§ Mr. Deputy Speaker(Sir Alan Haselhurst)
Before we debate the first of the two motions, I remind the House that the two orders to be considered this afternoon, on social security benefits uprating and on guaranteed minimum pensions increase, are to be debated separately for up to one and a half hours each. Debate should therefore relate to the merits of each order and should not extend to wider matters of social security or pensions policy.
§ The Secretary of State for Work and Pensions(Mr. Andrew Smith)
I beg to move,That the draft Social Security Benefits Up-rating Order 2003, which was laid before this House on 5th February, be approved.
I am satisfied that the order is compatible with the European convention on human rights.
The order will uprate most benefits in the normal way. National insurance benefits will rise by the retail prices index—1.7 per cent for the relevant period—and income-related benefits will rise by the Rossi index, 1.3 per cent. They add up to about £2.25 billion of extra Government spending to help those in most need and to tackle poverty.
This year, as in every year since 1998, we are able to increase some benefits by more than inflation. That contrasts starkly with the 1980s and 1990s, when child benefit was frozen for three years and pensioners received only inflation level increases, even as social security spending spiralled out of control.
In 1997, we said that we would cut the costs of social and economic failure, and we have done so. Despite a turbulent world economy, the latest unemployment figures show a record number of people in jobs and the lowest unemployment rate of the major industrialised countries. Through our investment in the new deal and Jobcentre Plus we have tackled the legacy of mass unemployment that we inherited. Since 1997 there have been nearly 1.5 million more jobs, with savings of £5 billion on the cost of unemployment that can be invested in improving services and tackling poverty.
§ Mr. Steve Webb (Northavon)
In his opening remarks, the Secretary of State said that national insurance benefits had been increased at least in line with inflation. He will know, however, that there is one national insurance benefit for which that is not true—contributory jobseeker's allowance. For some reason, it was raised not by headline inflation but by the Rossi index—1.3 per cent. and not 1.7 per cent.—so it is a real-terms cut in a benefit that, at £50 a week, is already low. Will the Secretary of State or the Minister who responds to the debate explain why that benefit has been cut in real terms by being linked to Rossi, when normally national insurance benefits are linked to the all-items retail prices index?
§ Mr. Smith
I could hazard an answer now, but it will probably be best if my right hon. Friend the Minister for Pensions responds in the wind up.
My general case is valid: we have increased benefits according to the normal indices and, indeed, we have been able to go beyond that due to our success in 431 tackling mass unemployment. As a result of savings from tackling benefit fraud, we are able to ensure that more money is available to invest in services, providing extra help where it is needed and enabling more people to fulfil their potential, as well as, of course, tackling poverty. We have reversed the generation-long trend of rising child poverty. We have reduced by a third the number of families living on less than £10,000 per year and we are getting more money to pensioners than ever before.
Our strategy has been to tackle the root causes of poverty and to ensure that families and pensioners have a decent income and that people of working age are better off in work. We are doing more to help families. Last year, we raised the standard rate of maternity allowance and statutory maternity pay by a record amount to £75. This year we shall go even further, increasing it by a third to £100 a week.
At the same time, we are increasing the period for maternity leave to 26 weeks, with the option of a further 26 weeks unpaid, allowing women to take a year off work after having a baby. We will provide help not just for mothers but for fathers. We are introducing statutory paternity pay and statutory adoption pay at £100 a week, plus the right to two weeks' paid paternity leave and 26 weeks' paid adoption leave. That package of support will help 750,000 parents to support and care for their children.
I can also announce further direct support for children. Child benefit will be increased by more than inflation for the third time by this Government, taking the cumulative real increase for the first child to £5 a week since 1997. In addition, all child allowances will be increased by more than inflation, benefiting some 1.3 million of the poorest families in our country. Under Labour, income support help for the poorest children has doubled.
We know that it is particularly hard for low-income families who are bringing up children with disabilities, so I can announce today substantial rises in support. The disabled child premium will increase by more than 16 per cent. to £41.30—nearly double its 1997 rate—and there will be additional help for poorer families bringing up the most severely disabled children: the enhanced disability premium will increase by nearly a half.
§ Mr. Tim Boswell (Daventry)
The additional help being given to disabled children is welcome, but can the right hon. Gentleman give the House any information about any campaign, conducted by himself or in conjunction with the Treasury, to ensure that, as has been promised in the past, those new benefits are properly publicised to the families and parents of disabled children—particularly where those new benefits are linked to, or passported by, other benefits—so that they are drawn positively to their attention to ensure that the benefits get to those who need them?
§ Mr. Smith
I am grateful to the hon. Gentleman for welcoming the measures, and I am happy to give him the assurance that, yes, I am very concerned indeed that people should get the benefits to which they are entitled, and I will examine anything that has not been done in 432 response to a campaign that it would make sense to do. It is in all our interests that people get what they are entitled to, especially when we are talking about disabled children.
Together, the measures that we set out will help more than 87,000 families bringing up disabled children. Our tax and benefit measures, combined with our successful employment policies, are helping to get more parents into work, enabling us to make major inroads into child poverty.
We also continue to tackle the legacy of pensioner poverty that we inherited. For the third year running, the retirement pension will be uprated by more than inflation, with an increase of £100 a year from next April for single pensioners and £160 a year for couples. We will increase the basic state pension by at least 2.5 per cent. each year during the lifetime of this Parliament, reaffirming the basic state pension as the foundation of security in retirement.
We will, as in every year since its introduction, increase the minimum income guarantee in line with earnings, giving more help to the poorest pensioners. Indeed, as a result of that measure alone, the incomes of the poorest pensioners will have gone up by over a third since 1997. In conjunction with the winter fuel payments and free television licences, we are already spending £6 billion extra in real terms on pensioners this year.
§ Paul Flynn (Newport, West)
The Government are to be congratulated on their policy on pensioners, which has delivered an increase that is probably greater than any increase that would have been made if the link to earnings had been restored, but is it not true that many of the poorest pensioners are not claiming income support for various reasons? We should be considering those people, of whom there is a very large number. For reasons of pride or because of a disorganised life, or whatever, they are losing out, as their incomes are well below the minimum income guarantee level.
§ Mr. Smith
I agree that very many of the poorest pensioners are benefiting by more than a restoration of the earnings link would have given them, so I would not accept that they are especially losing out. Of course, it remains a challenge to increase take-up to the level that we would like, and creating a dedicated Pension Service will be a big help.
The Pension Service is more effectively organised to be sensitive to pensioners, as it has a local arm, and I am sure that all hon. Members are beginning to see the benefits in their constituencies of the local surgeries that are being organised. I am glad to see that some Conservative Members are nodding.
Getting such entitlements through the Pension Service is a very good way of tackling the stigma that many people have felt, wrongly, in getting something from social security. The more clearly we bracket those entitlements with the pension and as things that come through the Pension Service, the more we will encourage take-up.
§ Mr. Michael Jabez Foster (Hastings and Rye)
My right hon. Friend may be interested to know that, in my constituency, more than 3,000 people have applied for the minimum income guarantee—calling it something 433 different has made a big difference. As he will know, couples now get £150 a week, plus all the other benefits, whereas if the Tory link had continued they would now get £105 a week. That is a massive difference.
§ Mr. Smith
I welcome my hon. Friend's remarks, and I am very pleased to hear that our measures are making a difference to poorer pensioners in his constituency, as they are across the country.
