HL Deb 05 November 1998 vol 594 cc429-50

7.6 p.m.

Earl Russell rose to ask Her Majesty's Government what is their response to the open letter from members of the Social Policy Association published in the Guardian of 29th July.

The noble Earl said: My Lords, I am delighted to observe that reports that the Minister had been locked in a broom cupboard were grossly exaggerated.

The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham)

My Lords, it is true.

Earl Russell

My Lords, I am delighted even more to hear that that is entirely true and that she has succeeded in securing her release. I also look forward warmly to the maiden speech of the noble Earl, Lord Listowel. Many years ago his family and mine were close friends. I look forward to listening to him and to resuming that friendship.

Tonight I am drawing attention to an open letter from the Social Policy Association to the Secretary of State about the Government's Green Paper on welfare reform. This is an audience which may be presumed to know a certain amount about what it is talking about. The response is largely interrogatory, but it is not exactly a ringing endorsement. I have a series of supporting letters behind that open letter in the Guardian, which the Minister will have as they were addressed to him. I can take up only a limited number of the questions that they raise.

First, I take up the dissatisfaction with the Government's use of the term "welfare" rather than "social security". It is a part of the Americanisation of our public life. It could be questioned on that ground alone. It also causes some anxiety to them, as it does to me, because of the somewhat derogatory innuendoes that people sometimes sense from my noble friends.

My noble friend Lady Williams of Crosby, writing in the Guardian on 11 th February 1998, said: Welfare-to-work in the United States has been based on a withering moral contempt for those dependent on benefit". Therefore, it is incumbent upon the Government to be particularly careful that nobody finds in their utterances any such suggestion of de-legitimisation or of contempt.

I was a little taken aback, to put in no higher, to see in the Statement of 28th October last an entirely unsupported statement that many are dependent on benefits when they need not be. There was no supporting argument behind it and no explanation. I do not know what is meant by that. The effect on Daily Mail readers, for example, could be unfortunate. But that is not my main concern, nor indeed that of the Social Policy Association. They are concerned to find out the exact meaning of the Government's mantra, repeated over and over again, "Work for those who can, security for those who cannot". As a soundbite, I have absolutely nothing against it. However, what worries me is that I am terribly afraid that the Prime Minister may think that it means something—and once you begin thinking that, it begins to become potentially dangerous. If it were developed to have the sort of meaning which I hope it has not, it would start developing, almost inevitably and probably unintentionally, towards a distinction between the able-bodied and the impotent poor, which I am sure is not the Minister's wish.

The real problem here is who decides on the word "can". That cannot be a unilateral decision. If it were a unilateral decision by the claimant, it would make all work voluntary. If it were a unilateral decision by the state, it would turn all work into forced labour. I hope that the House will forgive me for not deciding which of those is the more unacceptable conclusion. There must be a process of negotiation. I am not sure whether that is achieved in a number of cases under the present workings of the social security system. I refer, for example, to the application of the actively-seeking-work rules. It is necessary that people should be able, for their own safety, sometimes to decide for themselves whether or not they can remain in a job. As long as people lose benefit pending appeal should they leave a job, that is not entirely achievable.

I do not generally remind the Minister of her own speeches, but her speeches on the Jobseekers Bill and on loss of benefit pending appeal were some of the best parliamentary speeches that I have ever heard in this Chamber. I have not forgotten them and I hope that the Minister has not either. If there were to be any progress on that front, I should be very glad to hear it.

The same problem arises with incapacity benefit, especially in judging the effect of pain on fitness to work. I was listening only yesterday to somebody whose sister persistently reported severe pain and an inability to move her arm. The doctors thought that she was malingering until they finally did a scan and discovered that the patient had a severe blood clot in her brain and was in imminent danger of death. I can see gross injustices occurring if we do not take some account of a claimant's own statements on the subject of pain. After all, the claimant is the only one who knows—just as I am the only one who knows how difficult it is to keep these papers in order!

There is also the danger of over-zealous enforcement. The Minister has been in office long enough now to know that whenever she and her colleagues have worked out a principle, over-enthusiastic enforcement is capable of turning it into something really dangerous. The good cause provisions in the Child Support Act are an example of that.

I agree with the Social Policy Association that, when we talk about "work for those who can", we do not find any reciprocal duty on the Government to provide work. I welcome today's cut in interest rates, but, in the light of the global economic situation, I believe that, worldwide, we need to readjust our economic thinking and to think a bit more about the demand side—about the importance of keeping up demand enough to generate sufficient employment. If that is not being done, chasing claimants to look for work that is not there will be a heart-breaking process.

I was pleased to read in the papers published on 28th October, that account will be taken in interviews of individual circumstances. I should have liked to read also that account will be taken of individual areas. I am thinking of an area such as south Kilburn, where sending people round and round chasing jobs that do not exist may not be a particularly useful process.

Again, there is the problem of over-enthusiastic enforcement with that. There has recently been a case of somebody being disqualified from benefit under the actively-seeking-work rules for not applying for a job because she discovered that she was not qualified for it. If that sort of thing happens, it is a waste of employers' time as well as a cruelty to the claimant. This needs watching. As my right honourable friend Mr. Ashdown said at our spring conference, welfare to work is concerned with employability, not employment. It is not enough by itself.

Attention is also drawn to the problem of benefit levels, which is a problem that I have addressed in this Chamber a good many times. I agree with the Social Policy Association that the Green Paper contains an unfortunate phrase. It complains of people who believe that poverty is relieved exclusively by cash handouts. I have looked at my copy of the Green Paper. What I marked with a mass of red ink appears two paragraphs before, where it is stated that cash handouts alone can lead to a life of dependency. That is a statement akin to "Man shall not live by bread alone"; it is a perfectly true statement, but you do not deal with it by taking away the bread.

