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Mr. Speaker : Briefly, please.

Ms. Short : I have been sitting in the Chamber all day. I will not speak for too long, but I want to make my speech. I will not take messages from my own Whip or from you, Mr. Speaker, to prevent me making the simple points I want to make. I have sat in the Chamber for a

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significant number of hours. This is not a game to me. I really mean this. It is about real people's lives and the future of our country. I want to put my points on record.

The Government's strategy to dismantle the protection for low-paid workers has been supremely successful. We have more low-paid workers in our country than ever before. There has been an enormous growth in the number of low- paid workers. That is one of the major new economic records of the Government, who claim that they have created such monumental prosperity.

We now have 9.4 million workers--40 per cent. of those in work--who are paid less than the Council of Europe's decency threshold, at which we are all supposed to aim as a minimum. That means that that proportion of our people struggle between dependency on benefits and such low-paid work that they still live in poverty. They often find themselves out of work again because of the insecure conditions. That is the reality for nearly half our population.

The Bill and the further threat to the wages councils mean that even more significant numbers of people will live in poverty. The Government say, "Never mind, family credit is available. You can be subsidised if you are low paid." The problem is that only one third of those entitled take up the benefit. What is that subsidy? Apart from the poverty and lack of dignity, it is fantastically inefficient economically. That is a big benefit subsidy that goes to inefficient employers who pay low wages, seek to compete through a low wage strategy and do not invest or train. There is no future for that sort of economy post-1992.

The Government's strategy not only damages the interests of many people and their dignity in life but is massively dangerous to the future of our economy. With low-paid work, no training, high turnover of labour, no investment and a low-paid economy, we will not survive post-1992. The Government's strategy--the core of the Bill--is for more low pay, using the social security system to frighten people into accepting any old low-paid job. That is bad for people. There is no dignity and justice in it and it is bad for the economy.

I deeply regret that our country has sunk so low that such a Bill should come before the House and be debated at such a low level with the poor quality of the speeches made by Conservative Members. 9.28 pm

Mr. Paul Flynn (Newport, West) : It is a pleasure although a daunting task to follow the impassioned and uniquely well-informed contribution of my hon. Friend the Member for Birmingham, Ladywood (Ms. Short).

We are grateful to have drawn the support of the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) and some guarded comments from one Conservative Member over what we believe is one of the principal errors of the Bill. In clause 2, there is a subtle but massive shift in wealth, again in the wrong direction. An aging society with expensive medical needs is about to cut the Government's contribution to national insurance. That has been in place since 1911. The long-term cumulative effect will be as iniquitous and unjust as the income tax handouts to the super-rich in the 1988 Budget.

In 1945, the levels were set at 40 per cent. paid by the employer, 40 per cent. by the employee and 20 per cent. by

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the Government. That was virtually intact in 1979. It would have amounted to £5.3 billion ; that is the equivalent of the vast amount that is about to be moved as a burden from taxpayers to national insurance payers. It represents a further erosion of the hope of a fair, progressive taxation of equitable contributions on the basis of ability to pay.

A substantial redistribution has taken place already, moving the tax obligation from the wealthy to the less well-off taxpayer. By lessening the taxes paid by the rich, the more articulate and the influential, the Government have successfully fostered the illusion that they have reduced taxes generally. The truth is that, while in 1978-79 the proportion of GDP raised from taxes was 34 per cent., it now stands at 38 per cent.

The income tax cuts have been enjoyed by the higher paid, but for most people the reductions have been wiped out by increases in national insurance and VAT. National insurance payments are the least progressive contributions, hitting low earners as soon as their wages reach the princely sum of £41 a week, while top salary earners escape lightly with a flat-rate contribution. We are witnessing a further twist in the spiral that leads to the poverty of the unemployed and adds to the poverty of those on average wages and those in low-wage employment.

