefly donning my anorak, I thank the Secretary of State for freezing non-dependent deductions for the fourth year running. I welcome that, because growing numbers of young people, particularly those who are poorer, are unable to leave the family home until they are much older, and they are penalised quite harshly through the housing benefit system.

The increase in the child tax credit is welcome, but I wonder whether the Secretary of State could clarify something. He will be aware of the "Give us a fiver, Gordon" campaign that the Child Poverty Action Group and others have been running. That is the amount that they estimate is required to help the Government to achieve their initial target of taking 1 million children out of poverty. Given that the Chancellor has come up with £3.50 instead of £5, can the Secretary of State confirm that he believes that that increase is sufficient to hit the Government's first target on reducing child poverty?

In view of the problems with the family tax credit, can the Secretary of State confirm that 0.5 million families who are entitled to it are not receiving that credit and will therefore not get the money that the Chancellor announced? Given the computer shambles that still exists in the tax credit system, is he confident that even those who have made a claim will get that money seamlessly and painlessly?

For some reason, the Secretary of State did not mention the fact that the Chancellor has frozen the thresholds at which tax credits start to taper away. Can he confirm that that is the case?

The Secretary of State said that there will be compulsory action plans for all lone parents. What does that mean? For a lone parent who has just had their first child, presumably the only necessary action plan is to try to get some sleep. What are the Government going to require of all lone parents? What will one of those action plans look like? Will it say, "Take child to park, change nappies"? How will lone parents benefit? We heard nothing other than that oblique reference.

The Secretary of State mentioned the 1.4 million pension cap. In another place, my noble Friend Lord Oakeshott pointed out that that has a very different effect from that which the Chancellor claimed. I welcome the right hon. Gentleman's reference to allowing the National Audit Office to decide who is right—I think that we know who is right—but I am slightly confused by the Government's position. I have skimmed the Inland Revenue document. It appears to suggest that the solution will be all or nothing and that, if the NAO disagrees with the effect of the 1.4 million cap, it will be dropped. What is the status of that issue? I am slightly hazy as to where we are on the matter. Is it all or nothing? Could there be a different figure? Could the system work in a different way?

On the pension credit, will the Secretary of State confirm that today's figure of 2.4 million individual pensioners receiving it is less than half the number of people entitled to do so? While claims can be backdated to this October, will he confirm that anyone who has not been reached by next October—that could easily be 1 million or more people—will lose out permanently because the backdating will stop and they will not be able to get more than a year's pension credit from next October? Will he confirm that those people will lose out for ever?

The one aspect of the right hon. Gentleman's statement that we do not welcome is that of the local housing allowance scheme and its extension to the social rented sector. The idea of the scheme is that people should have shopping incentives and be able to pick and choose between different sorts of rented accommodation. Does the right hon. Gentleman accept that, for my constituents, the idea of a choice between different units of social rented accommodation is a joke, and that there is a massive shortage of such accommodation? The idea of a scheme based on shopping incentives is frankly insulting.

Mr. Smith

I thank the hon. Gentleman for his welcome for our decision on the non-dependent deductions, on the increase in the child tax credit and for our reference to the National Audit Office for independent scrutiny of the taxation of pensions and the cap. He asked about the thresholds for the credits. They are as set out in the documentation. We believe that that is the right thing to do this year, in the context of carrying forward the child tax credit framework as a whole.

The hon. Gentleman asked what the compulsory action plan would involve. Clearly, it will have to be tailored to the circumstances, needs and potential of the lone parent who is having the work focus interview. If they have very young children, for example, it will be important to encourage them in relation to how they work with them in terms of nurturing and development. It would be appropriate, for example, to encourage them to avail themselves of the support of the sure start programme, or for those with older children to liaise with the children's centres.

It would be appropriate for lone parents to take a long-term view of their own personal development and of how they see themselves supporting their child. When visiting the programmes in local communities, I have been struck by the fact that, if we can get lone parents and other young parents to work with their children on nurturing and development, it is not only the children who benefit—all the evidence shows that children progress better and are less likely to live a life of poverty if they have that kind of support—but the parents as well.

There should be more emphasis on training for lone parents with older children, on what they can do to get themselves job ready and on finding out what jobs they will be able to get into. The additional support that we announced today—free child care for the week before people start a job and the availability of child care for lone parents looking for a job—should all help to ease what can otherwise be a difficult transition. We have done well to get more than half of lone parents into work, but when we compare the rate of employment among lone parents in this country with the typical rate in the rest of Europe, we still have some way to go. All the evidence shows that, in most cases, lone parents would like to avail themselves of the opportunities being offered because their living standards and their children's prospects would improve.