I shall try to speed up my remarks because I am aware that the debate is more truncated than some hon. Members would wish and that a number of hon. Members want to take part.
In addition to the extra spending that I have already announced, we will go further. From this October, the pension credit will not only guarantee a minimum income but reward those with modest savings and occupational pension incomes, providing, we estimate, an average gain of about £400 a year for half the pensioner households in Britain. Thanks to all our reforms, pensioner households will be more than £1,150 a year better off as a result, and the poorest third of pensioners will have gained £1,500 a year in real terms.
§ Andrew Selous (South-West Bedfordshire)
Although the Secretary of State has just said that take-up is supposed to be better with the Pension Service, is he not concerned by the predictions from his Department that the take-up of pension credit is expected to be only 67 per cent.?
§ Mr. Smith
I have said already that I am concerned that the take-up of the help to which people are entitled should be as high as possible. The figure to which the hon. Gentleman refers is not a prediction; it is an operating assumption. We have to plan the expenditure using an assumption. However, if he is asking whether I am aiming for that target, the answer is that I am not—I want to ensure that take-up is as high as possible.
I shall write to all right hon. and hon. Members next month to set out our plans to ensure that people take up the pension credit to which they are entitled. We will automatically transfer current MIG recipients on to the pension credit, establish a freephone number for applications and launch an information campaign. For the first time, people will be able to make claims over the phone without having to fill in complicated forms—that will be done for them. The forms will be sent to them, and all they need to do is sign them—so we are simplifying the process.
Those measures, combined with the state second pension, which will benefit some 18 million people, will help all pensioners. We are making a real difference to the living standards of all pensioners, but those measures will help the poorest pensioners most of all.
§ Hywel Williams (Caernarfon)
I am slightly concerned that the Secretary of State seems to have jumped several generations, from talking about poverty among children to pensioners. Does he intend to address the income support available to younger people—those under 25—who are very clearly in poverty? I note from the table provided that the increase will be a whole 55p 434 this year. Does he suggest that they perhaps buy a weekday copy ofThe Guardian with that money, as that is all they could manage to do with it?
§ Mr. Smith
I would not attempt to prescribe what people should spend their benefits on. I take the point that the hon. Gentleman makes about people's needs. As I said, the amounts are being uprated in the proper way and, as he will be aware, the Government have made a big drive to give more help to disabled people. We have advanced their rights in an unprecedented way by creating the Disability Rights Commission. Moreover, we have not only improved benefits in the way that I have already outlined but launched pilot schemes that will help would-be recipients of incapacity benefit to stay in work or move into jobs. We should never forget that up to 1 million disabled people say that they want to work, and too many barriers are in the way of that at the moment. This Government want to remove those barriers and enable disabled people to work, while at the same time providing security for those who are unable to work.
In drawing my remarks to a close, it is evident that the measures that I have described will benefit a large number of children, parents and pensioners. They carry forward our reform of the welfare state and our mission to tackle all forms of poverty. Through policy reform, getting record numbers into jobs and tackling fraud, we are able to target extra resources on children and pensioners who need help most. This order helps us to build a Britain that fulfils potential, opens up opportunity and tackles poverty, and I commend it to the House.
§ Mr. David Willetts (Havant)
We will not oppose the order, and we will certainly not make the mistake famously made by the Liberal Democrats a couple of years ago of trying to vote against any increase in benefits. That was almost as much of a cock-up as the one that we have had today, which means that we cannot have this debate on the scale for which Members on both sides of the House would have wished. Sadly, the uprating debate has shrunk from a full day to three hours. It is a great pity that we have only an hour and a half on this order. I appreciate that that was an accident, but I hope that we will revert to the old arrangements in future.
As we now have less time than we had hoped, I will have to set aside my extensive indictment of the Government's record on social security, powerful and compelling though the evidence was. I am sure that it will be recycled on another occasion. Instead, I shall make some brief remarks.
First, this is a melancholy occasion, as this uprating order marks the disappearance of a range of benefits from the responsibility of the Department for Work and Pensions as they become tax credits to be run by the Treasury. We understand that Whitehall's arrangements are always being changed, but this change may result in a poorer quality of policy making and decision making. In so far as there is accumulated expertise anywhere in Whitehall on the needs of poor people and how to run their benefits, it lies within the old Department of Social Security, which is now the DWP. I am surprised that 435 Labour Members do not appear to agree with that, as it seems clear to me that the Inland Revenue rightly focuses on extracting income tax from the better-off. The idea that the Inland Revenue should send out giro cheques to millions of people, which will start in April, seems absurd.
We are told that the new arrangements will be seamless, but the reality is that an unemployed family will receive a child tax credit from the Inland Revenue to cover the costs of their children, while separately receiving from the DWP an unemployment benefit payment for the adult. That seems a far clumsier system than the one that it replaces. I hope that the two different Departments will co-ordinate their approach to one family, but it is a significant risk. As one Blairite adviser observed to me, the Chancellor of the Exchequer may not believe in contestability when it comes to health or education, but he certainly does when it comes to benefit systems, as we will now have two. I hope that the two systems can work successfully.
In the background to today's uprating is yet more means-testing. The benefits that we are uprating include further extensions of means-tested benefits as a proportion of the total social security budget. Rather than quote to the Secretary of State yet again the notorious commitment by the Chancellor to the Labour party conference 10 years ago to end the means test, I might go back further to an episode described in Alan Bullock's biography of Ernest Bevin, in which Bevin tried to persuade the tinplate workers of south Wales[Interruption.] I knew that the Minister for Pensions would be interested when I mentioned Ernest Bevin. He tried to persuade those tinplate workers to join an occupational pension. He negotiated it with the employers, but his members rejected it. Bevin went to his council of the T&G in 1937 and said the following:I think it is a tragedy for south Wales, but it appears that a large number of the men take the view that if they become party to a superannuation they are merely saving the Unemployment Assistance Board expenditure. When a large community develops a relief complex of this character it is not good for democracy.He found that the scope of means-testing was such that he could not encourage his own members to build up funded pension saving. That is a powerful warning of the long-term effects of means-testing on its current scale.
§ James Purnell (Stalybridge and Hyde)
As the hon. Gentleman is taking us on a trip down memory lane, will he confirm that he was an adviser on social security policy through almost the whole of the Thatcher Government? Does he therefore regret that they froze child benefit and froze pensions in real terms, and that the income of the bottom 10 per cent. of people fell in absolute terms—not in relative terms—by about 20 per cent.?
§ Mr. Willetts
We always have this exchange. I do not recognise the figure of a 20 per cent. fall in the real incomes of the poorest part of the population. I simply do not accept that.
What I want to talk about is what this Government are doing in uprating benefits. The problem of means-testing is not just its effects on behaviour but the problems of take-up to which reference has been made. 436 It is a great disappointment that we still have no take-up figures for income-related benefits for any year later than 1999–2000. They should have been published at the latest by last September, when we were suddenly told that they could not be released until research had been concluded on how tobetter identify people who are eligible for income-related benefits, especially pensioners." —[Official Report, 15 October 2002; Vol. 390, c. 645W]There is no reason why that research should delay the production of empirical evidence about the take-up of means-tested benefits. Nearly three years have passed since the period for which we require data, and the House would not be demanding unseemly haste of the Secretary of State in producing reliable figures for the take-up of means-tested benefits in 2000–01. The fact that we do not have figures for later than 1999–2000 is a disgrace.