When Labour left office in 1979, Treasury contributions stood at 18 per cent. Almost annually the Tories have cut it to its present level of 5 per cent., while increasing the contributions that employees have to pay, from 6.5 per cent. to 9 per cent. The Government are hugging and congratulating themselves with joy at this prospect. But while they will be pocketing what the amount would have been had they maintained the rate--£5.3 billion- -that money, if we look at it another way, has been picked directly from the pockets of the pensioners and those on benefit because the level has not been maintained in real terms in the way it should have been maintained. One can see that that £5.3 billion is very near to the sum out of which the Government have cheated the pensioners over the years by severing the link between earnings and pensions. That stands at £6.3 billion. Mr. Kenneth Hind (Lancashire, West) rose

Mr. Flynn : There is not enough time for me to give way. That money has been taken precisely from the deserving. The "actively seeking work" rule has, rightly, received much attention in the debate. It is another piece of irrelevant malice exhumed from its putrid sepulchre. That has been done because baiting the unemployed is a favourite Tory sport. How Conservative Members roared their approval at the Tory party conference when they were promised that new barriers would be erected for the unemployed to scale. They would have been frozen into mute, white-faced shock if a crackdown on income tax evasion had been threatened. Several hon. Members, including the hon. Member for Chelmsford (Mr. Burns), have asked why the honest taxpayer should suffer the welfare cheat. Let us put it the other way round and ask why the claims of the honest claimant should be cut by the cheating tax dodger.

Mr. Burns rose --

Mr. Flynn : No, I will not give way.

Those who cheat and abuse the system should be punished and pursued, and evidence has been given that

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when in government, Labour brought many people to book--far more proportionately than are being brought to book now.

But who are the real scroungers? That, I believe, is what the hon. Member for Chelmsford would like to know. The estimates given to the Public Accounts Committee showed that 20 prosecutions were made against individuals for making false returns of income tax or false claims for personal allowances. The cost of income tax fraud is estimated at £5 billion. The cost of dole fraud is estimated at £500 million and the number of prosecutions for that has totalled 14,000, a ratio of one individual pursued through the courts for tax fraud for every 700 prosecuted for welfare deception--one prosecution for every £35,000 fiddled in dole compared with one prosecution for every £25 million fiddled in tax. There is an unanswerable case for better targeting on income tax cheats.

The hon. Member for Chelmsford rejoiced in the fact that there will be more inspectors to hound those who are cheating on the dole. No one disagrees with that pursuit. It is wrong that such cheating should be happening. But we ask for some fairness and

even-handedness. There should be some attempt to deal with those who are robbing the country of very large sums of money through income tax evasion.

We have heard a great deal about the Conservative approach to assessing those who are cheating. The most enlightened figure that we have heard comes from the expert opinion quoted by the hon. Member for Roxburgh and Berwickshire, who said : "The man on the Clapham omnibus could tell her". That is a populist belief. But who will assess those who are actively seeking jobs? We know that the present laws insist that unemployed people have to make positive efforts to seek work. Those laws have existed for many years. They have been enforced vigorously and harshly through strict availability testing. We know that the Government must be planning something even worse than that.

We do not have to look in a crystal ball when we have graphic reports of what happened when the availability to work test in another form--the "genuinely seeking work" test--was enforced in the 1920s. Mr. John Hilton, an assistant secretary at the Ministry of Labour, made a tour to discover how the test was working. He went to labour exchanges and saw people being interrogated. They were asked, "When did you look for a job?" and they gave a litany of firms such as, "This week I went to Hatfields, to Gibbons and to Davies." They were asked, "Where did you go on Tuesday?" and, "What does the manager look like? Is he tall? Has he a moustache?" According to John Hilton, if the information given was true, every person would have been applying for those jobs 10 times a week. It would have meant that firms in Merthyr and in Sheffield would have had one person calling every minute of every day. The system encouraged those who could tell the tale. Those who were deceiving were successful and those who told the truth were punished. If this measure is introduced, it will have precisely the same effect.