The hon. Gentleman asked about the take-up of pension credit, and whether I was confident that we would hit our target. I am confident of the progress that we are making. As I was saying to the hon. Member for Eastbourne (Mr. Waterson), it is encouraging to see the take-up rate accelerating and to see the application process working so smoothly. In our constituencies, each of us now has thousands of pensioners who are benefiting from the pension credit. Alongside my announcement today, I am publishing a constituency breakdown, so that all hon. Members will be able to see how people are benefiting in their constituencies.

The hon. Gentleman asked about the progress that is being made on child poverty, and whether we believed that the increases announced today would be sufficient to enable us to hit our target of reducing child poverty by a quarter by 2004–05, which is the first milestone that we have to reach. There are details of that in the pre-Budget report documentation, but the short answer to his question is yes, these are challenging targets, but it is right that they should be and we are confident that we shall progress to hitting them using the measures that we have announced.

Ms Karen Buck (Regent's Park and Kensington, North) (Lab)

It is difficult to over-state the significance for lone parents and couples in London of the suggested regional wage top-up. I shall he interested to see the details of the proposal, but a number of colleagues and I have been campaigning for such a measure for many years, in recognition of the much higher costs of child care and housing in London and of the fact that we have much lower lone parent participation in the labour market and much higher incidence of child poverty here than in any other region.

Will my right hon. Friend tell us how that provision will be delivered? Will it be via a premium on the tax credit? Will it increase the entitlement to the child care tax credit? Will lone parents in London be expected to have been out of work for a year to qualify for the premium, as couples will be? Will the premium in London stop after a year, and, if so, how do the Government intend to deal with the risk of parents who have settled a child in child care as a consequence of the premium improving their access to employment finding themselves unable to sustain that child care place?

Mr. Smith

I thank my hon. Friend for her welcome for the proposal. Like her, I think that it is difficult to over-state its importance across London, where lone parents and other unemployed parents face particularly high child care and transport costs, especially when housing benefit is withdrawn when they enter work. That is why we have introduced the measure, and we believe that it will make a real difference.

I can confirm that it is intended for people who have been out of work for a year. The work search premium is also being introduced in a number of areas, which will give people £20 a week for actively seeking work, as well as the additional help with child care that I mentioned. If they get a job, they will then get the £40 for a year. We have found with previous programmes that, after a year, people have often made the transition into a job and progressed in their work. The premium helps them to meet their initial costs, they have a new social network and outlook and tend to stay in work. Obviously, we shall monitor the provision closely. I shall let my hon. Friend have a note on the details of the calculation and its administration.

Mr. John Redwood (Wokingham) (Con)

Like all hon. Members, I hope that my private interests in pensions will keep me above means-tested benefits in my old age and away from financial worry. Can the Secretary of State explain to my constituents, whose pension funds have been gravely damaged by the £5 billion smash and grab raid each year by the Chancellor, why it makes sense to damage their pensions, often to the point where schemes are closed or benefits cut, only to give less money back to them in the form of means-tested benefits? Is that not an outrageous mugging of our pensioners? Would it not have been better to have left more tax relief in the funds so that those pensioners, like us, could look forward to less worry in old age?

Mr. Smith

I cannot resist pointing out that the right hon. Gentleman was a member of the Government who oversaw the most calamitous mis-selling of pensions as well as fraudulent abuse of the occupational pension system, which did much to undermine confidence in that system. On pension credit, the Conservatives go on about means-testing, but the truth is that this is a million miles away from the humiliating, intrusive weekly means test of old. What worries them is that we are getting more money to the pensioners who need it most, while at the same time acting to address occupational pension insecurity through the proposed pension protection fund, measures for simplification, measures to take out cost, the development of informed choice, better financial numeracy and all the other measures that form such an important part of our strategy.

On dividend tax relief, I would take more notice of Conservative Members if their party were committed to its reintroduction. It is not, so this is all crocodile tears.

Jim Knight (South Dorset) (Lab)

If, before the 1997 general election, the Labour party had campaigned and pledged to increase employment by 1.5 million and virtually to obliterate youth unemployment, it would have been dismissed as dishonest and unbelievable. The Government's achievement in bringing down unemployment and putting more people in work through the new deal, which both Opposition parties voted against and which the main Opposition party says it would abolish, is an extraordinary tribute to my right hon. Friend the Secretary of State and his Department. However, has he considered a new deal for seaside communities, where seasonal unemployment is a particular issue? We need assistance to ensure not only that work pays, as my right hon. Friend says, but that it pays for 12 months a year.

Mr. Smith

I thank my hon. Friend for his praise for the new deal and its achievements. He is right, of course, that nothing could do more damage, setting back the hopes of those who would be assisted by those programmes, than the Conservative party getting the opportunity to end them. The idea that the Conservatives might save money from that to pay for pensions, or indeed to pay for anything else, is ridiculous when we take account of the fact that in cost-benefit terms the programmes are saving us money. The new deal for lone parents, as I mentioned, has been shown by research to save £40 million a year for the Exchequer. As well as the untold human damage that the Conservatives would inflict on many of the most vulnerable members of our community, they would face higher costs from abolishing the new deal, rather than saving money.