§ Mr. Webb
Given that the Secretary of State said that next month he will announce a package of measures to improve take-up of pensioner benefits, is it a coincidence that the figures for which the hon. Gentleman asks are due to be published at the end of next month? Does he share my suspicion that the figures may not be very good?
§ Mr. Willetts
My suspicions are that the Secretary of State is waiting for something to sugar the pill of some figures that might show, sadly, that take-up is far lower than all of us, on both sides of the House, would want.
There is a lot of change going on, and it is a pity that we do not have a longer debate in which to examine it. Briefly, in relation to some of the changes in social security benefits that we are about to see as part of this uprating order, I hope that the wind-up will provide a little more information on three points. First, on the new arrangements for the payment of benefit coming into force in April, there are widespread concerns about the post office card account. Ministers have regularly offered assurances that, as a very minimum, information will be given on all forms of benefit payment—not just on commercial bank accounts but on the post office card account. People should therefore have a choice, including the possibility of continuing to collect their benefits at the post office through the post office card account. I want to quote from a letter, however, which was sent to someone living near my constituency, who has passed it on to me. That person is in receipt of child benefit. The letter, which is from the child benefit centre in Washington, simply states:It has been decided to withdraw your order book method of payment for child benefit. Future payments will be made into a bank/building society. Please complete the enclosed form CH 1702 with your bank/building society account details.That is not compatible with the assurances that we have been given on the provision of information on post office card accounts to benefit claimants. The memorandum from the child benefit centre does not meet earlier ministerial assurances. I shall not detain the House by repeating those assurances, but the Secretary of State knows that they were given, and what is going on now is not compatible with them.
§ Andrew Selous
Does my hon. Friend share my concern that the script that the new Pension Service will use mentions the post office card account hardly at all and only at the very end, a fact that I and the Chairman of the Select Committee, the hon. Member for Roxburgh and Berwickshire (Sir Archy Kirkwood), who is in the Chamber, duly noted when we visited the Pension Service centre in Burnley? Does my hon. Friend agree that that will cause great difficulties for many post offices, which will be forced to close as a result of losing that income?
§ Mr. Willetts
My hon. Friend is right. It is clear from the way in which leaflets are produced in post offices, the letter from the child benefit centre and the script that followed that Ministers are not delivering on the assurances that they gave on information about the post office card account. I hope that the Minister will cover that in his winding-up speech.
On the arrival of the Pension Service, I was surprised to hear the Secretary of State say that local meetings are taking place to give people practical advice. As a Member of Parliament who represents Havant on the south coast, I have received a letter saying that the Pension Service office in Wrexham will handle pension issues for my constituency. Apparently, I should write to it there and my constituents can phone it. I am not aware of any improvements in local advice; nor am I aware of the delivery of the promised face-to-face interviews.
There have been exchanges in the Select Committee on that and I also had an exchange on the television last year with the Minister's Parliamentary Private Secretary, who was introduced as a Government aide. As the Government's representative, the hon. Member for Wigan (Mr. Turner) said:We have guaranteed that any pensioner who wants a face-to-face interview can have that and we're actually doubling the number of staff at the moment who have that face to face, the new Pension Service will have twice as many.
I hope that the Minister will repeat the assurance that his Parliamentary Private Secretary gave, so that we can guarantee that any pensioner who wants a face-to-face interview can have one. We realise that that does not mean every pensioner, because many will not want a face-to-face interview, but the interview should be available for those who want one.
We all know that the evidence given by the head of the Pension Service to the Select Committee and elsewhere is not compatible with the assurances, including those given by the hon. Member for Wigan. The head of the Pension Service said:We are not building a model which is actually showing that anyone can just choose to have a home visitShe also stated:The local service is not designed to be a 'visiting on demand' service and we would expect such occasions to be rare.Are we, or are we not, able to assure our constituents who want a face-to-face meeting that they will get one with someone who has the authority and expertise to give them proper advice?
438 I know that many hon. Members want to speak, so I shall be brief—[Interruption.] Are Labour Members telling me to keep going? Is that because my contribution is so compelling? I do not know how many hon. Members wish to speak—
§ Mr. Willetts
My distinguished hon. Friend has much wisdom on the subject and I am sure that he will wind up with great skill.
On the Child Support Agency and the conversion of old cases to the new formula, on which we heard a statement some time ago, when is C-day, as it is called, and what are the arrangements? I am sure that all MPs are receiving inquiries from their constituents who are concerned to know when and how they are to be moved to the new formula. Advice that can be given on a more authoritative basis would be welcome.
I hope that the Minister will tackle those specific concerns and say a bit about the philosophy of a Government who are supposedly committed to welfare reform but who have, after six years in office, ended up with a situation in which well over half the British population are on means-tested benefits. The number of people on income support is higher than it was when they came to office, the number of people claiming incapacity benefit is higher than it was when they came to office and the household savings ratio is almost at a record low. That is not the society that we want. We want more funded savings and people to be less dependent on means-tested benefits. It is a tragedy that we are heading in the opposite direction.
§ Vernon Coaker (Gedling)
I want to raise two or three specific concerns that my constituents have brought to my attention. The order is exceptionally important, given that it accounts for billions of pounds on which many people depend. We need more than an hour and a half to consider such matters, because they are of fundamental importance to a huge number of people. Indeed, they affect thousands of people in every constituency.
I agree with the hon. Member for Havant (Mr. Willetts). I am keen to ensure that benefits paid by post office accounts are made properly available to people. A number of my constituents have raised the problems that they have encountered on trying to open such an account. They have almost been persuaded not to have one. Sub-postmasters have also mentioned that problem to me. Post offices throughout the country need to operate on a level playing field so that people have a proper choice when they decide how their benefits should be paid.
§ Andrew Selous
Is the hon. Gentleman aware that the Post Office official to whom I recently spoke said that post offices stand to lose 41 per cent. of their income through the automated credit transfer process?
§ Vernon Coaker
I do not want to get into a debate about that. It is necessary for the Post Office to modernise. The Government's investment in computerisation, for instance, is welcome. Post offices need to diversify to build 439 up other aspects of retailing and so on. However, alongside that modernisation, we need to accept that post offices cannot continue to be subsidised by the state to pay out benefits. In the process of change, people need to have a choice about how they want their benefits to be paid. That is the sensible approach and I hope that the Government take it.
The Minister knows that I am keen supporter of the pensioner premium part of income support. Although it was unpopular at the time, it has redirected huge resources to the poorest pensioners in society. As a Labour Government, we decided to do that rather than to uprate all pensions because that would have allowed all pensioners to receive an additional sum even if they did not need it. We chose to ensure that the poorest pensioners received significant increases in their income. Many pensioners in my constituency have received that significant increase and it has made a huge difference to their quality of life and standard of living. The Government are to be congratulated on that and I was pleased to defend their policy when that was not a popular thing to do. We can be proud of the outcome.
Hon. Members on both sides of the House have spoken about take-up. We need a bit more information from the Department about what is happening with that. Can my right hon. Friend the Minister for Pensions provide any further information, and say how successful or otherwise we are? I support the policy, but I know that some people who are entitled to the benefit are not able to claim it or are not aware of their entitlement. We need to continue to consider how we ensure that those people are made aware of their entitlement.
§ Annabelle Ewing (Perth)
The hon. Gentleman was talking about the Labour Government's successes in dealing with pensioner poverty. How does that square with the fact that in Scotland one in four pensioners are still living in poverty, after nearly six years of a Labour Government?