My hon. Friend the Member for Newham, North-East (Mr. Leighton) eloquently pointed out the weaknesses in the statistics in "The London Labour Market" report. We should look to other statistics. A report by Harris Research used a much larger sample and showed that 73 per cent. of unemployed people sampled had looked for work in the previous week and 87 per cent. had looked for work in the four weeks prior to interview. The unemployed

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in the London labour market survey were not questioned in depth about why they were not looking for work, but we know that those groups are mostly the quarterly unemployed who have had enough. They have reached the point where they can take it no more. We seek some assurances on this matter. In areas where the jobs famine is really chronic, the discouraged unemployed will be coerced into the endless charade of seeking jobs that pobably do not exist.

We have heard about the job clubs. They have made a valuable contribution in increasing the self-confidence of workers, pointing them in new directions and breaking down isolation. But if we take the magic of the job club and use the analysis published in the midlands, where only 134 job entries resulted from 30,000 speculative job applications, what kind of active job searching would we need to achieve the Government's target in London of 140,000 job entries? It would require 500,000 speculative visits to produce 6 per cent. of those jobs ; 3,276,000 applications for advertised vacancies to produce 52 per cent. of those jobs ; 4 million speculative telephone calls to produce another 17 per cent. ; and 7,800,000 speculative letters to produce the other 25 per cent. of those jobs. That will not happen and cannot happen. We will not see that blizzard of job applications, that deluge of written letters and that bedlam of telephone calls which, in the Government's view, will create jobs. It cannot happen. However, we will see an endless procession of unemployed people having the sting of rejection added to the daily insult of unemployment that they face.

We have asked--we hope that we shall have a reply during the debate--about the comment of the hon. Member for Wokingham (Mr. Redwood) that the Bill will be interpreted sensitively. Opposition Members do not share that confidence, especially because of the way in which restart and other measures have been introduced. However, there are some timely clauses and some sensible clauses that we are happy to support. There has been an accusation that we are clinging to the shibboleths of the 1930s, but the Government are taking us back to the 1920s and beyond. The Government have claimed that similar measures are in force in Eire, Australia, and New Zealand. We have checked and although I do not have time to go into details now, it is clear that as far as we know there are no such provisions in any of those countries.

The Bill will be seen as an unnecessary and pernicious attempt to reassemble part of the cruel dark world of the past. Parts of the Bill have been conceived in prejudice, ignorance and malice. It has been prompted by a brutal populism. It is unworthy of the statute book of a civilised country. The Bill should be consigned to where it belongs--the dustbin of history.

9.41 pm

The Minister for Social Security (Mr. Nicholas Scott) : I congratulate the hon. Member for Newport, West (Mr. Flynn) on his first Front Bench appearance as an Opposition Social Security spokesman. His eloquence was impressive--his argument not quite so. I shall deal with some of the points that he put forward later. We welcome him to his new responsibilities.

The hon. Member for Derby, South (Mrs. Beckett) described the Bill as a "curate's egg", presumably acknowledging that it is good in parts, as did the hon.

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Member for Newport, West. I prefer to describe it as an hors d'oeuvre with a variety of flavours, some appealing to all hon. Members but some appealing only to a few, or to Conservative Members only.

The Bill contains a considerable number of clauses, as does any Social Security Bill which tidy previous legislation or are merely technical amendments to the existing law. I make no complaint that those who have spoken for the Opposition have most frequently concentrated on those clauses with which they most disagree. That is why we are here.

However, I think all hon. Members warmly welcome one clause--and several have done so. I refer to the proposal to increase from 75 to 80 the age limit for receipt of mobility allowance. The House knows that, in the context of the OPCS survey into the extent, nature and circumstances of disabled people in this country, we are reviewing the whole structure of benefits for disabled people. If we had not taken this measure, the first people would have ceased to received mobility allowance in 1989. Obviously, that had to be avoided. The entire benefit will of course be reviewed in the context of the OPCS reports. My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) drew particular attention to that. As I have said, we must await the outcome of the survey.

