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Mr. Donald Dewar (Glasgow, Garscadden) : On the expected savings, will the Secretary of State quantify his
Column 986attack on benefit tourism? What exactly will the proceeds be? Will he say a word or two about the citizens of the Irish Republic and how they will fit into this framework?
Mr. Lilley : We do not have records of how many foreign people who would be affected by the rules are currently claiming benefit other than the Home Office record that some 5,000 are claiming income support. That may well be incomplete. We have no records of those claiming housing benefit. We cannot put a figure on it. Clearly it is a growing problem. By stopping it now, the potential savings are equal to the size of the growth that would have occurred had we not taken this action. I am glad that it was welcomed by the hon. Gentleman when it was announced.
As to the impact on citizens of the Irish Republic, we will not of course discriminate through the measure between any citizens of the European Community, but, typically, they are more likely to have habitual residence both in this country and their own country and therefore pass the test. It is mistaken to assume that Irish people typically come to this country to claim benefit. By and large, they come here to work.
Mr. Dewar : I was not suggesting that.
Mr. Lilley : I was not saying that the hon. Gentleman was making that suggestion, but if anyone were to make that assumption--as some people do--they would probably be wrong.
Mr. Adam Ingram (East Kilbride) : He was thinking it.
Mr. Lilley : Perhaps I was reading the hon. Gentleman's mind. A further problem is those who enter this country on the express condition that they will not be a burden on the public purse, yet subsequently find ways of claiming benefit. I have already stopped the payment of income support to people who are supposed to be self-supporting or who are here illegally. The same will apply to housing benefit and council tax benefit from April 1994. Proposals are with the Social Security Advisory Committee for consultation. Those changes will enable us to concentrate our resources on those who have paid their contributions and taxes and intend to pay their own way in future by finding work.
In July last year, I published an analysis of the growth of social security. It indicated that one of the main sources of growth in claimants and expenditure up to the end of the century would be invalidity and related benefits. That is why I am making a fundamental reform of those benefits. Our reforms to statutory sick pay will return responsibility for levels of sick absence to employers. I am improving the structure of statutory sick pay and giving extra support for small employers. At the same time, I am reducing employers' national insurance contributions. That will more than compensate for the increased costs on statutory sick pay. Overall, as a result of the orders today, employers' net costs will be reduced by more than £100 million a year. Those employers who accept the challenge to improve their sick absence records will benefit even more.
The number on invalidity benefit has more than doubled over 10 years, and trebled over 15. Yet every other source of information indicates that the health of the nation has been improving. If left unchecked, expenditure on invalidity benefit looks likely to increase by a further 50
Column 987per cent. in real terms by the end of the century. The new incapacity benefit will focus help on those medically incapable of work--the people for whom it was always intended--through a new, more objective test of incapacity for work. I am also making a number of structural changes to the benefit so that those incapable of work will continue to receive a basic level of income, as of right, regardless of means.
The net effect of these changes will be not to reduce help to the sick and disabled, but only to curb the growth of expenditure. In future, we would expect to spend as much in real terms as those who, in the absence of changes, would have received invalidity benefit as we do now. In addition, people on incapacity benefit will be able to undertake up to 16 hours' voluntary work a week without it affecting their benefit. People receiving disability working allowance will qualify automatically for free prescriptions and dental treatment. I am increasing the level of support for Motability, which provides help with mobility for more than 170,000 disabled people. I am increasing by £1 million the grant to the mobility equipment fund, which adapts vehicles for severely disabled people.
This is a fundamental set of reforms to benefits for sick and disabled people. Altogether, my package represents a very substantial improvement in the structure of benefits for short and long-term sickness and disability. Employers will be encouraged to take direct responsibility for improving the health, motivation and monitoring of their employees. Benefits will be concentrated on those genuinely unable to work. The spiralling costs of benefits will be contained to the gain of all taxpayers and the ultimate good of the welfare state.
The next stage in my sector-by-sector reform is arrangements for the unemployed. At present we have two benefits with conflicting sets of rules, separate delivery systems and different levels of entitlement. That is contradictory, confusing and unnecessarily complex. We propose to replace them by a single new job seeker's allowance with a contributory and a means -tested element. At the same time, we will place a greater emphasis on helping people back to work.