Attention is also drawn to a number of exclusions. Time allows me to mention only housing benefit. I hope that the Government understand that with regard to housing benefit, we are dealing with a sellers' market in which one cannot bring down rents by lowering, controlling or capping the level of housing benefit. If one does that, all that happens is either landlords stop letting to claimants or they sell the house, leave the business of letting and make more money by investing the sale price at interest. I hope the department will give that some thought. I shall be interested to hear any current government thinking on this question.

7.16 p.m.

The Earl of Listowel

My Lords, I beg your Lordships' indulgence because this is my maiden speech. I begin by thanking the noble Earl, Lord Russell, for his kind words. I look forward to our families reacquainting themselves with one another.

Over several years I did work in part-time and temporary, paid and voluntary jobs with young people on housing estates in London. Recently I have taken an interest in the charity Centrepoint, which provides support for homeless nine to 25 year-old people, including a refuge for 12 to 15 year-olds, a shelter for 16 to 25 year-olds and 13 other projects in London. I therefore have an interest in this subject and some practical knowledge.

Those young people are among the most vulnerable in society. According to Centrepoint's 1996–97 annual report, nearly 50 per cent. of the people it helps come from the ethnic minorities and almost a quarter of them have been brought up in care. One young woman was physically abused by her father and later sexually abused by her stepfather. Another young man ran away at the age of 15 because his parents had often expected him to look after his younger siblings; when things went wrong, they vented their anger on him.

The Government's Green and White Papers on welfare reform, their Green Paper on the family, and the Guardian letter of 29th July agree that the family is under pressure. It could be said that the 2,500 young people Centrepoint helps each year are the fallout from this family pressure. A good test of any reform would be to see how well this group is treated in terms of housing, training and employment. The Government's Green and White Papers are positive in that they speak about helping rough sleepers. They set high targets which I very much hope are achievable.

The Government do not want to make people dependent on benefit, but rather wish to help them to find work and to develop confidence and independence. That is exactly the ethos of Centrepoint. However, I was very surprised to learn last week that, due to a stricter application of housing benefit rules, Centrepoint is a quarter of a million pounds worse off than last year. In its Soho shelter, Centrepoint aims to find more permanent accommodation within two or three days for the people it helps.

Those young people have often run from home with no papers to prove their identity. Since April the Department of Social Security has insisted on receiving original documents of identity, not photocopies, from claimants and has declined to make payments to claimants who spend less than a whole week at an address. To the Government's credit, they have recently allowed a short stay exemption of two days for those in shelters and refuges such as Centrepoint's, but this does not cover many of Centrepoint's clients whose stay is a little longer.

The original tightening of regulations in April of this year may reflect another vein within the Government's welfare policies, to which the noble Earl just drew our attention. The Government are keen to be tough on fraud and the causes of fraud. In their White Paper they emphasise the need to combat exploitation of the welfare system by the unscrupulous. However, there is a balance to be struck between being flexible enough to meet the needs of a transient group of people who may not have proper papers to prove their identity and the need to protect the taxpayer and legitimate beneficiaries.

So, to conclude, I do hope that the Government will err on the side of generosity when it comes to the needs of young homeless people. They need a helping hand to enable them to find accommodation, training and work. To withdraw that hand may be to see them fall into drug taking, prostitution and crime. To give it may well see them becoming independent adults, contributors to society and to the Treasury. Not to help would be both hard-hearted and very short-sighted. I urge the Government to show flexibility.

7.21 p.m.

Lord Borrie

My Lords, it is my pleasurable task to congratulate the noble Earl, Lord Listowel, on behalf of the whole House. He clearly spoke from experience, especially his own experience with young people and the homeless. He also spoke with genuine concern for social problems and made a number of very practical points. Your Lordships will know that the noble Earl follows in the distinguished steps of Earl Listowel who sat in this Chamber for more than 60 years and who became a very much loved figure. I wish the noble Earl many years equivalent to those of his father in this House. Of course, we all look forward to hearing from him again on many occasions. I regret that, unlike his father, he does not sit on the Labour Benches, but perhaps he is not very far from us in spirit. Indeed, I hope that the noble Earl will be a regular attender at our debates.

Like the noble Earl, Lord Russell, I was most interested in the letter to the Guardian of 29th July from leaders of the Social Policy Association, both for its interesting but critical and, in many ways, constructive comments and for the fact that two of its principal signatories were key members of the Commission on Social Justice set up by the late John Smith when he was leader of the Labour Party and chaired by myself. I have in mind Professor Ruth Lister and Dr. Ethne McLaughlin, both distinguished scholars of social policy. Therefore, I take a great note of what they say now, almost exactly four years after the report of our commission. Commenting on the Government's Green Paper, A New Contract for Welfare, they criticised it for lack of any mention of our commission's proposals for, a modernised, more inclusive social insurance system hotter attuned to women's needs and employment patterns". I believe that they must have been thinking about a number of our commission's proposals, such as that for a part-time unemployment benefit which would be of particular value to women who, after all, represent 90 per cent. of the part-time workers in this country. It would also match the needs of part-time workers and certainly be most helpful to women.

However, both before and after the Green Paper, upon which the letter was commenting, the Government announced numerous policies designed to cater especially for—and I use the same words—women's needs and employment patterns. Indeed, like the noble Earl, I could mention the welfare to work New Deal and especially emphasise the part of it concerned with lone parents, mostly women of course. The scheme began in operation last week with lone parents.