§ Vernon Coaker
I was pointing to the fact we have made the decision to shift a significant amount of resources to the poorest group of pensioners through the pensioner premium in income support, which was an unpopular decision opposed by many in the House. However, we rode out that opposition because we wanted to introduce the change. Other measures have also been introduced, including the winter fuel payment. The Government have tried to address problems, but take-up is still an issue. When I talk to pensioners in my constituency, they are still confused about their entitlement and the forms to be filled in. We must continue to try to find ways of dealing with that, perhaps through the Pension Service.
§ Mr. Heald
I do not know whether the hon. Gentleman has seen the Pensions Policy Institute paper that was published recently, but it shows that the income of pensioners as a percentage of national earnings is exactly the same now as it was in 1997. In fact, the gap between rich and poor has widened.
§ Vernon Coaker
I have not read that document, but if the hon. Gentleman talks to pensioners or looks at what 440 is taking place, he will see that significant additional resources are going to poorer pensioners through the pensioner premium in income support. I supported that policy decision when the Government made it, and I still do.
As I said earlier, I support very much the Government's welfare to work programme, and I believe we should all do so. The best way out of poverty is for people to be supported into work. The Government have introduced a number of successful measures to deal with that. They have targeted improvements on various benefits. The Secretary of State mentioned child benefit, in which there have been incredible increases, especially in respect of the first child, making a significant difference. My right hon. Friend also talked about changes to the disability premium—we all support those welcome improvements.
Flicking through the Social Security Benefits Up-rating Order 2003, one can see that it applies to hundreds of different benefits. A heart-rending, soul-searching parliamentary debate about whether some of those benefits are set at an appropriate level is long overdue. Some of the people I see are dependent on benefits and cannot work, for whatever reason. Sometimes I wonder how they can exist on the money that they receive. That is not so much a criticism as a plea for reflection. Can we pay benefits at a level that does not encourage people to stay on benefit, support a welfare- to-work policy, pursue an anti-poverty agenda, and command public support so that we are not criticised for making benefits too generous? The House and the country need to consider the serious question of whether the poverty line in our benefits system is appropriate. Are we being generous in our definition of poverty? Recently, the journalist Polly Toynbee lived on benefits. She could be ridiculed, as she knew that she would come off benefits and go back to her own world, but her experiences do provide an insight into poverty. She was moved by how little people who depend solely on benefits receive to support themselves. The House ought to have a debate on what is an appropriate poverty line in this country in the 21st century.
Finally, whatever the benefit, huge numbers of people come to our surgeries because they have difficulty finding their way through the forms and claiming their entitlement. Whatever system is set up, that is bound to be the case. It is therefore incumbent on us to ask ourselves whether the system is as good or simple as it could be, and what is the way forward. I welcome the Secretary of State's speech, which included good things about the disability premium. I congratulate the Government on that, but ask my right hon. Friend to take on board some of my remarks to see whether further improvements could be made, especially to take-up, which would help us to make our benefits system better still.
§ Mr. Steve Webb (Northavon)
It is always good to follow the hon. Member for Gedling (Vernon Coaker), whose contributions are thoughtful and gratifyingly critical of the Government—in a supportive sort of way.
441 It is hard not to reflect on the fact that, in debating the order and tax credits, we are debating expenditure of £100 billion in 90 minutes, which is about £1 billion a minute. I appreciate that the circumstances in which that time limit was set are beyond our control, but will the Secretary of State make representations through the usual channels to find an alternative occasion, perhaps in Westminster Hall, so that we can have the debate that we might otherwise have had here? There are many wider issues that it is not in order to raise in relation to the motion. However, they do need to be addressed, and there is not an obvious forum in which to do so. I hope that the Minister for Pensions will provide an assurance that he will seek such a debate.
I shall not make some important points that I might otherwise have made. Comments by Members on both sides of the House about the move to automated credit transfer are important, and I should like to see a campaign of civil disobedience by pensioners up and down the land, and the ceremonial burning of letters from the Pension Service saying that they cannot receive their money in the way in which they used to receive it until there are cast-iron assurances about the post office network that, frankly, I do not believe will ever be forthcoming.
I shall not repeat my intervention on the Secretary of State about the level of the contributory jobseeker's allowance, but I hope that when the Minister responds he will explain why that benefit has been cut in real terms. As the hon. Member for Caernarfon (Hywel Williams) mentioned, it is a woefully small increase to a woefully small benefit. Perhaps the Minister can explain why people on contributory jobseeker's allowance who have paid contributions will experience a real-terms cut in April.
There are three topics that I would have liked to deal with at greater length, but I shall now merely headline them. First, we have previously visited the 25p age addition in the orders. I thank the Minister and the Secretary of State because, unlike the previous Secretary of State, they are willing to engage in the argument about whether age additions are a better strategy than means-testing. The previous Secretary of State simply did not engage in that argument, but written answers that I have recently received from the Minister have set out the Department's line, which was previously given only in the Lords, where these things are debated properly. I thank the Minister for editorialising his recent written answer to me, explaining the facts of the case and why I am wrong. That is a step in the right direction.
On the strategy of age additions, instead of the 25p in the orders, it should be a worthwhile sum. The Government line is that older pensioners may be poorer on average, but there is a big dispersion of incomes among older pensioners, which is clearly true. They take the top and the bottom of the distribution as evidence, and say that there is a big gap between those two numbers, but that is only saying that there are some relatively rich old pensioners, which I do not dispute. The Government do not report in their written answers to me the shape of the whole distribution. At the top, there is a minority of well-off pensioners, but most of the distribution is quite low, with a sharp increase at the end. Therefore, although some of the money does not go to those who need it most, much of the money goes to those who miss out under the Government strategy.
442 Neither strategy is perfect. Under our strategy, which I think is also the Conservative strategy and that of the right hon. Member for Birkenhead (Mr. Field), we pay some money to the rich very elderly, but most of it goes to the relatively poor very elderly. Under the Government strategy, all the money goes to those who claim it who are by definition poor, but they miss out on a lot of very poor people, who do not get it at all.
The matter is not as clear cut as the Government like to pretend it is. Given that with the pension credit the presumption is 2.9 million recipient households out of 4.1 million entitled households—Government figures, not mine—that is a million who will not get a penny under the Government strategy, and probably two thirds of them would get all the money under the age addition strategy. I hope that the Government, particularly when they review wider pensions issues, will reflect on the 25p figure in the order and whether the reliance on means-testing can be reduced through an age addition strategy. I have never said that there is no place for means-testing; it is a question of balance.
§ Mr. Andrew Smith
In the interests of open debate on distributional issues, which the hon. Gentleman says he welcomes, does he accept that the cost of his strategy is not only that some older rich pensioners get money that they arguably do not need so much, but that younger poorer pensioners do not get money that they do need?
§ Mr. Webb
I accept that. However, the younger poorer pensioners below the income support line are typically not very far below the income support line, whereas the old poor pensioners who fail to claim their minimum income guarantee are typically a good deal further below the line. The recently retired generally tend to be better off. I accept that there are pros and cons to each strategy, but the distinctions are not nearly as clear cut as the Government like to pretend.
