§ 5.4 p.m.
§ The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham)
My Lords, with the leave of the House, I should now like to repeat a Statement that has been made in another place by my right honourable friend the Minister of State for Social Security. The Statement is as follows:
"Madam Speaker, with your permission, I would like to make a statement on the Government's Green Paper, New Ambitions for our Country: A New Contract for Welfare. The Green Paper sets out the principles of reform based on the twin pillars of work and security: work for those who can; security for those who cannot.
"Today we set before the House a comprehensive review of the welfare system, an argument about why it has to change, the eight principles on which change will be based, and success measures against which progress should be judged over the next 10–20 years and areas where legislation will be required in the short, medium and long term. The Green Paper offers the prospect for pensioners of a decent income in retirement. It offers a fresh start for disabled people— 1364 civil rights, help getting into work for those who want to, and a better system for making sure money goes to those in need. To all those of working age it offers greater help into work. It promises children and families greater support. It does this within a system radically reformed to make it more efficient, clearer, fairer and dedicated to rooting out fraud and abuse.
"The Green Paper considers how social advance for this country is best achieved and how, at the same time, we can also lift people from poverty and dependence to dignity and independence.
that is, my right honourable friend Frank Field—
"today's statement marks a milestone in a journey that has so far lasted 30 years. This Green Paper draws on my experience at the Low Pay Unit, the Child Poverty Action Group, on the Social Security Select Committee. But above all it draws on what I have learned from listening to my constituents in Birkenhead about the need for welfare reform. Those who rely on benefits for their everyday existence are the real experts here.
"It is a particular honour, then, to play a part in translating ideas into practice. I have, however, learnt a few home truths over the last few decades. The first is that changes to the benefit system affect the lives of people in ways which many of us can only half imagine. The second is that the need for change is overwhelming. The system as it stands promotes fraud and deception, not honesty and hard work. It has led to growing poverty and dependence, not independence. It has fuelled social division and exclusion, not helped in the creation of a decent society.
"The economy and society of today are profoundly different from the era when William Beveridge laid the foundation stones of today's welfare state. The world of work, the shape of families, the chances of a long life, the attitude of people to government: all these have altered in fundamental ways.
"At the heart of this Green Paper is a new welfare contract between government and citizen. Together, we must break the cycle of dependency and insecurity and empower all our citizens to lead a dignified and fulfilling life.
"Our changes are driven by the need for reform. What is more, the money that we spend must be spent in the best and fairest way possible. And for any system to be durable and fair, it must have costs that are manageable and under control. We want to spend more in some areas—such as health and education, and on help for severely disabled people with the greatest needs. But we want to spend less in others: to get the bills for social and economic failure down by cutting unemployment, tackling low pay and raising skills, rooting out fraud and abuse and encouraging greater self-provision where it is appropriate.
"So, our reforms are driven by principle. I now wish to turn to the eight principles in the Green Paper, the key clauses of the new contract.
1365 "First: the new welfare state should help to encourage people of working age to work where they are capable of doing so. Work offers the best escape route from poverty and dependence, a platform on which to save, and a sense of individual purpose. Already we have the new deals that are the biggest attack on structural unemployment for decades; a Budget that will make work pay; and a minimum wage to end poverty pay. In addition, today's Green Paper shows how the Government will: extend the new deal to partners of the unemployed under the age of 25, based on the principle of responsibilities and rights going together; extend the new deal to all lone parents with school age children, giving them the opportunity for an interview and help with job search and childcare; end the 16-hour limit on the amount of unpaid work that disabled people on benefit can do; extend the period, from eight weeks to a year, during which disabled people can have a job and come back onto benefit at the old rate if their health fails; increase the number of personal advisers available to claimants providing individually-tailored help; and introduce a single work-focused gateway into the benefits system for people of working age, sweeping away the duplication, waste and bureaucracy of today. We will modernise government to achieve closer collaboration between the Benefits Agency and the Employment Service, making clear that the first objective of the system is to get people back into work.
"Now I wish to turn to pensions. Principle 2 is that the public and private sectors should work in partnership to ensure that, wherever possible, people are insured against foreseeable risks and make provision for their retirement.
"In our manifesto we said the basic state pension will remain the foundation of pensions provision, and will be uprated at least in line with prices. That commitment remains, of course. We do, however, need to get greater help to the poorest pensioners. The Green Paper shows how this will be done.
"However, with an ageing population, over time, more will need to be saved for pensions, but the share borne by taxpayers cannot go up, otherwise the costs of the system will be unsustainable. We want everyone to benefit from a second pension, on top of the state pension. This is what our proposals for stakeholder pensions are all about. It is quite clear that, unless there is more saving towards retirement, we will continue to see into the next century far too many of our pensioners retiring on incomes which do not properly reflect the rising prosperity of the nation.
"The Government have launched a review of pensions. We have received many submissions as part of this review, recommending an extension of compulsory second pensions to those who are currently not covered and an increase in the minimum compulsory savings rate. We are considering these proposals seriously.
"Later in the year we will publish the Green Paper on pensions. I can say today that the Government plan to bring forward legislation later in this Parliament.
1366 "There is one additional change proposed in the Green Paper. Today, people can lose benefit if they have taken out insurance to pay off loans on their car or credit card and then lose their job. When we want to see more people helping themselves, this is simply absurd. We will change the benefit rules to ensure that people who insure themselves will no longer be penalised for it.
"Principle 3: the new welfare state should provide public services of high quality to the whole community, as well as cash benefits. We have already set out in detail our proposals for education reform, for changing the NHS and for improving the housing stock. I do not need to repeat them here. However, in addition, we are proposing a major reform and expansion of the current system of childcare in this country, on the basis that help with looking after children can be as important as any cash benefit. From next month we will start the expansion of our network of childcare clubs—providing a further 20,000 places across the country—and laying the foundation for Britain's first national childcare strategy. Our comprehensive programme will be set out in a Green Paper that we will be publishing after Easter.