Under the new proposals, we are strengthening the links between job search and benefit. At the start of their claim, unemployed people will be required to enter into an agreement on how they will set about seeking work. That agreement will not just be a form of words, but a commitment to a course of action that is relevant and beneficial to the individual and his or her circumstances. It will provide the claimant with a positive plan for getting back into work.
We are looking at ways of giving extra help to those who make the effort to find a job. We recognise that going back to work can involve extra costs, for example, for clothing and transport, which may be hard to meet after a long period out of work. The Employment Service, therefore, is piloting a job finder's grant of up to £200 for people who have not had a job for two years.
We are making further changes that will benefit unemployed people who want to help themselves and who find work. At present, unemployed people whose partners work for 16 hours or more a week are excluded from income support. That is a by-product of a beneficial change to the family credit rules, but it can work as a disincentive
Column 988to families on income support. We will therefore be restoring the limit for partners of people on job seeker's allowance to 24 hours. I am also pleased to be able to offer further, very substantial practical help to people with family responsibilities who want to work. Giving up benefit in favour of a low-paid job can be an unattractive proposition, especially if it involves child care costs. Therefore, I propose from October 1994 to enable families with a child under the age of 11 to offset up to £40 a week of child care costs against their earnings before those earnings are taken into account against benefit. Families on family credit will therefore be up to £28 a week better off. That will help up to 150,000 families, and we expect 50,000 people to take up work as a direct result of that measure.
Another major change announced in the social security statement was the equalisation of the state pension age. We will probably see scarcely any growth in the number of pensioners over the next decade or two. Thereafter, however, there will be nearly a 50 per cent. increase in subsequent decades. Given that the basic state pension amounts to more than a third of the social security budget, the potential impact of those extra pensioners on Department of Social Security spending is enormous. That is one inescapable reason for equalising at the age of 65 and for phasing in the new arrangements between 2010 and 2020.
To have equalised the state pension age at 60 would cost some £12 billion a year more than our proposals. Yet that appears to be what the Labour party is recklessly committed to spend. On 26 January I wrote to the hon. Member for Garscadden and reminded him that last year's Labour party conference passed a motion calling for the equalisation of state pensions at 60. The Labour manifesto likewise pledged to allow men and women to draw full pension at 60. Yet the hon. Member for Dunfermline, East (Mr. Brown) said on 26 January that Labour has
"no commitment to equalisation of the pension age at a certain age".
I have received no answer or clarification from the hon. Member for Garscadden. I will happily give way to him if he would like to tell the House whether the Labour party is committed to £12 billion a year extra spending. Or are Labour party promises made outside the House not worth the paper they are written on, as the hon. Member for Dunfermline, East cynically assures us? We must assume from the silence of the hon. Member for Garscadden that the Opposition's words outside the House are simply not to be believed, trusted or taken into account.
Mr. Bernard Jenkin (Colchester, North) : May I point out to my right hon. Friend that some countries have felt constrained to equalise the state retirement age at 67? We are still better off than a number of countries because of the prudent way in which we plan our social security and retirement systems.
Mr. Deputy Speaker : Order. I am having some difficulty in seeing how this part of the Secretary of State's speech about state pension age and its correlation comes within the terms of the orders. Perhaps I am unable to fathom that quickly.
Mr. Lilley : I take your point, Mr. Deputy Speaker. They are all inextricably entwined in the social security statement, but I felt that you would not like me to unravel them at this stage.
Column 989With your permission, Mr. Deputy Speaker, I should like to elaborate on a specific and non-partisan point, which will be of interest to the House and the country. At the same time as equalising the pension age, we want to ensure that women have more equal pension entitlement. One factor which makes it difficult for many women to earn full entitlement is that they are not earning while bringing up children or caring for relatives.
We already compensate for that by the home responsibilities protection system, which makes allowance for years out of the labour market by enabling women to build up full entitlement to the basic pension in as few as 20 working years. We plan to extend that to SERPS. That will be immensely valuable to women, and to a few men who are in a similar position. It will enhance women's pensions rights by some £2 billion a year by 2020.