The hon. Member for Belfast, South (Rev. Martin Smyth) acknowledged the benefits of that benefit but urged us to pursue a take-up campaign. Obviously, I want to encourage the maximum take-up of any benefit available. It is worth noting in passing that in numbers, since 1978-79 when 95,000 people were receiving mobility allowance, until the current year when 540,000 people are receiving it, we have seen a sixfold increase in the numbers of claimants with a 500 per cent. increase in expenditure on this important and well-targeted benefit.

My hon. Friend the Member for Broxbourne (Mrs. Roe) set out the principles that she hoped would guide the evolution of the social security system. It is important to emphasise that no social security system can ever be set in concrete for a lengthy period. Society is dynamic and changes, and the social security system must change too. My hon. Friend the Member for Broxbourne drew particular attention to the need for social security law for liable relatives to come into line with family law. She urged us, too, to do more to get absent fathers, who were liable to support their children, to provide that support. My hon. Friend the Member for Spelthorne (Mr. Wilshire) made the same point. I believe that it is a sensible and responsible way for the law to operate. I emphasise that no one will go down the route suggested in an early-day motion of pressing mothers into pursuing fathers to make the payment themselves. The practice of the Department of Social Security is to attempt to obtain the support for these children by sensible administrative measures, which is the path which we shall continue to pursue. Of course, if a voluntary arrangement is possible, that can often be the quickest and simplest way to achieve that support. However, no one will go down the route of pressing mothers in circumstances which could put them in, perhaps physical, and certainly emotional, danger.

My hon. Friend the Member for Leeds, North-East (Mr. Kirkhope) pointed out the looming shortage of manpower and skills and the need to motivate people to

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seek employment. We shall return to that provision in this Bill, but it is worth saying that, by the development of in-work benefits, by increases in tax thresholds at the lower end and by tax levels, the Government have made a significant contribution in this area already.

My hon. Friend the Member for Dartford (Mr. Dunn), speaking, as he said, for the first time from the freedom of the Back Benches, drew attention to the links between the possibility of social security advance and the economic performance of the country. We are spending a massive £50 billion-plus on social security, which has only been possible because of the successful economic performance of the Government's policies. My hon. Friend, too, mentioned liable relatives and the mobility allowance. He welcomed what we were able to do here and supported the employment clauses, to which I shall return.

Mr. Corbyn : As the hon. Gentleman is talking about the great prosperity of this country, will he explain why tens of thousands of people have been denied any benefit under the restart scheme and many people have been denied any benefit under his social security regime? Should not that prosperity ensure that every family has a home and a reasonable income with which to maintain themselves?

Mr. Scott : The hon. Gentleman made that comment earlier and I shall deal with it when I come to those particular points. I must say that the successful economy was only made possible because at the beginning of our period of Government, we ensured that public expenditure was under control. That should be contrasted with what happened under the Labour Government when--in the words of Joel Barnett--the Labour Government spent the first two years spending money that they did not have.

Three areas of this Bill aroused controversy in the debate. The first was touched on by the hon. Member for Derby, South, who said that the proposals for the recovery of benefit from awards for personal injury had been opposed by those whom we consulted. I acknowledge that. Of course, those are the people who are operating the present system and I am not surprised that they raised doubts about this principle. However, I believe that the change that we are making in this area--by moving to recovery of those benefits from awards for personal injury--rests on two clear and indisputable principles. There should be no double compensation for the same injury, which is absolutely clear and has been supported by the courts consistently in recent years. Secondly, the taxpayer has no duty to subsidise those responsible, or their insurers, where an injury occurs.

I believe, too, that the costs on industry have been exaggerated in that area.

Let us consider employment costs rather than insurance premiums. A typical firm with about 1,000 employees might experience an increase of between 0.14 and 0.28 per cent. as a result of the changes. I believe that that burden can be sensibly borne by industry and commerce in the interests of achieving the two clear indisputable principles that I mentioned previously.