I listened closely to what my hon. Friend said about the need for action in seaside towns. My right hon. Friend the Chancellor referred to the document entitled, "Full Employment in Every Region", which we published today. If my hon. Friend studies it, he will see in its extensive analysis some interesting observations on the particular position of the labour market in seaside towns. Of course, action teams, local worklessness pilots and other intensive local programmes complement the new deal; many of them are appropriate to and applied in seaside towns. However, I will continue to listen to him and other colleagues from all parts of the House who represent seaside towns to consider what further needs to be done.

Hywel Williams (Caernarfon) (PC)

On behalf of my party, may I also thank the Secretary of State for sight of his statement? He is a busy man, but I wonder whether he has looked at the New Policy Institute report on poverty and social exclusion. If he has, he will have noticed the statement: Wales is noticeably worse than average for…indicators of poverty…children in workless households as well as young adult unemployment and concentrations of poverty. Poverty clusters around children in families without work. I wonder how such child poverty will be addressed by the 1.8 per cent. increase, following the Rossi index. To enlighten the House, for a young unemployed person who is under 25, that means a rise from £43.25 to £44.05—the princely sum of 80p.

How will such child poverty be addressed by the lack of any reference, so far as I can see, to the continuing disgrace of the social fund, which nobody seems to mention these days? Just in case the Secretary of State is tempted to refer to getting people into work, I refer to the New Policy Institute report: The proportion of people in poverty in households where someone was doing paid work rose from 33 per cent.…to 41 per cent. between 1999 and 2002. Therefore, we have an increase in the proportion of people working but in poverty. As a matter of interest for Conservative Members, although I do not know whether they read these reports—

Madam Deputy Speaker (Sylvia Heal)

Order. The hon. Gentleman has had more than enough time to put his thoughts to the Secretary of State.

Mr. Smith

The hon. Gentleman has made quite a lot of points, so I shall try to do them justice. The new deals of all kinds have been working well in Wales. It is another interesting feature of the analysis that we have published today that throughout the UK unemployment has fallen furthest where it was highest. That shows an evening out of opportunity, which is welcome, notwithstanding the concentrations of unemployment and other deprivation, which, as he points out, can occur in particular communities.

One of the pathways to work pilots, to which I have referred, is working in Bridgend and in the south Wales valleys, where there is a concentration of people who receive incapacity benefit. It is early days yet, but the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Liverpool, Garston (Maria Eagle), who is the Minister with responsibility for disabled people, and I make it our business closely to monitor the performance of those programmes. The early signs are very encouraging.

On the general point made by the hon. Gentleman about the increase in benefits, I point out that one of the great advantages of the Government's child tax credit approach is that there is seamless support for children, whether or not their parents are in work, so people out of work will benefit from that increase, just as people in work will. As I was telling the hon. Member for Northavon (Mr. Webb), who speaks for the Liberal party, that will be a big factor in helping us to hit our targets to reduce child poverty in Wales, as elsewhere.

Miss Anne Begg (Aberdeen, South) (Lab)

I welcome the Secretary of State reiterating his commitment to the new deal. About three weeks ago in Aberdeen, I helped to launch a new deal called progress to work, which is for recovering and recovered drug addicts. It is crucial that those young people get that specialist and specific help, because without it there is no way that they would ever enter the employment market. I am concerned that those people are the very ones who could be threatened should the Conservative party ever come to power and scrap the programme of new deals.

One of the main routes out of unemployment or off benefit for hard-to-place groups is self-employment. I notice that the Secretary of State said that the Government are thinking of providing extra help for those on benefits to enter self-employment. Can he give an indication of what that extra help might be?

Mr. Smith

My hon. Friend is right. As well as the general benefit of the new deal, there are those specialist elements of the programme, such as the progress to work initiatives to help drug abusers to manage their condition and to get to a position from which they can move into work. It would be an utter tragedy if the Conservative party were able to scrap them.

As we examine the future of the new deals and our wider array of employment programmes, as well as wanting to simplify what has become, due to its incremental development, a complex structure in terms of eligibility and programme operation, I think that there will be scope—not least through the incentivised employment zone approach—to make more resources available where people with a particularly challenging history or condition are being helped. As a condition of that, however, there must be a rigorous focus on the outcome of those programmes to enable us to have sufficient flexibility in the system, so as better to reward the ones that genuinely help the hardest to help and successfully get them towards the labour market.

It has been a feature of the existing new deal programmes that self-employment is an option. That has already helped many people successfully to start their own business. We want to develop that further with the quality of advice and support that is available. Of course, it will also be helped by the measures for skills, which my right hon. Friend the Chancellor announced in his statement.

Several hon. Members


Madam Deputy Speaker

Order. I must move on to the main business.