"Principle 4: disabled people should get the support that they need to lead a fulfilling life with dignity. In our country, everyone has a contribution to make—and that includes, of course, disabled people. Today I wish to announce a substantial programme of reform in this area, based on the following key changes. Better rights for disabled people. We will bring forward legislation, at the earliest possible time, to establish a disability rights commission to protect, enforce and promote the rights of disabled people. There will also be more help into work for those who can and want to work. It is estimated that hundreds of thousands of disabled people do want the chance to work. There will also be extra help for those severely disabled people with the greatest need; and a pledge that those benefits covering the additional costs faced by disabled people—disability living allowance and attendance allowance—will remain universal, national benefits.
"At the same time, we will be looking at ways to ensure help goes to the right people. The recent report of the DLA Advisory Board presented worrying information: that in two-thirds of cases there was not enough evidence to support the claim and that one-third of awards made for life were made to people whose condition might have been expected to improve. Meanwhile, evidence from the forthcoming disability survey suggests that only around half of those entitled may be taking up their DLA entitlement. So the current gateways clearly are not working and need reform. We propose, after consultation with disability groups and others, to legislate for new gateways which are clearer, fairer and easier for people to use.
"I now turn to incapacity benefit. We all know that the last government used it to disguise the real level of unemployment. Since 1979, the numbers on incapacity benefit have trebled, pushing the cost of 1367 the benefit up to almost £8 billion, more than we spend on the whole of the police in England and Wales. We accept that those currently on IB have built a standard of living around it. But for future claimants we must fundamentally reform the benefit.
"The all-work test for entry onto the benefit writes off all too many people. We want to move from the current focus simply on what people cannot do, to focus on what, with the right help, they can do. So we need reform. In place of the current test, we are looking instead to assess the scale of people's employability, and then give them the opportunity to get the help that they need to return to work. Taken together with changes already made, the effect of this will be to reduce significantly the numbers in the future who come onto the benefit, and thereby produce increasing savings over time.
"This will be a major reform. Savings will be found, which will allow us to give more help for severely disabled people with the greatest needs. I emphasise, as with all these proposals, that we will be consulting at every stage with disabled people and organisations representing them.
"As a result of the reforms we are making, disabled people will get a better deal, with proper rights, opportunities to work and a benefits system that better reflects their needs.
"Principle 5: the system should support families and children as well as tackling the scourge of child poverty. It is simply unacceptable that nearly 3 million children are growing up in households without a wage. Child poverty shames our nation. The Green Paper outlines a comprehensive package of help for families and children. This will build on our existing measures to help children: a childcare tax credit, covering up to 70 per cent. of eligible childcare costs; £2.50 extra on both child benefit and to rates for younger children on income-related benefits; and parental leave.
"In an ideal world families would always stay together. But in real life parents split up and the children suffer in more ways than one. The Child Support Agency was intended to help children. But when proper maintenance is only secured in a third of cases it is clearly failing. We are spending £200 million a year simply to run the CSA and securing only £500 million maintenance as a result. Today I can announce that we will be bringing forward proposals for fundamental reform of the agency. This will make it administratively more simple and fairer to get rid of a situation in which often it is the parents who keep in closest touch with their children who get hit the most.
"Principle 6: there should be specific action to attack social exclusion and help those in poverty. Our attack on social exclusion will include a new deal for communities, offering targeted help to areas worst hit by economic change. For those areas which have multiple problems—crime, drugs, poor housing, educational underperformance—there will be an integrated programme of support and renewal. Action zones for education, health and employment will 1368 pioneer the innovation and co-ordination necessary to tackle this national problem. In addition, in the next few weeks the Social Exclusion Unit will present its first plans to tackle two of the root causes of social exclusion: truancy and exclusion from school and sleeping rough on the streets.
"Principle 7: the system should encourage openness and honesty and the gateways to benefit should be clear and enforceable. I have spent a good part of my parliamentary life urging concerted action to tackle benefit fraud, which erodes the whole basis of the welfare contract. Every pound in the pocket of a fraudster is a pound less in the pocket of someone in need. It gives me then great pleasure to announce the Government's crackdown on fraud.
"Today's report from the Public Accounts Committee shows the scale of the problem we face in just one area—housing benefit fraud. Almost £1 billion is lost in fraud, with suspected fraudsters having a 99 per cent. chance of getting off scot-free. This underlines the importance of the action we are now taking to tackle housing benefit fraud. We have radically altered the focus of the Benefits Fraud Inspectorate to inspect our own agencies as well as local authorities and ensure that they are working together to crack down on fraud. We are strengthening the link between the Benefits Agency and local authorities to make sure that information on possible fraudulent claimants gets passed across more quickly.
"There will be a new framework of guidance for local authorities to check claims for housing benefit properly to prevent and root out fraud. The Government will use new powers to set targets for local authorities for improvements in tackling fraud and penalise them if they fail to take sufficient action. We are giving local authorities new powers to stop housing benefit getting paid directly to landlords who have committed fraud.
"Some of these measures may seem draconian, but I have no doubt that they are right. The measures we are taking to root out housing benefit fraud are part of the comprehensive strategy set out in the Green Paper, based on earlier prevention, more effective deterrence, better detection. Our measures include improving the effectiveness of gateways onto benefit to make them less vulnerable to fraud; a thorough validation of the entire system of national insurance numbers to stop people using false or falsely acquired NI numbers to claim benefit; and improved sanctions, including, for the first time, powers for the DSS to fine those defrauding the system.
"Principle 8: the system of delivering modern welfare should be flexible, efficient and easy for people to use. Our aim is a revolution in the delivery of front-line services with the creation of an active modern service which is built around the customer, makes best use of IT and fits new services to new need and demands. In a world of 24-hour shopping, free helplines and computer banking, people are entitled to a far better service than many of our public services are currently able to provide.
1369 "As a result of our drive to get the Employment Service and Benefits Agency working more closely together, we aim to provide a seamless service, with personal advisers for everyone trying to return to work. The modern office should include touch-screens with information on benefits, jobs, training and childcare, as well as telephone information lines for claimants and claim forms which are tailored to the individual.
"At the same time, for those who are not able to work or the retired, we need an efficient and friendly service that is easy for everyone to understand and use and provides benefits accurately, promptly and with minimum hassle. Our aim must be to make sure that the services we provide match the standards of the best companies in the country.