As an example, a recent written answer to me from the Minister of State stated that the pension credit was going ahead, but had the Government decided at the start of the year to put the whole net cost of the pension credit on the pension for the over-75s, the pension for the over-75s would have been £19 a week bigger. That was the sum cited in the Minister's written answer to me of 25 February. That is close to the MIG, so the question is whether, had we not followed that strategy, for the same expenditure we could have got everybody over 75 clear of the MIG, with vast gains in take-up and in administrative saving. I hope that the Government will keep an open mind on the issue.
As a final observation on the age addition issue, I note that the same Government who say that targeting by age is a bad idea because there are some rich old people have chosen to make TV licences free to all the over-75s. When the Chancellor announced that measure in his Budget speech, he justified it by saying that on average older pensioners are poorer. The Government cannot have it both ways, although they may try; there must be some consistency in their reasoning.
The second issue is the increase of £1.95 a week in the retirement pension, for which the regulations provide. That is £1.95 a week for people on full pensions. I draw to the attention of the Secretary of State women who do not get £1.95 a week increase—they do not get £1.95 a 443 week pension, because of the operation of the married women's stamp. I have invited the Secretary of State—I hope that he will respond to me shortly, though probably not today—to have an independent look at the position of those women who do not get the £1.95 under the regulations.
I want to put on record the way in which our thinking about the matter has moved on. In the past we have said that those women signed up for the system, but we dispute whether all of them knew what they were doing and whether they had proper information. The Government's line—or some parts of the Government's line—is, yes, the women knew what they were doing and it was all crystal clear, whereas Lord Rooker, when he was a pensions Minister, said that none of the information would have passed the plain English test. There has been some admission in the past that there was a problem.
I still believe that there was a problem, but we will never resolve it because the events took place a long time ago. Our argument now emphasises the fact that there was not a one-off decision by those women. It was an ongoing decision for the whole of their lives to remain on the married women's stamp. What might have been a correct decision when they made it may have become a wrong decision when the half-tests were scrapped, which the Secretary of State knows all about, the homes responsibilities protection was introduced, and the national insurance for the low paid was restructured. All those measures changed the balance of advantage of being on the reduced stamp as opposed to being on the full stamp.
The issue that we have not explored properly, which an independent inquiry could investigate with no prejudice and no obligation, is whether women knew about that, whether they had information, and whether they lost out through not being told about the changes. It ceases to be an argument about what happened in the 1960s and becomes an argument about whether women were told about the changes in the system that affected their choices and now affect the benefits that they draw when they retire.
The issue is not just a Lib-Dem whinge. We have tabled early-day motion 131 and the majority of signatories are Labour MPs—76 Labour Members have signed the motion. It is regrettable that the Conservatives have put a block on their Members signing, but 13 free-thinkers on the Conservative Back Benches have done so anyway. I hope that the Secretary of State will reflect on the matter. I stress that apart from 1 million stamps, virtually no public expenditure would be involved, so he would not be making a public expenditure commitment. It is a matter that unites hon. Members across the House.
I do not say that I have an angry woman in every constituency, but something approaching that.[Interruption.] Yes, we are working on it. There are members of our campaign organisation in more than 400 constituencies, and they have met hon. Members. Many hon. Members in all parts of the House have signed the early-day motion. Let us not make it a party matter. I welcome the support from all parts of the House. Let us have an independent look at the issue. I hope that the Secretary of State will respond positively.
444 The final issue is the complexity of the system, which has been touched on. I am a regular subscriber to the Child Poverty Action Group's handbook on welfare benefits, which runs to 1,300 pages. I received a rather worrying letter recently, inviting me to buy next year's edition, which will include the tax credits, and informing me that it will include an extra 300 or 500 pages—I do not remember which. The letter assured me that the handbook would not take up any extra space on my bookshelf because it would be printed on Bible paper. In other words, the system is so complicated that next year another 300 or 500 pages will be added to the guide to help people through it, and the guide is only a summary—it does not go into the law in any detail.
When the hon. Member for Gedling (Vernon Coaker) commented on the complexity of the system, I expected him to say that radical simplification is needed. I agree that we need to consider what would be adequate, but surely we are going down the wrong track.
§ Mr. Willetts
I entirely agree with the hon. Gentleman about the extra complexity that will be added by the move to tax credits. Will he confirm that, in evidence to the Public Accounts Committee, the chairman of the Board of Inland Revenue said that the computer power needed to deliver the tax credit proposals was eight times that needed for self-assessment, and that the PAC has shown that the simple cost of the IT and administrative expenditure to install the new system is well over £1 billion? That is money that could have gone in benefits delivered by well-established systems. Instead, it is being spent on inventing a parallel system that will leave many of our constituents more confused than they are already.
§ Mr. Webb
Yes. I am aware of tax accountants who do tax every day, but when faced with a benefit form are bewildered by the entire process. However, we must come clean. We all voted for the Tax Credits Act 2002, so we all supported the principle. We have considerable reservations about its complexity and we may well have to revisit it. In admitting that, we should accept that there is great complexity in all the benefits. For example—
§ Madam Deputy Speaker (Sylvia Heal)
Order. I hope the hon. Gentleman will relate his remarks to the uprating of the benefits.
§ Mr. Webb
Indeed, Madam Deputy Speaker. I have a specific example involving income support and the rates being introduced this April. A constituent who came to speak to me about another matter had a letter from his local Jobcentre Plus about the rates of income support that he will get in April. I have a question about the order, to which I hope the Minister will respond.
The letter tells my constituent how much income support he will get now, and goes on to inform him that on 1 April he will get £8.40 because a change in child benefit is coming in. On 8 April he will get £11.77 a week because of a change in the money that he receives through other benefits. On 15 April he will get £11.50 a week because of a change to the severe disability allowance that his partner gets. On 29 April he will get £11.27 because there will be a change to the child benefit that his partner receives. That is four changes in a month.
445 I read the regulations last night, and it appears that not all the changes come in on the same day. Given that income support depends on all the other benefits that people are getting, my constituent will get four different rates of benefit and does not have a clue why. Can the Minister of State explain why the changes are being introduced on different days during April, and how many extra letters have to be sent out to tell people that for a week they will receive a different amount of money? That is symptomatic of the complexity of the whole approach.
§ Mr. Heald
I do not know whether the hon. Gentleman recalls the draft Child Support (Miscellaneous Amendments) Regulations 2003 that we discussed recently in Committee. Does he agree that if we take account of the knock-on effects of the changes in this order and the complexity of the system on matters such as child support and benefit sanctions, we will end up facing an absolute empire?
§ Madam Deputy Speaker
Order. Once again, we are going rather wide of the motion.
§ Mr. Webb
I am grateful, Madam Deputy Speaker. I shall wrap up my remarks, but I hope that I will receive some idea as to why the rates are changing on different dates in April and get some sense that the Government recognise that producing telephone directories of regulations and benefits is not the right approach to take.
The fact that we have not got proper time to debate the motion is the result of a cock-up rather than a conspiracy. I hope that we shall receive an assurance that we will have a chance to raise the wider issues that you, Madam Deputy Speaker, quite properly do not want us to consider now. However, the House should certainly have the time to consider them. Although we were right when we opposed similar regulations a few years ago, we will not oppose the motion today.
§ Mr. Tim Boswell (Daventry)
I shall be brief so as to leave time for a proper response. I appreciate the narrowness of the terms of this debate but I shall make a few brief points that have not already been well brought out in the earlier contributions.