I could mention the increases in child benefit—considerable increases on this occasion—which will be operative, together with child personal allowance increases, from next April. There is also the childcare tax credit scheme which will commence from October next and 1 million new childcare places. Surely no one can deny the vital importance of childcare if women's needs are to be met. Of course, there has been improvement and simplification in child support provision. It was a pleasure for me to chair a conference a few weeks ago at which both my noble friend the Minister and the noble Earl were the principal speakers. We spent a day on that particular aspect of women's needs. I could also mention the working time regulations and part-time working directive which will increase access for part-time work. There are many policy proposals like the minimum wage which are not put forward in a way which is gender specific because they can also help men. However, I would argue that they certainly promote the needs of women, among others.

I am delighted to take part in this debate and I am especially pleased that it happens to fall on an evening when we have a little longer than the usual one-hour limit. However, in a way, the timing is not ideal for the noble Earl if he wants to be particularly critical of the Government. This debate falls only 48 hours after the announcements made by the Chancellor of the Exchequer in his pre-Budget Statement. I could not help but be impressed by an article in yesterday's edition of the Guardian by Julia Finch in which she said: Chancellor Gordon Brown is rapidly asserting himself as a champion of the women of Britain". I hope that my good friends and former colleagues on the Commission on Social Justice, Professor Lister and Dr McLaughlin, have taken note of that comment. Julia Finch used those words about Gordon Brown because she was referring to the fact that it was announced seven months ago that the children's tax credit scheme (designed to cover childcare costs and encourage women back to work) would apply only where the children were aged under 11. But Gordon Brown has now announced that that is to be extended to cover children up to the age of 14 and, if a child is disabled, it will be extended to the age of 16.

I am not sure that the Social Policy Association recognises clearly enough the fact that work is almost certainly a better route out of poverty than benefits. That relates to the points that the noble Earl made in his opening remarks. Of course benefits for those who cannot work through age, disability or whatever, must be adequate. I must agree with that. I say to my noble friend the Minister that we need to know more from the Government about the second part of that equation—or mantra, as the noble Earl put it—which reads: work for those who can and security for those who cannot.

The Government have made the position plain. Several Green Papers have been published and others are to follow. We all look forward to the one concerning pensions which of course affect men as well as women. There are many more aspects of the Government's policy which have yet to appear. The Government have been in power for 18 months. People on the other side of the Chamber are entitled to say that the Government can no longer spend their days blaming the previous government for this, that and the other. However, it is only 18 months. Can one really judge the capacity of the Government for building a considerable new structure of welfare when up to now we have barely seen more than the rough drawings and perhaps a little of the foundations? I do not know whether the Minister would use those terms. That is the stage we have reached at the moment. It is fascinating to have this debate on the subject but I think that judgment must come later.

7.31 p.m.

Baroness Byford

My Lords, I, too, thank the noble Earl, Lord Russell, for tonight's timely debate. It comes at the end of some months of confusing messages from the Government about their plans for the future of welfare provision. Since the Green Paper was launched, two Ministers have departed and numerous new documents have been produced, the last of which, Supporting Families, was launched only yesterday.

The principle which guides the reforms is work for those who can and security for those who cannot. The letter from the Social Policy Association poses the question: with all the emphasis in the welfare contract on the duties of individual benefit recipients to take up work and training, where is the duty of government and employers to provide employment? The noble Earl referred to that matter earlier. The group also reminds us that the Green Paper ignores other forms of work, mostly the work of caring undertaken in the home. That is still carried out mainly by women.

On 17th July the Telegraph stated that, stay at home mothers would get extra pensions", a state funded second pension. However, there was no mention of that possibility in the booklet, Supporting Families. The Government state they are considering the role and status of carers and of the long-term care of the elderly. Perhaps the Minister will comment on that matter later. The Labour Party's manifesto clearly states, We will also seek to develop the administrative structure of SERPS so as to create a 'citizenship pension' for those who assume the responsibility as careers, and as a result lose out on the pension entitlements they would otherwise acquire and currently end up on means-tested benefits". I hope the Minister will clarify that position when she replies to the debate.

I find these different messages confusing. Families face challenges from birth to the grave. Surely we should not consider certain aspects and challenges in isolation. We should consider them as a whole because in real life problems can occur at any time across the age range. This is even more worrying at a time when the numbers of elderly people are increasing dramatically, changes are occurring in family structures, there is a decline in the number of male breadwinners and a geographical dispersion of families. That will put enormous pressure on both the family and state support in future years.

In his foreword to the consultation document, Supporting Families, the right honourable Jack Straw acknowledges that family life is the foundation on which our communities, our society and our country are built. The introduction to that document states at paragraph 8 on page 4 that marriage is still the surest foundation for raising children and remains the choice of the majority of people in Britain. But families need stability and they need to know where they are going. Rumours do not help. It was recently rumoured that the state pension and child benefit might be means tested or taxed. What we have is confusion. Perhaps the Minister will confirm or deny that the Government are considering taxing child benefit and that this tax may apply only to married couples.

Confusion also exists in the minds of lone parents. The New Deal which is aimed at helping parents back into work has had mixed success. On 26th October a headline stated, Millions spent on saving the New Deal". A multi-million pound advertising campaign was to be launched. The Secretary of State, the right honourable Mr. Darling, gave the clearest hint that lone parents would be compelled to attend an interview. However, as regards the pilot scheme in Cardiff, only 4 per cent. of single mothers with school age children who were invited to participate replied. Some 48,000 invitations were sent and nearly 27,000 interviews were arranged. Nearly 24,500 turned up for interview. Some 17,500 signed up for the scheme but at the end of the day only 4,736 gained jobs. I am sure that all of us in this Chamber are pleased that those jobs were secured but we also have to recognise that at the present time the success rate of the scheme is somewhat disappointing.