"In all, the application of the principles in the Green Paper will break the traditional welfare mould in three crucial respects. It moves from a focus on simply paying benefits to enabling people to move into work. It moves from dispensing cash to also providing services. It moves from merely alleviating poverty to ensuring that each and every one of us has opportunities to develop our talents to the full.
"Behind our principles and core values lies the idea of the good society which has not only motivated British radicals for centuries but has drawn support from all sections of society. This appeal to create a better world to hand on to future generations is one which this Government, through an open and inclusive approach to reform, will strive not merely to sustain but also strengthen. I invite everyone, wherever they are seated, to join constructively in this debate.
"The Green Paper also sets out a vision of welfare in the year 2020, restructured around the new contract between the Government, on the one hand, and individuals and families, on the other. The new contract is essentially about duty. Duties on the part of government are matched by duties for the individual. So, for example, it is the Government's duty to provide a proactive, work focused service, ensuring the easiest possible return to the labour market. But it is similarly the duty of each individual to seek work or training where they are able to do so.
"It is the duty of government to help parents meet the costs of raising their children; it is the duty of individuals to support their children, and other family members, financially and emotionally. It is the duty of government to relieve poverty in old age and regulate pension provision; it is the duty of individuals to save where possible for old age.
"There are, however, two no-go areas for this Government. Our commitment to the vulnerable is not negotiable. Our commitment to reform is not negotiable. What is negotiable is how we can achieve our aims.
"There are some people on the Right of politics who want to dismantle the welfare state altogether. There are others who baulk at any change. The Green Paper is the third way: not the end of the welfare 1370 state, or defence of the status quo, but a welfare state to meet modern needs, which supports a decent and fair society founded on social justice.
"The Green Paper sets a clear framework for a principled programme of reform. All of us have a stake in the debate. But I pledge to this House, and the country, that we will not depart from the principles I have outlined, and that in the years to come, as the new welfare contract is established, we will have a new welfare state fitting a modern nation in the new millennium.
"I commend this Green Paper to the House".
My Lords, that concludes the Statement.
§ 5.30 p.m.
§ Lord Higgins
My Lords, I congratulate the Minister for her stamina in reading out that extremely long Statement which was made appropriately in another place by the Minister for Welfare Reform. The Statement has been long awaited. If patience is a virtue, those of us interested in this area have shown it. What we do not yet know is to what extent that patience has been rewarded. Not only is the Statement extremely long but the Green Paper is substantial.
It is fascinating to try to work out to what extent the document reflects the views of the Minister for Welfare Reform. His views on a number of issues are well known. For example, has the view of the Minister for Welfare Reform on the one hand, or that of the rather unholy alliance between the Chancellor of the Exchequer and the Secretary of State on the other, prevailed on means testing or—dare one say it?—affluence testing, a term which seems to have disappeared from the political vocabulary after a short shelf life? Which view is taken on compulsion in the welfare to work programme rather than persuasion in the welfare to work programme? Should there be compulsory payment for second pensions? What is the position on SERPS? There are many other issues. It is tempting to tick off in the Green Paper which view has prevailed on a specific issue.
However, despite the fact that the Green Paper has finally arrived—it was originally promised last year—it is still to a large extent a review of reviews. Although it seeks to take credit, for example, on proposals on pensions, we must await a further review on the substance of them.
It is extraordinary that on many of these issues we have had the White Paper in the form of the Budget ahead of the Green Paper. The Chancellor took the opportunity to pre-empt the Minister for Welfare Reform on a number of issues. But what is of great fascination is the extent to which the way ahead now plotted is largely inconsistent with the actions the Government have taken since they came into office. If they had worked out their principles in advance, they would not have done many of the things which they have done in the past few months. I shall say a few more words on that in a moment.
We have before us eight principles. I do not think that anyone would have difficulty in agreeing to them. But that does not get us much further forward in terms of 1371 practical politics. There are many factors in the review with which one can agree and welcome—for example, the proposals on the disabled, and so on. I understand that next Wednesday we shall have an opportunity to debate those issues, so I shall not pursue them further at this moment.
I welcome the fact that one of the many reviews will be on the Child Support Agency. In his Statement, the Minister for Welfare Reform appealed to personal experience. Since I still bear the scars of many constituency cases dealing with the Child Support Agency—I note the view is shared by a number of noble Lords on both sides of the House—we shall look forward and welcome that review. But as of yet we know no more about it.
In the leak that appeared before the publication of the Green Paper great stress was put on the so-called success measures. I believe that there were 25, or something of that order. They are said to be measures, but they are ordinal rather than cardinal. They tell us that by the year 2020 everything that is good will be better, and everything that is bad will be not as bad. But there is no quantification of those measures. I had intended to ask what sanctions would be imposed if the success measures were not met. However, that is pointless because, frankly, the measures are so vague as to have no meaningful way of being assessed, other than whether the figures are up or down, on whether or not there has been success.
I wish to comment on two areas. The first is pensions. If one spoke to anyone in the lobbies outside the House today, or indeed from experience, the greatest concern has always been the position on the basic national insurance pensions. The Minister has repeated, rightly, the assurance given previously; namely, that pensions would be at least uprated in line with prices. There is no mention as to whether it might be means tested. The Green Paper is silent on that issue.
The second matter which gives cause for concern is that when the Minister for Welfare Reform appeared before the Select Committee he seemed to indicate that an assurance on the maintenance of the basic national insurance pension was an assurance which had been given only for this Parliament. That has caused much concern among many pensioners. If the noble Baroness looks at the evidence on that occasion I think that she will take the same view that I have just expressed. Will she therefore give a categoric assurance in the context of this Green Paper that the Government see the basic national insurance pension, uprated at least in line with prices and not means tested, as a permanent feature of pensions policy?
Perhaps I may say a further word on pensions. I cannot agree more with the views expressed in the Green Paper that at present few people retire on an adequate pension. Although one has the basic national insurance pension, there are many other schemes. But it is not clear how the Government propose to go forward on this. We are told that we shall have a pensions review. However, as it is mentioned in the Green Paper, it is worthwhile pursuing the point.