The decision to remove the Treasury supplement to the national insurance fund also drew some controversial comment. That move was welcomed by my hon. Friend the Member for Fylde (Mr. Jack) but opposed by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood). It is important to establish the facts. The current rate of

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supplement from the Treasury to the national insurance fund is 5 per cent. At the start, in 1948, that supplement was 33 per cent., but the move has been inexorably downwards in the intervening years. The current yield is some £1.6 billion and in the coming year it is estimated at £1.75 billion. The fund's income in the year 1988- 89 will be £29.1 billion and that will produce a surplus of £2.7 billion. The end of the year balance will be about £9.9 billion, equivalent to some 20 weeks' benefit expenditure--about the same number of weeks' expenditure as existed in the last year of the Labour Government.

In essence, recent developments and the growth of the fund has meant that the Treasury supplement is no longer necessary to sustain the fund. It was necessary in 1948 to balance the books because the old flat-rate contributions had to be set at a level low enough to be affordable by all. Now that the contributions themselves are earnings-related, that situation has changed.

What is possible now and what was mentioned by my hon. Friend the Member for Fylde, is logical and has been desirable all along. We can pay contributory benefits with contributions--that is equal to about £26 billion of benefit expenditure--and leave the taxpayer to pick up the bill for the non-contributory and income-related benefits amounting to about £20 billion.

Mr. Kirkwood : Does the Minister accept that the increase in the national insurance contribution fund reflects the fact that people are earning more? An increase in earnings is bringing in more money. The Minister, however, is only protecting benefits, and the discrepancy is unfair,.

Mr. Scott : I do not believe that it is unfair, and if I had time I would debate this matter with the hon. Gentleman. We have fulfilled our pledge to protect benefits against inflation. Earnings-generated income into the fund has meant that the Treasury supplement is no longer necessary.

My hon. Friend the Member for Fylde asked about the long term--Keynes had a word to say about that--and if demographic changes make a change in the pattern necessary, it will be for the Government of the day to establish the most sensible way in which to deal with that change.

The most controversial and the most discussed aspect of our proposals relates to the employment clauses and the proposal that people should be actively seeking, and not merely available for work. The present basic conditions for unemployment benefit are that a person must be physically capable of work and available for it. Our proposal is to introduce the additional condition that a person must also show that he is actively seeking work. I believe that that is common sense and that it is widely supported in the country. There is a clear split across the Floor of the House on this matter. I believe, however, that most people not only support our proposal, but believe that that is how the system operates at the moment. The hon. Member for Roxburgh and Berwickshire appeared to be under that illusion. He mentioned the decision on R(U)5/80 and he advanced that as evidence of the existing situation.

That judgment referred to the need to take active steps, but, since then, further decisions have defined more closely what is an active step. In one example a claimant had attended a jobcentre, had not even left his name and

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address, and had gone away. The commissioners held, however, that that was sufficient to confirm his declaration that he was available and actively seeking work. That is nonsense, but that claimant had no obligation to do any more.

The other point that the hon. Gentleman raised was whether what we were proposing in this clause was a move towards workfare. I have three words to say about that : no, no and no. Our object is to encourage people into real jobs, not to force them into non-jobs. That is, and that remains, our conclusion.

Mr. Frank Field : When I raised this earlier, the Secretary of State nodded his head in agreement, and it would be useful to have it on the record. Are we right in thinking that, under the new rules, claimants will not be forced into jobs which pay them less than benefit? In other words, are the Government holding the Joseph line, which was precisely that?

Mr. Scott : If I may say so, commissioners' decisions have for many years past, under Governments of both persuasions, decided that it is legitimate for people to have to take a job which pays below the level of benefit they have been receiving. Under both Governments the commissioners have made this decision, so we are not changing this. What this Government have done, by the development of family credit, by our alterations to tax thresholds and other measures, is to make it almost impossible for anybody to be better off in benefit than in work.

Mr. Field : So the message we can take to our constituencies is that, thanks to all these marvellous changes the Government have made, people will not find themselves in the position of having to take a job which pays less than benefit?

Mr. Scott : I think the hon. Gentleman should read what I said in Hansard very carefully, and take it from there.