How do lone parents view the prospect of compulsion? Last week in this House I attended the single parent roadshow which was held in the Grand Committee Room. Speakers expressed their reluctance to be forced to attend interviews. They felt that they should be able to choose whether or not they had paid employment or spent their time as homemakers with their children. They were concerned about the availability of a sufficient number of well paid jobs which would pay them more than they spent on childcare.

On 27th October Maeve Sherlock, director of the National Council for One Parent Families said that, the New Deal … can only be damaged by threats of compulsion". Noble Lords should be aware of the conflicting views expressed by lone parents. For many the chance of a job is a tremendous boost and one which they relish, but for some the chance to care for their own children carries equal weight.

I have spoken at some length about the younger people in our society. I now turn to pensioners. I visited Age Concern in Leicestershire in September. I asked people there what was the greatest concern expressed by clients. Perhaps not unexpectedly, it was that of provision for old age. Like other noble Lords tonight I welcome the minimum income guarantee for pensioners which was announced recently. However, there are many pensioners who have looked ahead and who have saved a little of their own money. They now wonder whether that money will be sufficient for their needs and whether those modest savings will bring in the income they will need. They ponder whether it is worth saving when they see others who have enjoyed a similar income but who have not saved and are still looked after by the state.

The Government acknowledge that people are living longer and that the numbers of such people will rise dramatically. At the same time, the number of people of working age is decreasing rapidly. So it is understandable that so many people are posing questions about future provision.

I wish to add my congratulations to the noble Earl. It was a huge pleasure to hear his maiden speech. It came from the heart and from his practical experience.

Perhaps I may quote a remark of the noble Lord, Lord Callaghan, in a recent article in the Express on 27th July. The noble Lord said: The domestic programme is a ratbag of unrelated policies". I have not been as direct as the noble Lord. However, this Government have raised the hopes of millions of people, and at this present moment they are concerned and not a little confused about what to expect. I look forward to the Minister's response, and I thank the noble Earl for making the debate possible.

7.40 p.m.

Lord Addington

My Lords, it has been some time since I have been able to say this with such a degree of certainty, but most of what I intended to say has already been said by other speakers. My remarks will therefore be restricted.

I had to agree with the initial letter in the Guardian referring to the Government's policy documents. The basic argument was: "Sounds nice; may not mean anything". Many of us who went through those papers had also said, "Yes, well-intentioned, well-intentioned".

Over the past few days some more flesh has been added to the bones of the arguments. Some of it is good, and some is promising. What troubles many of us is that we are still not sure of the overall direction. Too many matters have been left behind which need to be drawn together.

The idea of interviews has been touched on by a number of speakers. It could either make or break this new approach. If interviews are used creatively and look towards a person's needs, they will be a good thing. They may well mean that the overall bill will go up—when it comes to disability matters, for instance, we know that there is under-claiming.

Also, in any area where there are complicated forms, a few people will have read them all backwards and know exactly what they are doing, and many more will not. In any field we come across there will be small numbers of people knowing exactly what they want, even smaller areas of complicated fraud, and large numbers of people who are not extracting the correct benefit.

There is also a problem that sits like a dark shadow beside the Government; namely, that at present the economy is in slow-down. How deep that is and how long it will last we do not know. "Welfare to work" may mean exactly that. It may mean welfare to absolutely no work; or merely welfare to training schemes that go on forever.

I hate to say this, but we have been down this path many times. Indeed, I remember when, at the age of 16, the YOPS scheme was thrown at us. We were told: "If you join the scheme you will be able to find jobs". I remember many of the people with whom I was at school ending up on those schemes and saying, "God, four weeks of making tea, and out!". With the best will in the world, that danger is still there. Unless we attempt to address it in the maintenance of the scheme, matters could go wrong again. I very much doubt whether any new scheme brought forward by the present Government would be anywhere near as bad as that scheme. I sincerely hope that at the very least the Government will not make the same level of mistakes. But it must always be remembered that unless the scheme works properly, it will merely involve further shifting around of paper.

I wish to put a specific question to the Minister. It was raised initially by my noble friend Lord Goodhart in relation to the Statement made two days ago and relates to students who fall into a loophole, to use my noble friend's words, if they become disabled at the age of 20 or more. It means that they will not qualify for severe disability allowance since it is limited to those who are under 20; however, they will not qualify for income capacity benefit as they have had no chance to contribute. If we are talking of getting people into work, I suggest that the matter of people in training should be addressed by the Government.

There will always be loopholes in all types of regulation. I hope that this one has merely been overlooked. It has happened before under governments of all colours at all times. I should be glad if the Minister could offer some reassurance that this matter has either been dealt with, or will be dealt with in future.

7.45 p.m.

Lord Higgins

My Lords, the House will be grateful to the noble Earl, Lord Russell, for initiating this debate, and in particular for the reference to the letter in the Guardian from the Social Policy Association. As he pointed out, there is a rather more lengthy letter elaborating some of the points made in that published in the press.

I wish to join with those who have congratulated the noble Earl, Lord Listowel, on his maiden speech. He spoke with great feeling and experience in regard to those who suffer, in London in particular. He also referred to the problems of ethnic minorities—a matter specifically referred to in the letter that we are debating, and in relation to which, as the letter points out, the Government have not made any clear pronouncements. We welcome the noble Earl's speech, and look forward to hearing him again. I suppose that in many ways he exemplifies the case for the hereditary peerage. Alas, while hoping that we shall hear him on many more occasions, his time may be—though I hope not—somewhat limited.

The document to which the noble Earl, Lord Russell, referred gives a lukewarm response to the Government's publication on a new policy for welfare. Indeed, it states in terms—and it is almost the best that it can say—that they could do quite a bit better. That is scarcely a ringing endorsement.