Can Ministers comment on the position of the increments to the retirement pension for those who have worked beyond their time or whose partners have worked beyond their time? There is a clear steer in the Green Paper that people should be encouraged to work beyond the statutory retirement age. However, as I understand it, there is still a disincentive—or apparent unevenness—in the treatment of the increments from the basic retirement pension because, to be fair to Ministers, they have been more generous with the basic pension. We need to establish the principle that the two elements should operate in parallel in the future.
My second point relates to the disregard of pension income in connection with incapacity benefit. The system has now been in operation for nearly two years and kicks in at £85 a week. I believe that there has, as yet, been no indication of any uprating of that figure. Clearly circumstances and the amounts paid vary over time, and Ministers might like to clarify the position on that.
446 My third point relates to work. We now have a new structure in which therapeutic work is deemed to have come to an end and there is now permitted work for a finite period. Beneath that, since the Social Security Act 1986 was implemented in 1988, there has always been the understanding that people who, for example, return to work after a period on benefit could work for a limited period and receive pay that would be disregarded. That initially kicked in at £15 a week but it is now £20 a week. If we relate that figure to the minimum wage, it is a morning's work and no more. However, there does not seem to be a change in the permitted level for any period of time and I flag up to the Minister that there is something of a black hole between the operation of that relief and the new permitted work regulations for people working more than 16 hours a week.
A final anomaly relates to the achievement of both Houses and Ministers in relation to the pension credit. Hospital downrating rules were amended to 13 weeks instead of the much shorter period that was in force previously and that will remove much of the sting of the operation of those rules in relation to pension credit. However, I ask Ministers to reflect on some of the associated benefits that have not been so amended. In particular, I think of the attendance allowance for older people that kicks in to affect the benefits available to those who care for them.
As I understand it, the attendance allowance is still withdrawn after four weeks in hospital. Therefore, although someone's pension credit is not deducted for a reasonable period when someone is in hospital—in fact, that person is likely to have left hospital—the last thing that he or she might think about is the attendance allowance. I flag up to Ministers a more general concern that results from the fact I have come across cases in my constituency work of the Department attempting to reclaim benefits that have been overpaid to people who are not fraudsters. Their behaviour may have been inadvertent or they may have been unwell, and problems might arise from that. I hope that Ministers will consider that issue, because the cost would be quite small in relation to the circumstances that I have mentioned. They could make a difference to smoothing the problem out.
In the spirit of getting on with the debate, I shall make only one further point that relates to the delivery of the benefits. It does not matter how much they are uprated if they are not functionally available to the people who need them. Points have been raised about the operation of the post office card account and about the take-up of benefits. I agree with those points, but I add one of my own that was touched on slightly in the remarks of the hon. Member for Northavon (Mr. Webb). There needs to be a functional network of post offices in which benefits can be delivered. That applies even if that involves the use of basic bank accounts and more so if it involves the use of post office card accounts.
A written answer that I received the other day suggested that 12 million payments are still made at post offices every week. One of the problems is that that number of payments proceeds in parallel with—and in certain cases is preceded by—the closure of urban post offices.
§ Madam Deputy Speaker
Order. I hope that the hon. Gentleman will not continue for too long on that point.
§ Mr. Boswell
He will not, indeed, Madam Deputy Speaker. He is making the point that it does not matter how good the benefits are if, for example, my constituents in Tamar square in Daventry, who handed me a petition the other day, find that the post office from which they were going to collect their benefit is no longer open and that the post office to which they are now assigned has queues of an hour at the time of its greatest use.
§ James Purnell (Stalybridge and Hyde)
I shall make a few very brief points. The first relates to an issue that was considered in the Committee considering the State Pension Credit Act 2002. It involves the incomes disregard for the pension credit. I very much welcome the upratings that have been announced today, but we are trying to encourage older people to work at least until the age of 65 and perhaps beyond. Income starts to get clawed back if they earn only £5 to £10, and that figure may be too low. Have Ministers considered the position in Denmark? As I understand it, it is starting to disregard all income for those aged over its pension age. I can imagine that the expenditure implications may be high for this country, but is it not worth considering whether the disregard should be higher so that people can work beyond the age of 65 without losing too much of their pension credit?
The hon. Member for Daventry (Mr. Boswell) referred to home responsibilities protection, so will my right hon. Friend the Minister for Pensions consider a discussion that we had in Standing Committee last year? Perhaps he could reply today or in writing and tell me whether today's statement will deal with the fact that people who care for foster children do not receive home responsibilities protection because they do not receive child benefit. As a consequence, they do not receive credits towards their basic state pension. That leaves them without the security in old age that they require. I know that Ministers said last year that they would consider that point, but several people in my constituency have raised the issue with me. I have spoken recently to foster carers in my constituency and they told me that they did not realise that that would be the consequence of their caring for foster children. That might act as a genuine disincentive, so will my right hon. Friend say something about that today or in future weeks?
I also want to return briefly to the speech of the hon. Member for Havant (Mr. Willetts). He said that he did not recognise the figures that I had quoted. I have written to him to say that those figures are from the Office for National Statistics. I first saw them in Nick Timmins' biography of the welfare state. I wonder which figures the hon. Gentleman does not recognise. Does he agree with the Office for National Statistics, because most people would agree that it is a fairly reliable source of information even though he has a good record of exposing some of its inaccuracies? However, on this issue, it is a fairly reliable source, so does he not recognise the figures in the publication on households on below average income or those of the ONS? Does he think that the figures are wrong? I would be interested to hear him apply his forensic skill to the figures to learn whether they are correct.
448 Means-testing underlies the Government's uprating announcement. The hon. Member for Havant and his colleague, the hon. Member for North-East Hertfordshire (Mr. Heald), spoke about the problems of means-testing. Means-testing is a way of targeting the benefits that the Government give out. If we do not target benefits, the current distribution of income will remain as it is. Under the Government of whom the hon. Member for Havant was a member and served so well from 1979 to 1992, the income of the poorest 20 per cent. fell by 30 times, in relative terms, the income of the top 20 per cent. According to the latest publication, under this Government, the income of the bottom 20 per cent. is rising at the same rate as that of the top 20 per cent. In today's economy, rewards for skills and education are growing exponentially.
§ Mr. Heald
I do not know whether the hon. Gentleman has seen the paper that was published very recently by the Pensions Policy Institute, but it shows that the gap between rich and poor is widening.
§ James Purnell
That point relates only to pensioners, if I am not mistaken. In response to my hon. Friend the Member for Gedling (Vernon Coaker), the hon. Gentleman quoted figures to show that the value of pensions had stayed the same as a proportion of earnings. That is an achievement when compared with the Conservative Government's record. Under that Government, the amount fell, because the pension was tied to inflation. As earnings rise faster than inflation, this Government have managed to restore the overall amount of money that has been put into benefits and pensions. We are increasing it in line with earnings and in line with the overall economy—and we are targeting money at the poorest people. That is a significant improvement on the Conservative Government. Opposition Members may wish to acknowledge that: they may even wish to apologise.
At his party's most recent conference, the hon. Member for Havant said that his party had made some mistakes during its time in power. I wonder whether he thinks that it made some mistakes on benefits. The hon. Member for North-East Hertfordshire may wish to intervene again to clarify the position.
§ James Purnell
I see that he does not want to.
Will the Minister tell us how today's announcement affects the goal of reducing child poverty by 50 per cent. by 2010? Has he considered the good work done by Holly Sutherland of the National Council for One Parent Families? How far will the announcement take us towards our goal of creating a fairer society—which would be in stark contrast to the record of the Conservative Government?