1372 Page 33 of the Green Paper contains a remarkable sentence. It states:Occupational pensions are the clearest example"—of a way of providing second pensions—and are arguably the biggest welfare success story of the century".That is a rather glowing expression by the Government. I should declare an interest. I am a chairman of an occupational pension scheme. But having declared that, what did the Chancellor do in his first Budget on coming into office? He clobbered occupational pensions very seriously. Since it is accepted in the Green Paper that people need a second pension to top up their basic provision, why are the Government pursuing a policy in their financial Budget arrangements which is inconsistent with the principles and views expressed, even ahead of the pensions review? One must hope that that point is clarified. Indeed, perhaps I might ask the noble Baroness now: what exactly is the Government's position so far as concerns SERPS? The consequence of the way the ACT decisions have been made has been to push people out of defined contribution schemes and back into SERPS. As I understand it, that is inconsistent with the Government's proposals.
As regards the stakeholder pension, is it the Government's intention that, in future, all state pensions should be fully funded; and if that is so, how will they get round the problem set out by the Conservative Party in its election manifesto, of a possible solution for ensuring that some groups of pensioners do not pay twice over?
Perhaps I may turn, secondly, to a matter that has arisen a number of times during the past week at Question Time, and in particular in response to two Questions tabled by the noble Lord, Lord Northbourne, on the Cross-Benches. I recognise, as the noble Baroness said from the Front Bench yesterday, that there are many stable relationships between two people who are not married. Nonetheless, the question as to whether people are married or not has always been recognised by government as important, in regard to both the legal situation and to taxation.
I was rather astonished that another noble Baroness, replying to a question that I put to her earlier in the week, seemed to be under the impression that restricting the married couple's allowance—which has been done in the Budget and which will eventually save the Exchequer over £1 billion a year—had no effect on married, as against unmarried, couples. As this issue is not referred to at all—in fact, it was raised yesterday from these Back-Benches by the noble Baroness, Lady Young,—we need to be clear as to whether the Government are altering their attitude towards the question of marriage, with regard to both the legal framework and taxation. If that is so, it is a very substantial change. It seems to have been implicit in a great many recent statements by Ministers.
I am conscious of going on even longer than the noble Baroness—which would be rather remarkable. Perhaps I may therefore turn rapidly to the question of housing 1373 benefit, which is generally recognised as a major deterrent in relation to those people whom the Government are trying to move from welfare to work. The noble Baroness spoke at great length about fraud. In the light of the report of the Public Accounts Committee published today, we can all be concerned about that and welcome the Government's proposals. However, the Government give no indication at all as to their intentions on the crucial issue of housing benefit. We are told yet again that there is to be another review. Can the noble Baroness give the House any idea at all as to what the Government are going to do as regards the effect that the present system of housing benefit has on their welfare to work programme?
Overall, it has been very difficult up to now to avoid the conclusion that the whole of the welfare to work programme has to a significant extent been driven by the Treasury, and that the ideals put forward by the Minister for welfare reform have been largely overtaken in that respect. We have had a widespread advertisement for the "welfare roadshows" that have been going on. It became increasingly apparent that these were not in fact open to the general public; they were to be roadshows involving only those who were likely to be Government supporters. That roadshow has now finally arrived at Westminster.
We very much look forward to examining in greater detail, when we have the opportunity of doing so, the proposals in the Green Paper. I give the noble Baroness and the Government the assurance that we shall look at it in a very constructive way. It is undoubtedly the case that the welfare system needs reform, but these are highly technical issues which ought to be debated in detail in this House and in another place. If we do that, we shall make progress. However, I fear that there is far too much by way of generalities in the Green Paper, and not enough to provide a firm basis for further discussion.
§ 5.45 p.m.
§ Earl Russell
My Lords, it is a military maxim that no plan ever survives contact with the enemy. The social security system is rather like a crossword puzzle. If you change one letter, you change all the other clues across the crossword—you shift the whole pattern. This Statement and, so far as I have been able to read it so far, the Green Paper, are much more complex, and therefore a good deal better, than the statement that was trailed in this morning's press. I have so often reproved governments for not heeding the maxim, "Legislate at haste, repent at leisure", that I cannot blame the Government for taking time to make up their mind, especially since I have seen in the document a good many improvements compared with what we expected a short while ago.
On examining the Statement, I find first a series of principles. The only comment I will make on those principles is that I have no objection to them. I then find many small improvements. There are a good many of them, especially in the area of disability, where I believe I can detect the fingerprints of the Minister herself—and I am very glad to see a number of those fingerprints. I can detect several mistaken diagnoses and, finally, 1374 what might be described as a sermon on duty. While I was reading that sermon, there came into my mind Wordsworth's description of duty:Stern daughter of the voice of God".From now on, when I think of the Minister of State, that will be the nickname under which I think of her.
I want to turn first to the sermon, since I suspect it will cover quite a lot of the publicity that this matter will receive. There are two potentially conflicting principles here. There is the statement, which I am very glad to see:Our commitment to the vulnerable is not negotiable".But it is quite important to understand exactly whom the Government mean when they talk of the vulnerable. There are those who are still totally ignored by the benefits system-16 and 17 year-olds for one—who would appear to me to be vulnerable. When I talk of "vulnerable", I mean anybody who would not otherwise be able to eat.
That potentially conflicts with the principle, with which I do not disagree, that it is the duty of every individual to seek work. There is nothing surprising about principles, both of them good, being capable of conflicting with each other. But I should like, first, to know that the Government recognise the conflict; and secondly, I should like some indication as to how, piecemeal, they might intend to deal with it. All the skill is going to reside in reconciling those two potentially divergent principles.
In this context, the Minister may know a lecture on welfare to work by her noble friend Lord Plant, who develops two concepts of citizenship, one resting on the concept of entitlement, where the state has to recognise the right of everybody to subsistence, and the other resting, much as the sermon does, on a very stern contractual concept of duty.
My own reconciliation of that, for which I shall not hold the noble Lord, Lord Plant, responsible, is that the state should act on the entitlement concept of citizenship, and the individual should act on the duty concept of citizenship, each acting on the concept more favourable to the other party. That is my reconciliation. I do not know what the Government's is. My judgment will depend very heavily on how that works out in detail.