I have much sympathy with the view expressed by the noble Earl, Lord Russell, in questioning the use of the expression, "welfare", as against "social security". There are some problems. However, it is difficult to find a phrase that does not carry some of the overtones which are so unfortunate, for instance, in the United States.

The letter should be read in the context of the Chancellor's Statement this week. It is concerned in particular with the question of opportunities for employment. The fact that the Chancellor envisages a slow-down clearly diminishes the case for creating more jobs, and that is to be regretted.

When I pointed out yesterday that the growth rate in Britain is likely to be less than half that in France, Germany or Australia, the reply I received from the Government Front Bench was that that is because we are at a different stage of the cycle. The Government ought to consider the implication of that remark, which must be that we are now in a general down-turn. At all events, it is an important issue.

Perhaps I may ask the Minister one specific question regarding employment in her own department. We are told that the Government are to spend some £7 billion in improving the IT arrangements throughout her department. That must presumably create a strong likelihood of redundancies as a result of such a massive injection of technology. Since this forms part of the overall employment situation, perhaps the Minister will tell us what is intended.

It remains my view that, despite today's cut in interest rates, the situation faced by the Chancellor is critical. I am reminded of the story of the small child who was asked by his teacher to continue a story in which the hero was tied to the railway line and the express was approaching at 80 mph. The teacher said: "Now get on with the rest of the story"—to which he replied, with one splendid leap, "Our hero extricated himself from his predicament". That is rather the kind of feeling that I got from the Chancellor's Statement this week.

There is one aspect of the Chancellor's Statement which I should be grateful if the Minister could explain. The noble Baroness asks me whether it relates to social security. It does indeed; that is the point. The Chancellor is constantly poaching in the area of social security. If there is any good news, it is given by the Chancellor, not by the Secretary of State. There is no doubt that the Chancellor is becoming more and more involved in this area, and shifting Treasury Ministers into the department is not deterring him. The Chancellor said: Already 29,000 companies have signed up to the New Deal and 30,000 have found jobs with employers, jobs they would not have had without the New Deal".—[Official Report, 3/11/98; col. 160.] How does he know that they would not have got those jobs but for the New Deal? Our view on this side of the House is that a considerable amount of the increase in jobs has been due to the underlying situation and not to the New Deal. I hope that, in defence of the Chancellor, the Minister can tell us what the position is.

With regard to the letter which the noble Earl has drawn to our attention, one of the supporting papers, by Professor Ruth Lister, states that there are at least three holes in the Government's policies. She says: First, the Green Paper does not offer a clear strategy for the reform of the structure of social security. In particular, it contains nothing of substance about the future of the National Insurance system. The only clue to the Government's thinking is one opaque paragraph that explains that the Budget 'changes to the National Insurance scheme provide an opportunity to update the contributory principle"'. I repeat a point which I have made previously. It seems clear to me that the Government are undermining the contributory principle which has formed the basis of entitlement under our system ever since the end of the Second World War. Measure after measure tends to do this. I therefore raise another point which is relevant in this context. The Chancellor said in his Statement: And business will be pleased that I can announce that from April, employers will not pay national insurance on earnings below £83 a week, the 1999 level for the personal tax allowance".—[Official Report, 3/11/98; co1.160] That is one of the cases in which he made an announcement which we all know he made in the previous Budget. This tendency to regurgitate statements time and again as if they are news is becoming a hallmark of the present government.

The noble Baroness will know perfectly well what I am going to say next, because we debated the matter at length last year. There is no reference in the Pre-Budget Statement to what many people supposed would be in the previous Budget; namely, whether the employee's threshold for contribution would be raised in the same way. The noble Baroness will recall that on that occasion she said clearly that the position of people who no longer paid contributions would be protected. It remains a mystery as to how the Government will do that. Perhaps I may therefore ask the noble Baroness whether the proposal as far as employees are concerned is still on the agenda. It seems strange that it appeared in the previous Budget but is not in the Pre-Budget Statement this year. What do the Government intend to do about the contributory principle in that respect?

As regards the uncertainty in the document to which the noble Earl referred, it seems that the contributory principle is under attack, with all the implications that that will have for means-testing the national insurance pension. Means-testing has become a major feature of the way in which the Government are proceeding. In particular, there is what seems to me to be a disgraceful proposal that a disabled person who has managed to obtain employment and has contributed to a defined-contribution company pension scheme should have that pension taken into account in assessing his disability allowance. Though he did not speak in the House the other day, the noble Lord, Lord Ashley, is on record as being opposed to that proposal, and I am glad to see that the Liberal Democrat Party take the same view. I find it an extraordinary proposition that a disabled person who manages to obtain work and build up a company pension should have that pension taken into account when assessing his disability allowance.

Finally, having in mind the injunction of the noble Earl who introduced the debate, I come to the question of interviews and compulsion, matters referred to by my noble friend Lady Byford and others. One of the threads that has run through the debate is an increasing concern about the Government's attitude to the social security budget. It seems to me extraordinary that in the Statement made from the Front Bench last week we were told that the Government would not compel people who were terminally ill to attend interviews. I can imagine that an official might include that in a Statement to the House, but I cannot imagine that Ministers would even conceive that it might be necessary to do so because Members of this House might think that such a thing could happen.

This raises concerns. Because the Government have so blatantly failed to cut the social security budget in order to spend more on health and education, there are being introduced a series of relatively minor but rather nasty matters with regard to which the House should consider whether the money saved justifies the degree of hardship that is likely to be incurred as a result.

I believe that this has been a helpful debate. We look forward to the Minister's reply. The way things are developing gives people, not least those who wrote to the Guardian, considerable cause for concern.

7.56 p.m.