The hon. Member for Birkenhead (Mr. Field)--it was a timely intervention by him--talked about a contract between the individual and the state. It is a fanciful concept, if I may say so, as he went on to say, to hold that the role of the state in this contract is to present the unemployed with a job. It seems to me that the unemployed themselves have a duty laid upon them to go out and actively seek work. What we can do as a Government is create a climate in which job opportunities expand, and we have created more job opportunities in the last 10 years in this country than any other country in Europe. We can encourage people to avail themselves of that opportunity, as we are doing in this Bill, and we can provide support services such as client advisers, counselling for the unemployed, job clubs, restart and employment training--now costing about £1.4 billion a year, and of high quality.

I believe too that as a Government we can make a contribution in moving jobs away from the areas of the country where the employment situation is tight and flourishing and away to the less developed parts of the United Kingdom. I very much hope that we will be able to do that, and I hope the hon. Gentleman will lend his support to us as a Government when some of the Luddites

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in the London Labour party oppose it when we begin to move jobs in the social security system out of central London.

The hon. Member for Derby, South said that other countries did not have the provisions that we are putting forward. If I may, let me just tell the hon. Lady before I sit down what happens in Australia. In Australia, unemployment claimants have to register continuously with the Commonwealth employment service ; they have actively to look for work ; all claimants have to send fortnightly details of activity to their regional office ; a claimant about whom there is a doubt as to whether he is making a real effort to find work must complete a work intention form, a questionnaire about his intentions and availability. If doubt still remains, a work effort certificate is issued by the mobile review team requiring claimants to provide signatures of employers he has approached. That is at least as tough as, and in my view tougher, than the proposals in this Bill. I believe there is general support for what we are doing through the introduction of this clause and the clauses that are associated with it, and I believe that only the most perverse interpretation could describe this as punishment rather than encouragement of the unemployed into jobs. I believe this will encourage self-reliance and independence on the part of people in this country, and I make no apologies at all to the hon. Gentleman for Leeds, West (Mr. Battle) for making that a major thrust of this policy.

Most people actively seek work. We are talking not about the majority of unemployed people who are actively seeking work but about the minority of people who are not actively seeking work. My hon. Friend the Member for Norfolk, South-West (Mrs. Shephard) gave a clear example. Even the hon. Member for Newham, North-East (Mr. Leighton) had to admit that a minority of people exploit the system. Genuine claimants have nothing to fear from our proposals. I believe that they will be welcomed by the country as a whole, and I commend the Bill to the House.

Question put, That the Bill be read a Second time :--

The House divided : Ayes 292, Noes 230.

Division No. 28] [10.00 pm


Aitken, Jonathan

Alexander, Richard

Amery, Rt Hon Julian

Amess, David

Amos, Alan

Arbuthnot, James

Arnold, Jacques (Gravesham)

Arnold, Tom (Hazel Grove)

Ashby, David

Aspinwall, Jack

Atkinson, David

Baker, Rt Hon K. (Mole Valley)

Baker, Nicholas (Dorset N)

Banks, Robert (Harrogate)

Batiste, Spencer

Beaumont-Dark, Anthony

Bellingham, Henry

Bendall, Vivian

Bennett, Nicholas (Pembroke)

Benyon, W.

Bevan, David Gilroy

Biffen, Rt Hon John

Blaker, Rt Hon Sir Peter

Body, Sir Richard

Bonsor, Sir Nicholas

Boscawen, Hon Robert

Boswell, Tim

Bottomley, Peter

Bottomley, Mrs Virginia

Bowden, A (Brighton K'pto'n)

Bowden, Gerald (Dulwich)

Bowis, John

Boyson, Rt Hon Dr Sir Rhodes

Braine, Rt Hon Sir Bernard

Brazier, Julian

Bright, Graham

Brooke, Rt Hon Peter

Brown, Michael (Brigg & Cl't's)

Browne, John (Winchester)

Bruce, Ian (Dorset South)

Buck, Sir Antony

Budgen, Nicholas

Burns, Simon

Burt, Alistair

Butler, Chris

Butterfill, John

Carlisle, John, (Luton N)

Carlisle, Kenneth (Lincoln)

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