There are other potential areas of conflict: whether the Government wish to make it first and foremost easier for people to work or whether they wish to make the system cheaper. The Minister herself understands how rapidly those two principles may diverge in practice. There is the conflict of whether they wish the system to give claimants more dignity or to prevent fraud. Those two equally may diverge in practice.
I turn now to the pleasanter task of listing some of the good things in the Statement. I am pleased by the terms on which welfare-to-work is being extended to people with disabilities, to those who want to work. I shall watch with great care how that is executed in practice and whether the use, for example, of performance indicators may tend to create pressure on people to try to cause them to want to work.
1375 I am pleased by the ending of the 16-hour rule for disabled people who are taking unpaid work. I am extremely pleased by the extension of the linking rules to a year. It may make a lot of difference. I am pleased by what is being done about people who have claims from their insurance policies against unemployment and who find they lose benefit as a result. I welcome that. In that context, I wish to congratulate my noble friend Lady Ludford. She took that up extremely quickly and was about to make it the subject of her first Parliamentary Question, until she was persuaded—largely by the Minister's doing—that the department had the issue well in hand. That was quick thinking, well rewarded by success.
I am pleased, too, about what is being done as regards the partners of the unemployed. I remember many speeches here that the Minister made in opposition. I am glad to see them coming to fruition. I am very pleased indeed to hear about the action being taken on civil rights for people with disabilities. Perhaps the best thing of all in the Statement is the guarantee of the continued universal availability of disability living allowance. I am pleased by what the Statement said about take-up and very pleased indeed by the rejection of the local authority route, which has been canvassed. In that context, I wish to extend congratulations also to the noble Lord, Lord Ashley of Stoke, who has been so tireless and shrewd in the matter. We owe him a great deal.
I am pleased by what is being done about childcare. That is necessary and overdue. There are, of course, practical questions about such things as the skill of those who are providing the childcare, the facilities, and transport. We can return to them later.
I have one small digression. The noble Lord, Lord Higgins, made a great point about marriage versus cohabitation. I should perhaps declare an interest, having two sisters-in-law each of whom cohabits. So far as I can see, they are quite as married as I am. What I really want to say to the noble Lord, Lord Higgins, is that I think he is on to a vote-loser. Canvassing in perfectly respectable areas such as Richmond, Christchurch and Folkestone, I found that it is true, as Social Trends says, that some 20 per cent. of couples in the electorate are cohabiters rather than married. I do not think they particularly like being called second-class citizens. But if the noble Lord, Lord Higgins, and his party wish to lose votes, maybe I should not stand in their way.
As regards pensions, it is not yet possible to judge exactly what the Government will do. I have two points to make. First, if we are to expect people to invest more in personal pensions, as obviously in some way we must, we will need greater security that the money will be properly handled. The Government need to look again at the Goode Report and consider whether we need even more safeguards than the Goode Report offered.
Secondly, I wish to take up the suggestion in the Statement that the burden of pensions might become unsustainable. I have been looking again at the words of 1376 the Government Actuary in his "Politeia Lecture" of 27th January. He says on the subject of the cost of pensions:The fact that future costs of social security in the UK look much more manageable than in most other countries reflects relatively low benefits which can be expected from the public system".The word "unsustainable" was perhaps a little imprudent.
I am extremely pleased to hear that the Government will do something about the all-work test for incapacity benefits. But until I see exactly what, the welcome will remain cautious. I look forward to further discussion of it.
Similarly, I am delighted to hear that there is a real change in the CSA coming forward. That has not worked. I do not yet understand what the Government will put in its place. I would welcome the chance to discuss it inside the Chamber or outside. I do not think we will reach full agreement on it, but we might very much reduce the area of disagreement which I would welcome.
I am interested that attention is being turned by the social exclusion unit to people who are sleeping rough. But I wait with interest to see whether the Government will do anything about benefits for 16 and 17 year-olds. As the CHAR inquiry found, that is an important part of homelessness. Without attention to that, not much will be done.
On fraud, obviously something needed to be done, but we on these Benches, remembering that fraud is a crime, will judge the measures by how far they promote the interests of justice which are identical neither with those of the claimant nor with those of the Treasury.
There are some points in the Statement which I think are still a little out of focus; for example, the insistence that the Government can lower unemployment by measures to change the welfare state. Peripherally, yes, I think they can make some difference. But the Government would do much more to reduce unemployment by bringing down the excessively high level of the pound rather than by making any changes to the welfare state. The Chancellor might have achieved more in that direction if he had spent more time doing his own job and less doing that of the Secretary of State for Social Security.
I am not at all sure that it is a particularly exact statement to say that the social security system promotes fraud. It is true in the sense in which money promotes theft or life promotes murder. It contains a certain element of truth, but not a particularly profound one. Overall, what I welcome most about this paper is its greenness. I look forward to further discussion.
§ 5.57 p.m.
§ Baroness Hollis of Heigham
My Lords, I thank the two noble Lords for their contributions before we go into the wider debate. If I miss any of the points raised, we shall write to noble Lords. The first point the noble Lord, Lord Higgins, raised, was to complain that, I think his phrase was, this was a "review of reviews". We have made it clear that this is a framework Green Paper, to be followed by Green Papers on pensions, child support, 1377 which was mentioned by the noble Earl, Lord Russell, the national childcare strategy, together with a White Paper on social services and the report of the Royal Commission on care.
The noble Lord, Lord Higgins, asked that such highly technical issues be debated in this House. Of course, that is the point of having the Green Papers, but it seemed to me that the noble Lord was criticising us at both ends. On the one hand, he was criticising us for not having the detail here and, on the other hand, for not having Green Papers in front of us which are yet to come and which will follow the framework document that the Green Paper represents. That is our policy. The Green Paper is a framework Green Paper, to be followed by detailed Green Papers which will be the subject of wide consultation, discussion and debate, exactly as the noble Lord would wish us to do.