The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham)

My Lords, we have a custom of welcoming debates in this House, whatever their content, though in truth some debates are rather more welcome than others. However, I welcome this debate without reservation because it raises profound and interesting questions about welfare reform. I also welcome it because, as all those who spoke have said, it gave us the opportunity to hear the wise, generous, moving and compassionate speech of the noble Earl, Lord Listowel, who spoke from his personal experience of Centrepoint and widened that out into some apt and pertinent comments on our social security system. We all enjoyed listening to his speech and benefited from it; I think we shall all remember it.

I should like to say a few general words about the letter which inspired the debate. As noble Lords have said, the letter welcomed our consultation. There were some warm, slightly fuzzy words in it about our acceptance of a mission to clear the route into paid work for those on benefit. But the letter criticised us more for what is not said than for what is said in the Green Paper. I am sure that the noble Earl, Lord Russell, shares my view. It is like the irritation authors have when reviewers criticise them for not having written the book that the reviewer would like them to have written and instead having written a different book. It seems to me unfair to be criticised for what one has not done as opposed to what one is seeking to do.

The Green Paper set out to consult on the principles that should guide reforms, not on new reforms themselves, and to establish support and consensus for the future shape of reforms. I hope that the members of the Social Policy Association, whose views I take very seriously and whose work I have read over two decades of social policy research, will recognise, as they see our reforms taking shape, that their criticism was a little hasty.

I agree with the point made by the noble Earl, Lord Russell, and the noble Lord, Lord Higgins, that if we are not careful the word "welfare" can too easily slip into carrying the stigma that I have seen it carry in some of the poorest housing estates in St. Louis where, the moment one obtained a job, one was out of housing because one was no longer on welfare. Welfare was for those who had dropped out and were to be stigmatised. As someone who cherishes our welfare state, which I believe is one of the proudest achievements of the 1945 government, I too should be appalled if welfare became part of a language of contempt for those who are dependent on benefit and who therefore, by our use of language, become moral outlaws in our society.

The reason that we use the word "welfare" is for the opposite reason. For us, welfare is more than merely social security, important though that is. It embraces health, education, housing and, in social policy terms, what we used to call the social wage. We are arguing to encourage people into partnership with us, to find their own way through into prosperity. That is not only a matter for social security but for the full array of the agencies of government. That is why the word welfare has been used rather than social security.

To understand the basis of our reform, we must appreciate our starting point. To adapt slightly what George Eliot said, the happiest nations have no history. I am not sure whether the noble Earl, Lord Russell, would agree with that. I suspect that it might do him and me out of jobs. We are not in that happy state because social security has a past. It is worth reminding ourselves that in Beveridge's era matters were very different. Some of the statistics still have a power to startle. Women's work then was predominantly in the home while their husbands earned a wage. Today, two women out of three of working age have a job. An intriguing point is that 50 years ago men insured against the risk of a long retirement because the average life expectancy was only 66. Nowadays, men and women need to save for the expectation of 10 or more years of retirement.

The nature of the family has also changed. There were fewer lone parents in Beveridge's day. This was mainly because of shotgun marriages: women got married when they got pregnant. Often men did not want to marry until they were sure that a woman could become pregnant. That may not have said much for the happiness of the marriage, but marriage there was. Today the number is 1.75 million. The noble Lord queries that. I can assure him that, if we look at any of the research on birth registrar statistics, a very high proportion of first births were registered within a month, two months or three months of marriage through from the 1815 period to the Second World War and the widespread use of contraception.

Welfare has changed. The state no longer has a monopoly on welfare. Occupational pensions, for example, have played a huge part in enriching the older generation. So these are just some of the examples of social, economic and demographic influences that have changed our world and therefore require us to change our approach to social security.

Over this period, spending on social security has moved inexorably upwards. More and more has been spent and yet, in many ways, less and less has been achieved. By many of the indicators that the noble Lord shared with us, inequality has widened. Between 1979 and 1994–95, households in the top fifth of the population saw income rises in excess of 50 per cent. But the income of those in the bottom fifth of the population barely rose in real terms; in many cases it actually fell.

Worklessness increased too. Almost one in five of working age householders have no breadwinner compared to less than one in 10 in 1979. Nearly three million children are growing up in workless households. Nearly two million children are growing up in families where there is no maintenance from a father.

We must fashion a welfare system which fits this world. I see the Government's role as, first, running an efficient economy, a point made by several noble Lords tonight; secondly, promoting work for those who are able; and, thirdly—and no less importantly—securing a decent standard of living for those unable to do paid work. We have also to value unwaged work as well.

The letter from members of the Social Policy Association asks, as have some of your Lordships tonight, how our strategy for welfare to work fits into the context of an uncertain world economy. It is a pertinent point. For the first time Britain has a consistent framework for both monetary and fiscal policy, one which has replaced boom and bust with stable growth. Under the previous government we saw taxes cut in good times and public spending cut in bad times—and then we were surprised to see the effect of that creeping through into unemployment.

We now have prudent fiscal planning. Even allowing for slower world economic growth, the Government will deliver their spending commitments without risk to public finances. We expect current account surpluses of £33 billion over the next five years. We expect to meet our targets for inflation. In the context of our prudent fiscal planning, the Bank of England monetary policy committee, as your Lordships have mentioned, has decided to cut interest rates again today.

An uncertain economic outlook makes investment in helping people into work rather than dependent on social security even more important. That is why the stable course set out in the pre-Budget Report sets out the platform for the new deal to succeed.

It is worth reminding ourselves that employment has risen by 400,000 since the general election. The economy is still expanding and creating new jobs. About two million people either move into employment or change jobs each quarter, and 250,000 people leave the claimant count each month. Over 200,000 new vacancies are being notified to job centres every month. The last statistics showed that there are currently approximately 300,000 job vacancies in our economy. Many of those vacancies will be part-time. But those changes in the labour market are very often on the side of what single parents tell us that they want—part-time jobs so that they can balance their responsibilities to their children as well as to work.