§ 3.2 pm
§ Andrew Selous (South-West Bedfordshire)
It is sometimes futile to trade statistics across the Chamber, but I want to respond to comments made by the hon. Member for Stalybridge and Hyde (James Purnell). The figures for the number of working-age adults on less than 60 per cent. of the median household income have 449 remained at about 6.6 million from 1994–95 to 2000–01, so there does not seem to have been much of a shift there.
In this uprating order, we have seen an increase in incapacity benefit from £70.95 to £72.15. I do not think that the number of people on incapacity benefit in this country is generally known; neither is it known that the number is steadily increasing. In fact, 2.38 million people are on incapacity benefit. That is a rise of 1.7 per cent. over the past year. Of those, 1,070,000 have been on incapacity benefit for the past five years.
The Select Committee has seen evidence that, in parts of the country with high unemployment, many general practitioners have perhaps been more willing to sign people on for incapacity benefit than has been case in other parts of the country. In their quest to get more people of working age into work, I suggest that the Government consider carefully the points of entry to entitlement for incapacity benefit.
I want to suggest another change to the Secretary of State. Will he consider changing the name of the benefit? Why not "capacity benefit"? "Incapacity" is a negative word that stresses what people cannot do. Changing the name may have the effect of setting the benefit in the light that I know the Government would want.
§ Mr. Andrew Smith
Does the hon. Gentleman accept that precisely that proposal is being consulted on in the Green Paper on pathways to work?
§ Andrew Selous
I hope that the proposal will receive a positive response. The present name is negative and unhelpful.
Jobseeker's allowance has increased to £54.65 from £53.95. I share the concern of the hon. Member for Northavon (Mr. Webb), who spoke for the Liberal Democrats, that there has been a less than real-terms increase for those on JSA who are under the age of 24. The JSA increase will no doubt be appreciated by the 207 people in my constituency who are now unemployed but who were not unemployed this time last year. It is worrying that three quarters of that increase in unemployment has come in the last quarter or so.
Disability living allowance has increased to £57.20—another small increase. I am worried by reports that I have had from a number of my constituents that disability living allowance and attendance allowance are being decided on without claimants having the opportunity to go before a doctor. In one very worrying case, the disability allowance of a constituent of mine was quite severely reduced on the authorisation of a GP who not only had not examined the claimant but had never even seen him. That decision has since been overturned. However, the case was worrying, and if increases are to mean anything in the uprating, I would ask the Secretary of State to consider it.
Time is short and the Minister for Pensions is keen to start the wind-up speech. However, I want to question the Secretary of State's claim that the basic state pension will remain as the cornerstone of our pension's policy. If the minimum income guarantee continues to be uprated by earnings while the basic state pension is uprated only according to prices, over a long period the basic state pension will wither away as a fundamental component of people's retirement income.
§ 3.7 pm
§ Paul Flynn (Newport, West)
I am grateful for the chance to contribute to this annual get-together of social security buffs. We are small in number and we talk a language that nobody on the outside seems to understand. Certainly, no journalists understand or appreciate it. After all, today's announcement affects only about 20 million people.
I repeat what I said in an earlier intervention and congratulate the Government on their splendid record in this field—especially in the area of the state pension. I also point out the shameful record of the Conservative party. My hon. Friend the Member for Hastings and Rye (Mr. Foster) gave a striking example of that.
A school in my constituency has the splendid motto "Nid da lle gellir gwell"—which means that there is no good that cannot be improved on. In a helpful and constructive way, I want to suggest to the Secretary of State for Work and Pensions and the Minister for Pensions that they can do even better.
It would not be right to allow this debate to go by without some reference to the earnings link. We owe that to the traditions of the House. I believe that I am the only MP in the Chamber who has to declare a financial interest in the basic state pension, of which I am a grateful recipient and have been for the past three years. As we know, the increase this year is above the level of prices; prices went up by 1.7 per cent. and the pension will go up by 2.5 per cent. That is fine. It shows up the meanness of the previous Administration, who for 17 years increased it by a lower level, which meant that there were salami cuts throughout that period. It is right that we should proclaim the achievements of this Government.
To take up a point that was made from the Opposition Front-Bench spokesman, the relative value of the pension is important. Pensioners want an assurance that they will not lose out relative to the rest of society. All those who campaign for pensioners seek such an assurance but, sadly, no party in the country is offering it at the moment. In spite of the large increases, it was a mistake that we did not go for the attractive and understandable policy of restoring the earnings link. I was disappointed to receive an answer from the Minister for Pensions on 24 July 2002 which revealed that the pension was a smaller proportion of average earnings at that time than at the time of the Labour Government's first uprating in April 1998. Although we have achieved a great deal, the tendency is to head for further reductions, because of the success of the Labour Government's economy. This is a generous policy, but it will end in reductions.
Can we afford it? The Government Actuary said last year that the surplus above the contingency fund in the national insurance fund was £18.4 billion, and we are told that that will rise to £20.2 billion in a year's time. This is the unneeded surplus, over and above all the money that is there to account for any unexpected increases in unemployment and so on. Then there is the £2 billion a year that is taken out of the national insurance fund to compensate employers for the green taxes. It might be quite reasonable to give them that compensation, but why on earth should it come out of the national insurance fund, which is made up of money paid in by working people to ensure that they have 451 benefits in their retirement? I therefore make the plea—not exactly for the first time in this House—that we should consider restoring the earnings link.
§ Mr. Oliver Heald (North-East Hertfordshire)
I was surprised when the hon. Member for Newport, West (Paul Flynn) said that he had been receiving his state retirement pension for three years. He obviously keeps very fit through his constant surveillance of the Government on pensions issues. He used to tax me about those matters, but I see that he is now taxing his hon. Friend the Minister.
We have had an interesting debate that, although short, has concentrated on the key issue relating to the uprating statement: what it means for people in practice. We have had a lot of discussions about means-testing and take-up. It is easy for a Government to rely, as this Government so often do, on the effect of means-tested benefits to make them appear more generous than perhaps they really are. The gap between rich and poor has widened since 1997, and the amount that pensioners in the bottom fifth of the population are receiving has remained the same. The complacency that we heard in the Secretary of State's opening speech is misplaced.
We also have to look back at what the Labour party used to say about this, and judge it against its words. The Chancellor wrote a document called, "Getting Welfare to Work" in 1996, in which he stated:Means-tested benefits are claimed by over 3.5 million people over the state retirement age—a third of all pensioners. Six hundred thousand do not receive income support to which they are entitled … and are amongst the poorest people in Britain.Now, it is not one third but 60 per cent. who are on means-tested benefits. Now, it is not 600,000 not receiving income support but 770,000 pensioners not receiving the minimum income guarantee. Take-up has declined over the Labour years from 75 per cent. to 71 per cent. The Secretary of State admits that this downward slide is about to get worse, as his target for pension credit take-up is a miserable 67 per cent.
§ Mr. Andrew Smith
I made it very clear that that was not a target but a planning assumption. We want the highest possible take-up.
§ Mr. Heald
But that is what the right hon. Gentleman thinks will happen; 67 per cent. will mean 1.8 million people who cannot have the benefits about which he boasts.[Interruption.] He laughs, but the fact is that he brags about huge achievements on means-tested benefits while the poorest pensioners in the land do not receive the money. Even by 2006, his target is that 1 million people will still not be claiming the pension credit. Surely we can do better.