The noble Lord, Lord Higgins, said further that the document was welcome in its principles but short on practical policies. That is not true because each chapter offers measures of success. The noble Lord admitted that, but then he said that they were not quantitative. Yes, but I draw his attention, for example, to page 51 of the Green Paper. He moved from the Statement to the Green Paper, not surprisingly, given the hour-and-a-half which he had to explore them. Page 51, Principle 4, gives the assurance that there will be measures of success to introduce effective civil rights for disabled people. How would one put a figure to that? How many rights? How many disabled people? That is a statement, a guarantee, a commitment that we will honour. We will remove the barriers to work; give active help to disabled people. What will count as a quantitative measure of a fundamentally reforming capacity benefit? Does the noble Lord wish a quantitative measure to be placed before this House before we have even had the technical paper for which he called later in his speech?
In relation to ensuring that the welfare system recognises the extra costs placed on disabled people, the noble Lord welcomes the consultation with disabled people. But does he wish us to bring forward a quantitative measure before that consultation has taken place? The noble Lord was perhaps unwise to call for quantitative measures in relation to things that either do not lend themselves to quantitative assessments—like civil rights—or to things that must properly follow detailed discussion and consultation, to which we have committed ourselves.
The noble Lord went on to ask a series of questions in relation to pensions. He asked whether the basic state pension will be means tested; whether its uprating will be a permanent feature. We are pledged to retain the basic state retirement pension as the foundation of pension provision and to uprate it at least in line with prices. Our major concern is the weaknesses in the second tier of public/private partnership on which depends a decent prosperous retirement in old age. I am sure that we do not disagree about that. We want better value second-tier pensions which will give low paid workers the chance to save. A Green Paper later this year will set out our proposals to that effect. For the noble Lord to ask me to bind a Chancellor of the 1378 Exchequer in perpetuity comes oddly from somebody who was a distinguished Minister of State and Treasury chief who would have allowed no such commitment to be made when he was in post.
The noble Lord also went on to talk about occupational pensions being the biggest welfare success of the century. Indeed, that is so. He asked why we have therefore "clobbered" them with ACT. As we have already made clear, the measures in the previous Budget, reinforced by those set out in this month's Budget, create the right conditions for long-term investment and growth. We believe that strong pensions rest not on deformities in the tax system, but rest instead on the strong investment policy that can follow a strong economy. By providing that strong economy—if the noble Lord looks around he will see it—we will follow the strong investment and performance in equities on which the long-term health of pensions will rest.
The noble Lord asked also about families and taxation and said that over £1 billion in the longer term will be withdrawn from married men through a reduction in the married man's tax allowance. Rather like the noble Earl, I doubt that that is what determines whether or not a cohabiting couple decide to marry. In any case, the point we were trying to make in Question Time earlier this week—I should like to repeat it—is that marriage or cohabitation is a personal choice for the couples concerned. What matters to us as a government and as a society is that children are brought up in a family in which they thrive, whether their parents are married or are cohabiting. In either situation the children can thrive. What concerns us is a situation in which children are in families which do not thrive because they are fractured. The children may be abused, they may be poor; the father may not be providing the child support and maintenance that he should. That is the area of policy that we will be seeking to strengthen to ensure that all children have a chance to a decent head start in life irrespective of their family formation.
Finally, the noble Lord talked of housing benefit and what effect it would have on welfare to work. It is a difficult issue. We are considering ways of easing the transition into work. We know that worries about housing costs are crucial to people when they are thinking about that move and we are looking to ways to improve the work incentives in housing benefit. We believe that the working families tax credit will help that situation. But the noble Lord is right to identify the problem of tapers allied with the problem of other tapers, which is a major difficulty. We share that difficulty and I am hoping to receive the benefit of the noble Lord's expertise when we come to discuss this in greater detail as we proceed.
Perhaps I may turn to the comments of the noble Earl, Lord Russell. I was glad to receive his welcome for so much in the Green Paper, in particular our proposals for disabled people which we believe will reassure them, given some of their previous fears. The noble Earl suggested that our commitment to the vulnerable not being negotiable, our commitment to welfare to work could be in conflict.
1379 We do not believe that is so. We believe—the Statement and the Green Paper reaffirm this—that those who can, should work, and that those who cannot should enjoy security. We also recognise that each of us may become vulnerable or suffer insecurity during our lives. That is why, in the foreword to the Green Paper, the Prime Minister makes it very clear that the welfare state belongs to us all; it is not just a receiver of taxes and a giver of benefits. It belongs to us all because at different points in our lives we may all be threatened with insecurity and need support. The welfare state is the common wealth of us all.
The noble Earl went on to comment on pensions being unsustainable. Were the basic state pension to be the main source of income and support for the elderly, the costs would be unsustainable. That is why we are anxious, in partnership with the private sector, to ensure that all elderly folk and people going through now will enjoy a good second-tier pension. But I must say—I am sure your Lordships have heard this before—that what matters about a pension is not so much what we can now do as a government in this year or in this Parliament, but that young people in their 20s and 30s are in jobs and saving for a pension so that in the years to come they will enjoy prosperity in their old age. That is what matters most in the future of pension provision.
Finally, the noble Earl asked about the social exclusion unit, JSA and benefits for 16 and 17 year-olds. He particularly identified the issue of rough sleepers. It is clear that a large number of rough sleepers are young people. But, from my experience, when those young people come on to the streets they are already to some degree damaged. They have come out of abusive family situations; they have often come out of care when they have been abused themselves. Therefore they need more than just hardship payments; they need the support of us all as well as pathways into work. We want to ensure that that is done with generosity and decency. I hope that I have answered the questions that were asked of me.
§ 6.7 p.m.
§ Lord Ashley of Stoke
My Lords, is my noble friend aware that a black cloud of fear has been lifted from many disabled people. There is now an opportunity for constructive dialogue between them and the Government.
Disabled people have been worried about the possibility of cuts in the level of disability benefits, about the disability living allowance being means tested and about inadequate local authority care being substituted for cash benefits. But those have now been ruled out because the Government listened to disabled people and responded positively. I should like to congratulate my noble friend and the Government on a forward looking Green Paper; it is great.