We believe that prudence in running the economy gives us a firm foundation on which to base reform. We will avoid boom and bust. As a corollary, we shall not end up cutting taxes in good times only to slash spending in bad times. We shall not end up increasing inequality in good times and in the bad times increasing unemployment. That will not be our policy and we will not go down that path.

The first thing, therefore, is to secure sound economic policy, and we are doing so. Our second objective is to promote work. I am not ashamed to say that I believe—and I think your Lordships will agree—that that is the best route, in many ways the only route, out of poverty. It facilitates social inclusion; it gives status; it strengthens independence; it adds a quality to life; and it is the gateway to economic advancement and the foundation of a secure future.

I remember Frank Field telling me that he was talking to his Birkenhead constituents and asked a 10 year-old what he was going to do when he grew up? A decade ago, that 10 year-old would have said, "I am going to be an engine driver" or "I am going to be an airline pilot." This 10 year-old said, "When I grow up I am going to claim my giro payment." That is not a society fit for our children to inherit.

So we must promote work. So important is work that we have attacked worklessness relentlessly since coming to office. Let me respond to a comment made by the noble Earl, Lord Russell, when he said that he read a sinister meaning into the language in the statement that people are dependent on benefits who need not be. That is not because we necessarily believe that it is through some act of lack of moral fibre on their part that they are unemployed. Very often, particularly for disabled people, it is because of the exclusion imposed upon them by society; or, for lone parents, because of a lack of childcare and so on, that makes choice of work possible.

The noble Lord asked whether the claimant would have a say in the choice of work. Obviously, it depends on whether we are talking about a young person aged 18 to 24 where we say it is no lack of choice simply to be on benefit. As for other groups of society, the personal adviser approach offers partnership. I thought that the phrases that the noble Lord, Lord Addington, used were exactly right. The personal gateway interviews should be creative, positive, enthusing, inspiring and problem-solving. What the single gateway is about, particularly for lone parents and disabled persons, is a recognition that the knowledge of opportunity is itself about empowering somebody to make choices. Without that knowledge people do not have the strength to take the risk, to take the chances, to explore the opportunities. When they do manage to do so, they will then see that their lives, and the lives of their children, are immensely and immeasurably enriched. That is the point of the interview. Without that knowledge, people do not know what they do not know. With that interview and working with the advisers—in just the language that the noble Lord has spoken of—we hope to give people the empowerment to take and regain control over their lives, to make their own choices and set their own courses.

So we have a four-fold strategy—extra help into work through the range of new deal programmes. I think the noble Baroness, Lady Byford, or the noble Lord, Lord Higgins, asked whether we were confident that the new deals were producing extra jobs over and beyond the rate that would have been the case without them. We are monitoring our pilots—particularly our new deal pilot for lone parents—and we are already finding a modest, additional value-added factor. Area for area—control groups versus pilot groups—where the new deal is running, a higher proportion of lone parents are going into work than in identical areas where it is not. It is modest. The programme is still in its early stages. We hope to roll it across the country. If we can continue with those results, then both for disabled people and lone parents we will see positive value coming from the New Deal.

So far, so good. We have a long way to go and we are certainly not complacent. We are researching it carefully and the evidence, though we are still at the beginning, is on the side that the New Deal is the most effective way we have so far found to make that possible. If other people, including Her Majesty's Opposition, have alternative views about how best to encourage people into work, we would be delighted to explore them. It does not have to be a party point. But, so far, no one has come to us with a better way forward.

So the first thing we are doing is extending help for work through the range of New Deal programmes. Secondly, we are seeking to make work pay through the minimum wage and tax credits, although I have to say that I am slightly startled by the position of Her Majesty's Opposition and the noble Lord, Lord Higgins. They are opposed to the working families' tax credit and therefore they are opposed to all those efforts which will spring so many families off dependency on benefits and into work that will probably pay. But perhaps that was another off-the-cuff policy that the Conservative Party will go on to review, re-consider and revise and then change its mind. Let us hope so. It would be nice to think that on an all-party basis we wish to see people move off dependency into a system in which work is rewarded and people do not lose money by moving into work through penal marginal withdrawal rates.

Thirdly, we are removing barriers to work in the benefits system by, for example, allowing those on incapacity benefit to take a job without losing benefit if they fall ill again within 12 months. We are helping people to stay in work by removing the barriers of prejudice; for example, in terms of ensuring that there is a Disability Rights Commission for disabled people, which I know your Lordships will welcome. So on a whole array of fronts we are trying in a positive and creative way to ensure that people get help to move into work.

Our third area of activity is for the group of people who were the concern especially of the letter writers referred to by the noble Earl, Lord Russell. That group is those who cannot work. We recognise that work cannot be the solution for all. As a society, we owe it to those who cannot do paid work to ensure that they have a decent standard of living. We are determined to do that. The Social Policy Association would have us focus more on benefit levels. There is force in its argument and I shall answer it. We have to accept the fundamental point that merely raising benefit levels will never stop poor people being poor or make them prosperous. The statistics I was given by officials a year or so ago showed that to raise all benefit levels by £10 a week would cost us more than £20 billion a year. They would still be poor but we would have spent £20 billion—the same amount that we spend on schools and the same amount that we spend on hospitals. Yet most people in that situation would still be leading lives confined and circumscribed by absolute poverty.

Over the course of this Parliament such a rise would consume all the extra resources that we have earmarked for health and education. Is that the right way forward? We think not. However, we do accept the need to raise benefit levels where we can focus help on those in greatest need. That is what we are doing. We are helping pensioners in terms of the guaranteed minimum income; we are helping families through the increase in child benefit; and we are helping disabled people through the disability income guarantee. Above all, there is a huge increase for young people who become disabled before they can ever enter the world of work. As a result, they will be floated off means-tested benefits in terms of income support for, it is to be hoped, life.