The debate has concentrated on how we might do better. We have looked at the balance between means-testing and take-up. The proposal that was made against the pension credit option, to give older pensioners—the over-75s—the uprating to which they were entitled, struck me as a measure that would ensure almost 100 per cent. take-up.
§ Mr. Heald
I have not got time. I have only seven minutes.
452 Many hon. Members have mentioned the over-complication of the system. This is not a minor point. When considering the uprating of benefits, we have to be able to see what it means in all the nooks and crannies of the benefits system. Just a few years ago, the Department responsible for these matters was the social bank of the Government. It dispensed money to people in need. Now, these functions are spread all over the place. The Home Office deals with asylum support, but it has not even bothered to introduce measures to target fraud, which is bound to exist in any benefit system. The Treasury deals with tax credits, which has knock-on effects on the child support system. It is a mess. My hon. Friend the Member for Daventry (Mr. Boswell) mentioned overpayments. One reason that people are overpaid is that they do not understand the system; it is too complicated.
In my last minute, I should like to return to the points raised by my right hon. Friend the Member for Havant (Mr. Willetts)—I am sorry, my hon. Friend; he will be right hon. soon. First, on the post office card account, why is it, after all the assurances from the Government that there would be equal treatment of banks and building societies—
§ Madam Deputy Speaker
Order. I have already ruled that that matter is outside the scope of the debate.
§ Mr. Heald
I am grateful to you, Madam Deputy Speaker, because that means that I have time to mention the other issues, which are clearly within the scope of the debate.
Will the Pension Service be able to ensure, through local surgeries, that pensioners have the proper facilities that they need to find out about the benefits to which they are entitled under the uprating statement? We should like to hear more about that.
On the child support system, the question of the C-day is obviously relevant because of the benefit sanctions that will have an impact on the uprating statement. We should like to hear from the Minister when C-day will be. Finally, can he tell us his philosophy in about a minute and a half?
§ The Minister for Pensions (Mr. Ian McCartney)
Like the hon. Gentleman and other hon. Members on both sides of the House, I am disappointed that we have not been able to have a fuller debate. I have had to junk all the things that I wanted to say about the hon. Gentleman and his party; I shall have to keep that powder dry. The hon. Member for Northavon (Mr. Webb) had a smell, but he was not going to miss out either. I shall try to answer as many questions as possible, but I give the commitment that I will send an answer to every question that I have been asked, place a copy in the Library and ensure that a copy of each answer goes to the Chair of the Select Committee, who, I know, likes to monitor what is happening in the Department. I hope that that helps hon. Members.
On further debates, I welcome the opportunity from time to time to have debates in Westminster Hall. I have recently offered to take part in a debate on older people, along with other colleagues, on a cross-government basis. I hope that the Leader of the House will be able to 453 give details soon. I would welcome a range of debates such as that. I am more than happy to debate these issues in whatever forum we can within the House, whether in Select Committee, Westminster Hall, here in formal debates or even in Adjournment debates.
What has this debate been about today? Judging by what has been said by Opposition Members, they have not quite got it yet. It might be worth while, in the short time available, to put on record that the estimated cost of uprating for 2003–04 is £2.25 billion additional income. There will be £1.25 billion extra for pensioners. £200 million extra for people with disabilities and their carers, £400 million extra for working-age people and £400 million extra for children. One would not think that there could be fuller evidence of the Government's commitment to tackle and eradicate child poverty, to introduce measures to tackle poverty in old age, and to give opportunity through work and work incentives for people to get into the labour market and, with our support, to deliver themselves out of poverty.
If the current Opposition had been on this side of the House today, the debate would have been reclassified as a debate on downrating. In all that he said, during the short time in which he said it, the hon. Member for Havant (Mr. Willetts) once again failed to reassure the House and the British people that he does not support the proposed £100 billion cut across the public services, much of which would affect our Department.
The hon. Gentleman smiles, but his hon. Friend the Member for Arundel and South Downs (Mr. Flight), the shadow Chief Secretary to the Treasury, has said that he has an opportunity to make cuts totalling 20 per cent. of public spending across the board of Government activity.
§ Andrew Selous
Will the Minister give way?
§ Mr. McCartney
Much as I love debating with the hon. Gentleman, I have little time left. I ask him simply to believe that that is what his hon. Friend said. I know it must be a shock to him that he must support such a ludicrous policy.
§ Mr. Willetts
§ Mr. McCartney
Here comes another one.
§ Mr. Willetts
Will the Minister give way?
§ Mr. McCartney
I will at some stage.
§ Mr. Willetts
The Minister only has four minutes.
§ Mr. McCartney
I know that. The hon. Gentleman had much more time than me. What I have said is true, however: I can quote fromThe Daily Telegraph, the house magazine of the Conservative party.
We shall spend about £7.5 billion extra on pensions in 2003–04 as a result of measures that we have taken since 1997. Opposition Members say that this Government have not made a difference to the poorest pensioners, but that is entirely untrue. For example, under the last Tory uprating, an elderly gentleman aged between 60 454 and 74 would have received £68.80. This year, from 1 April, the same gentleman will receive £102.10, an extra £33 a week.
As for the extension of means-testing, what does it really mean? It enables the Conservatives and the Liberal Democrats to disguise their policy of cutting the incomes of Britain's poorest pensioners. The Conservatives will make direct cuts because they simply do not like pension credit and want to get rid of it. The Liberal Democrats offer a choice. Those who are poor at 60 and want a Liberal Democrat Government should just hope they can reach 75, as they must face 15 years of penury before the Liberal Democrats will give them one extra penny.
To be fair to the hon. Member for Northavon, he admitted that today, for the first time. But we have been telling him for more than a year that his policy is not about lifting pensioners out of poverty, but dividing poor pensioners into two camps. His party will say to poor people under 75, "Go away. Do not disturb us". They will tell those over 75, "Don't worry, we will look after you." I would not put the hon. Gentleman in charge of a piggy bank, let alone the national insurance contributions system. It is a scandalous proposal, and I can guarantee that we will not adopt it.
§ Mr. McCartney
I would like to, but I have only three minutes left. I gave the hon. Gentleman a guarantee at the outset that I would be more than happy to discuss the matter at any time and in any place. He has committed himself to allowing poor pensioners under 75 no proper access to additional income.
Let us be quite clear about pension credit. The Tories and the Liberals continue to raise the issue of mass means-testing. They are trying to deter pensioners from claiming money that is rightfully theirs.
What the Opposition spokesmen have omitted to mention in the political debate is that pension credit is now going live. What is the process about which they complain? It involves a simple telephone call on a free telephone line. Claimants are asked for information only for the purpose of working out the claim. They are sent a form to sign to confirm the information that they have given. The claim is then dealt with directly by the Pensions Service. If the claimants are entitled to extra income, it will come their way, and the vast majority will have nothing more to do for five years. How could that possibly be portrayed as the old-fashioned weekly means test?
As a consequence of this change, the poorest pensioners will receive an average extra income of £400 a year—and at last the savings of those who are just above the minimum income guarantee level are being recognised. I ask hon. Members to support an order that will provide huge amounts of new income for many pensioners and others.
Question put and agreed to.
That the draft Social Security Benefits Up-rating Order 2003, which was laid before this House on 5th February, be approved.