My noble friend may be aware that we still have some reservations about certain aspects of the Green Paper, on which I should like clarification. For example, my noble friend mentioned incapacity benefit and the amount of money in that respect being reduced. That may well be, as disabled people become employed. 1380 That would be welcome and help given to disabled people to obtain jobs is forward looking and constructive. But we do not want disabled people to lose incapacity benefit because of restrictive criteria.
The Minister mentioned severely disabled people possibly getting more money. That is to be warmly welcomed. It is another constructive step. However, we do not want it to be at the expense of the least disabled people. We want that money to come from people in jobs and those who are working. But those are small reservations which we will explore in the weeks ahead.
§ Baroness Hollis of Heigham
My Lords, I am delighted that my noble friend, who has led the campaign not just over this past year, but over many years for disabled people, feels able to welcome this chapter in the Green Paper.
My noble friend is right to say that the Green Paper tries to suggest to disabled people that they can have every confidence as we move forward together in consultation, in partnership with disabled people, to decide how best to adapt, modify and reform disability benefits. Where my noble friend is absolutely right is that disability living allowance will in future remain a national benefit. In other words, it will not be localised—that is, sent over to local authorities. My noble friend is also right to say that DLA will remain a national, universal benefit. In other words, it will not be means tested.
My noble friend referred to incapacity benefit and asked what was meant by "the money will he reduced". If we reduce the money spent on incapacity benefit, that will be a sign of success and not failure. It will mean that our strategy to help disabled people to remain in jobs, which is the best strategy possible, and our strategy to help disabled people to move back into work have succeeded. It will be a test of success and not failure. All existing claimants on incapacity benefit will be protected should and when the all work test be replaced by an employability test.
At the moment, incapacity benefit is an all-or-nothing situation. With 15 points you get your benefit; with 14 points you get nothing at all. It is a cliff edge. People with experience of disability know that disability is a continuum and a fluctuating experience. We need something far more sensitive to the real lives of disabled people, as they move in and out of work—voluntary work, part-time work or full-time work. Because of that we wish to develop those principles and those topics in conjunction with disability organisations and with the all-party disability group which my noble friend chairs in such a distinguished way. Along with civil rights for disabled people, we have promised a commitment, a contract and a new deal about which, together, we can rejoice.
§ Lord Tebbit
My Lords, is the noble Baroness aware that the Green Paper and the Statement appear to be strong on sweet words but that there is not too much evidence of parsnips, let alone butter? Can she turn her attention to look not merely to the right, as Ministers do these days—that is, at page 51 from which she quoted—but at page 50 where she will notice a series of success 1381 measures which could well be quantified numerically? Secondly, did she notice that she was able to give an assurance on behalf of the Chancellor—a long-term assurance, as I read it—that DLA will not be taxed or means tested? Why was she not able to give a similar reassurance that the old-age pension will not be so treated?
Thirdly, on the subject of disability, the Green Paper seems not to recognise that disability affects not only the individual but the family in which the individual lives. Does she not regard it as quite extraordinary that, while a travelling salesman is allowed the cost of his transport as an essential business expense, the spouse of a disabled person, who could not go to work unless there was a carer at home, is not allowed the cost of that carer as an essential expense in being able to get to his or her work? Will she have a word with this extraordinarily generous Chancellor about that matter?
§ Baroness Hollis of Heigham
My Lords, the noble Lord asked about DLA and said that I appeared to give an assurance on behalf of the Chancellor that it will neither be taxed nor means tested. What I said was that it will not be means tested. As I am sure he would recognise if he consulted his noble friend Lord Higgins, who is a former Minister of State in the Treasury, the Chancellor must always reserve to himself the position on taxation. There are no proposals to tax it, but that position must be reserved. The commitment in the Green Paper is to DLA not being means tested.
The noble Lord referred to disability and the tax changes. Like the noble Lord, I think that the position of carers is a crucial, sensitive and vital one in supporting disabled people within the family and within the community, and it is one that has too often been neglected. That is why I am sure he will join with me in welcoming the changes in the Budget introduced by my right honourable friend the Chancellor in which he allowed the same tax credit that married men currently enjoy for a disabled wife and dependent children to apply to a working wife with a disabled husband and dependent children. Certainly the Carers National Association has warmly welcomed the change and I am sure I can expect the noble Lord to do so as well. My noble friend Lady Pitkeathley is the chief executive of the Carers National Association and has been active in promoting its concerns. We will be looking at some of the wider issues affecting carers as the summer progresses. The noble Lord was quite right to draw those points to our attention. They will be looked at.
§ Lord Shore of Stepney
My Lords, I congratulate my noble friend and the Government. This is an important Statement and it is very helpful to all of us to have a restatement of the general principles of the welfare state and indeed of some of the main policies which are already in train or being adopted.
However, I have one reserve to express and one question to ask. The reserve is really about the effects of the welfare-to-work measures, of which I accept there are quite a number, on the reduction of unemployment. I think the effects will be quite small. The main effects 1382 in reducing unemployment will be achieved, if they are achieved, by successful macro-economic policies, of which the exchange rate is one, but by no means the only one. The lack of mention of demand management as being one of the keys to the whole economic situation is to me a matter of profound regret.
The question I want to ask is quite a short one and it is about the options for a second pension. I wholly accept that we must have a second pension; I wholly accept that savings have to be increased; and I wholly accept that it has to be compulsory. But I should like an assurance from my noble friend that, in considering what kind of pension this should be, we will keep in play the possibility of amending and improving SERPS as the basis for the second pension rather than shooting off into the stratosphere with the ill-defined stakeholder pension which may or may not be of equal merit.
§ Baroness Hollis of Heigham
My Lords, my noble friend raises two points. The first concerned the welfare-to-work measures and a reduction in unemployment. He is worried that the effects may be quite small and that unemployment will better respond to macro-economic policies such as demand management. I am sure that, to a degree, that is true but our experience over the past 20 or so years has been that whenever unemployment has receded—when the economy has picked up through good and effective demand management—certain groups of people have been left stranded on the beach. In other words, when employment improves, some of those who previously were left unemployed do not come back into the labour market. From our experience they have disproportionately been disabled people; they have been men in their fifties from areas of former heavy manual work; they may sometimes be young people from ethnic minority backgrounds; they may be people with low skills and low literacy qualifications.