The other main criticism of the Social Policy Association was our failure to say how we should overhaul the entire system and whether in particular we were moving away from a contributory system to means-testing. I think that is partly because of the letter writers' failure to understand that we were consulting on principles and not on the specific reforms. We have set out an ambitious programme for facilitating work which will see a variety of measures ranging from benefits to services and civil rights. Many of our reforms that are in the pipeline will, as my noble friend Lord Borrie said, disproportionately benefit women because women are disproportionately recipients of social security benefits.

Lord Higgins

My Lords, I am most grateful to the noble Baroness for giving way. Surely the contributory principle is that one only gets benefits if one has met certain contribution requirements. Therefore, the argument that this ought not to be covered by the Green Paper seems an extraordinary one.

Baroness Hollis of Heigham

My Lords, the Green Paper set out the principles by which we will go on to adopt reforms. Perhaps I may take up the points made about the social insurance scheme. Our approach has three principles. The first is that protection is better than cure. It is better to fence off the precipice than send in the ambulances. We seek partnership with the private sector and we seek to prioritise in order to focus most resources where they can do most good.

The noble Lord, Lord Higgins, raised the issue of social insurance benefits. There is a popular assumption that social insurance benefits must always be better than means-tested benefits. This is a false dichotomy. Not all benefits are either contributory benefits or means-tested benefits. Child benefit and disability living allowance are neither contributory nor means-tested. The new incapacity benefit for younger people who have become disabled before the age of 20 will neither be contributory nor means-tested. We have extended, to coin a phrase, a third way of benefits between those two. They each have their own strengths and weaknesses.

Noble Lords do not need me to remind them that national insurance benefits are cheaper to administer and command wider political support, but they have rarely been paid at a substantial level and they are not well focused on need. Means-tested benefits can be expensive to run and can discourage saving but can be more focused on need. We need a variety of benefits. No one category fits all need. Over the next couple of years we will be working out the best benefit structure to meet the different categories of need in our society. We should be judged on the efficacy of that structure.

The noble Baroness, Lady Byford, commented on the confusion of our messages, particularly to women and to families. No, what we were saying was not confusion. We were saying that there are choices that individuals, not government, may seek to make. A woman may choose to stay with her children; she may wish to have some work and also have childcare; she may wish to work full time. We are saying that, whatever her choice, we as a society and we as government stand behind her shoulder and empower her to make those choices. Therefore, we will support her in whichever of those paths she treads. That is not a confusing message. It is not a conflicting message. We are saying that we are behind her right to choose and will make that right a reality by empowering positively, through childcare, education, training and family-friendly employment, her right to make those choices.

Baroness Byford

My Lords, I thank the noble Baroness for giving way. Will she confirm that lone parents will not be required to come to interview to take jobs in order to be entitled to payment? That is where the confusion lies. At some stage over the past few weeks many speeches have been made on the topic.

Some of the lone parents I have spoken to have been under the impression that they would not be entitled to payment if they did not come to interview. I explained in my speech that some of them feel that they would like to choose not to have to come to interview, that they do not wish to work and that that is their right. On the one hand, it has been suggested that they have to come to interview in order to be entitled to the benefit. Indeed, what will happen to those on benefit now? On the other hand, the Minister has today implied that that is not so. That is where the confusion lies.

Baroness Hollis of Heigham

My Lords, that confuses two separate policy initiatives. I can well understand why people might be confused as they do overlap. One is the New Deal, which is voluntary and is for lone parents and disabled people, and the other is the single gateway. In the single gateway process we are saying that in certain pilot areas—it may well be rolled out nationwide after the year 2000 if it is successful—new claimants for benefit acquire that benefit through the process of an interview. That was commonplace in 1979 when we carried out 5 million to 6 million interviews a year. It was dropped in the name of expediency by the subsequent government and the number fell to around 500,000. In those gateway pilots we are saying that to acquire income support a disabled person or a lone parent will have an interview. One signs on through an interview rather than through a telephone call or the return of a piece of paper. At that interview, if one is a lone parent, one will probably discuss access to child maintenance, opportunities for education and training, and so on. But there is absolutely no compulsion to go beyond that attendance at interview. That is the first point at which one claims benefit. There is no requirement to go on to work subsequently if one is a lone parent or disabled person. That is one's choice.

We want people to have the knowledge to make an informed choice. In a way compulsion is a red herring. We say that benefit is acquired at the interview rather than as now through a piece of paper. That has always been the way it has been done in the past. I can see why the message has become confused. We regard childcare as being at least as important as going out to work, but we know that most married women choose to do both. We want to ensure that lone parents have the same right to exercise that choice as married women. Seventy-five per cent. of married women with a child under 12 work whereas only about 40 per cent. of lone parents do so. Why? The answer is that they do not have the mechanisms for child support, the knowledge and the infrastructure that they would otherwise have. We will help them if that is what they wish to do but they cannot make that choice unless they know about it. That is how we hope to use the interviewing process.

Time has moved on and I am exploiting the goodwill of the House. I have not covered every point and I shall write to noble Lords as necessary. I could go on for another half an hour but to your Lordships' relief I shall not. To conclude, the noble Lord, Lord Higgins, said that the Social Policy Association's assessment of the Green Paper A New Contract for Welfare was that they could do better. The Government agree. As a society we can, should and must do better. The Green Paper sets out the principles for reform, not the reforms themselves. We are now putting those principles into practice. We have already done a good deal and we shall do more, and by that we shall rightly be judged.

House adjourned at twenty-two minutes past eight o'clock.