Our experience has been that demand management, while of course an important part of economic management, is not enough to refloat those people who have been left beached back into the labour market. That is why we need the targeted effects of the new deal for young people, for the long-term unemployed, for disabled people and for lone parents.
My noble friend asked about SERPS and the stakeholder pension. We will be bringing forward a Green Paper and we expect to see major legislation in this Parliament. Within that context, we will welcome the contribution of my noble friend.
§ The Earl of Onslow
My Lords, I have glanced briefly at the document, but I hope that any comment that I make will not be just a glance comment. What has struck me very forcibly is that throughout this century welfare and social security have been advanced by one party or the other more or less equally, be they the Liberals of 1905, Chamberlain in 1925, the 1935 Act and so on. The only thing that has become absolutely clear is that every single cash forecast has been quite horrendously wrong. It is stated that old age pensions in 1905 were expected to cost £2.5 million, but in four 1383 years they cost £5 million. I know that the cost of the disability allowance was way in excess of what we thought it was going to be. Nobody, least of all myself, would complain about the extra cost because it is obviously necessary. But when the numbers are done, can the Government do basically what President Kennedy did as regards going to the moon? The estimate of the cost was put at x million dollars and he simply added a nought to the end of it. The project then came within budget. Whatever we do about welfare will cost a great deal more than was envisaged at the time. Can we always bear that in mind?
§ Baroness Hollis of Heigham
Yes, my Lords.
§ Lord Randall of St. Budeaux
My Lords, I should like to say how impressed I am by this Green Paper. It is imaginative and visionary. If we can go ahead with it we shall have a better society, which is something that most of us in this Chamber would wish to see.
When one looks at the costs of welfare and extrapolates them, one must conclude that it is inconceivable that we can continue spending at the present rate and with the huge growth rates in the future. Something has to be done. Again, I compliment the Government on taking action.
I have a question for my noble friend. The change is very comprehensive and it will affect many people. I believe, generally, people are not keen on change. I believe that there will be a big reaction. I noted in the Statement that Mr. Field said that reform is non-negotiable. I welcome that. However, does my noble friend agree that we must proceed with this programme although it will be politically very difficult at times? The reason is that what the Government are doing is absolutely right.
§ Baroness Hollis of Heigham
My Lords, I thank my noble friend for that contribution. He said that it is inconceivable that the costs of welfare should continue to rise if one extrapolates them. I believe that he is right. I had some calculations done as to what would happen if £10 per week was added to every benefit. It would not make people hugely wealthy or prosperous, but it would be useful. People will not be able to afford a holiday on an extra £10 per head in benefit. They would be unable to have an extravagant lifestyle. Yet the cost of increasing every benefit by £10 per week is £20 billion. That confirms the point made by my noble friend. Increasing benefits will not get people out of poverty. That is why we have been emphasising work for those who can and, with the available resources, security for those who cannot.
My noble friend said that reform was non-negotiable. That is right. My right honourable friend said in the other place that how we do it is indeed for discussion on the basis of Green Papers. As has been made clear in our earlier discussions on disability benefits, we seek to do that by consent. My noble friend is also absolutely right in that we are committed to a better society. 1384 The welfare state was one of the proudest and finest achievements of the post-war Labour Government. We seek to strengthen and to renew our commitment to it.
§ Baroness Fookes
My Lords, I gather that the Child Support Agency is to be reformed and not abolished, as we thought at one time. Can the noble Baroness say what precisely will happen in practical terms? As we discovered before, the devil is in the detail. What is the detail now?
§ Baroness Hollis of Heigham
My Lords, the detail will be the subject of a Green Paper, as I made clear at the beginning. It is a highly technical subject. It is true that the method of child support will be reformed rather than the CSA. In the process I hope that we shall he able to change the culture so that non-resident fathers recognise their responsibilities to their children both in financial and emotional terms. We want to see reformed child support, making sure that maintenance, for example, does not subvert contact. We want fathers to both pay maintenance for their children and to have contact with them. We shall be bringing forward a Green Paper in due course which seeks to ensure that as a result of these measures, the children enjoy the emotional and financial support of both parents, whether they live together or not. That Green Paper will be produced over the next year.
§ Lord Stoddart of Swindon
My Lords, in fact, the Green Paper was better than some of us anticipated. Nevertheless, is the noble Baroness aware that it will disappoint many, particularly pensioners, who had nothing out of the Budget and who have certainly got nothing out of this Green Paper? My first question is this. Can I have her absolute assurance that the basic state pension, increased by the cost of living every year, will continue not only for this Parliament, but beyond it?
My second question refers to the Child Support Agency. We understand that it is to be reformed. Will it be reformed in such a way that males in particular will have proper access to their children provided that they make a proper contribution to their upkeep?
§ Baroness Hollis of Heigham
My Lords, my noble friend said that he was disappointed at the lack of mention of pensioners. I am grateful and appreciative that he responds warmly to the Green Paper, but I am sorry that he does not feel that we have given pensioners the due that he believes that they should have. He will recall that it was the Labour Party that ensured that VAT on fuel was not increased, but reduced, for pensioners. As a government we have introduced the winter fuel payment. We are about to start a £15 million pilot scheme for pensioners to ensure, through data-matching, that they take up the income support that they should. Perhaps I may give the pledge that my noble friend is asking for. This Green Paper reiterates and restates our commitment to the basic state pension rising at least in line with inflation as the foundation of our pension provision.
My noble friend asked about the Child Support Agency and the position of males and access to children. We shall be seeking to ensure that fathers recognise, 1385 want and welcome their responsibilities to their children through maintenance and contact. I very much doubt that we shall make it a legal commitment that one goes with the other because of issues in the past involving violence and the like. Some of the changes being introduced by my right honourable friend in other areas of government policy—for example, in the Lord Chancellor's Department—are seeking to encourage non-resident fathers or co-habitee fathers to put their names on the birth certificate and, as a consultation paper will discuss, whether that will also give them the parental rights of access that married fathers take for granted. If the consultation paper suggests that it is a wise and proper way to go forward, then it may address many of the concerns raised by my noble friend.