Over the past year, I have endeavoured to stimulate an informed public debate, as I have by the orders. I have been as open as any Minister could be in thinking out loud about our long-term approach to social security reform. I have spelled out long-term approach to social security reform. I have spelled out our principles ; I have discussed our methodology ; I have published our analyses of past spending and projected future growth in spending and dependence ; I have collated overseas experience ; I have issued our plans for the first sectoral reforms and indicated our likely legislation a year or so ahead.
All this has indeed stimulated a welcome, lively and constructive public debate. Academics, think tanks, newspapers and commentators have joined in- -everyone except, alas, Her Majesty's loyal Opposition. They have been conspicuous by their silence.
The Commission for Social Justice--whose formation I welcomed--has not yet made any concrete contribution. Fearing it might eventually do so, the Leader of the Opposition has now gone to the length, as we are informed by the newspapers, of setting up a separate policy body to take direct control of social security policy and presumably to shut the commission up.
Since policy has been shunted into those bodies, the poor hon. Member for Garscadden--though theoretically his party's spokesman on social security-- has been completely silenced. His role is like nothing so much as a mime artist on the radio : the Marcel Marceau of the social security debate. We urge him, on this occasion, when he has plenty of time and an eager House waiting to hear his words-- [Hon. Members :-- "Hear, hear"]--to let us know his thinking and what his policies would be. We want to know what his party would spend and how it would reform benefits and contribute to the great national debate on the reform of the social security system so that we may have a better welfare state in the next century.
I believe that the orders will be widely welcomed. Our reforms have the backing of most thinking people and we are on track to build a better welfare system for the future. I commend the orders to the House.
Mr. Donald Dewar (Glasgow, Garscadden) : I must confess to the Secretary of State that there is a certain predictability about such debates. I had the advantage, or
Column 990should I say I took the precaution, of re- reading what he said last year. The right hon. Gentleman's speech therefore contained few surprises.
I accept that I have time to speak at great length, if I were so minded, but I am not sure that the audience is one that I find attractive. It looks a little like the "Muppet Show" at the moment, possibly because the hon. Member for Havant (Mr. Willetts), among others, is present. I am glad to respond to some of the points that the right hon. Gentleman made.
This is a ritual debate in the sense that it is an annual outing. The right hon. Gentleman has gone through the niceties of etiquette and it is usual for him to restate what he has already told us in the uprating statement. Some parts of the right hon. Gentleman's speech were almost word perfect, if my memory serves me correctly. It is also an occasion on which the right hon. Gentleman appears before us in the role of the eminently reasonable man. He likes to parade the uprating benefit, particularly when it is in line with prices, like a trophy. We are invited, collectively to say, "The lad has done good." I must tell the right hon. Gentleman that I do not believe that the entire House will be willing to do that today and it is certainly not something which the country would be willing to do. I accept that expenditure on social security is formidable and that it is growing. I am not sure that demonstrates any commitment by the right hon. Gentleman to retain what he was pleased to call a "decent level" of benefit. It certainly underlines the price that we have been paying for recession and high unemployment. One of my colleagues has told me that can be calculated at about £20 per week per household. That is simply the cost of financing and paying for the long dole queues.
Although I suspect that the rate of unemployment will continue to fluctuate, one of the really depressing factors to emerge from the figures published today is that the number of long-term unemployed has gone up greatly in recent times. It looks as though that problem will not be easy to solve.
Mr. Jenkin : Taking into account all those factors, particularly what we now call cyclical social security, are we spending enough?
Mr. Dewar : We are spending a great deal in the wrong way. I am quite sure that the hon. Gentleman, whom I welcome as a scarred veteran of Glasgow politics of recent years, by his use of the word "cyclical" is conceding that it is a product of the recession. Some of us would argue, however, that it is the result of the mismanagement of the economy. None of us likes bills to go up for that reason.
If we were in a position to do it, I am sure that the hon. Gentleman at least would want the general standard of protection in society to improve. It has not been possible, not because of demographic factors--those are some years away, as the Minister pointed out--but because Britain has failed to achieve a reasonable economic performance in the past decade. That must rest on the hon. Gentleman's conscience as an active Conservative and a supporter of the Government, as it should on the conscience of the Secretary of State.
Today, we have the essential minimum. The Minister has uprated benefits according to the RPI, where
Column 991appropriate, or the Rossi index. He has added in a certain amount partially to compensate for the imposition of VAT on domestic fuel.
Mr. Jim Cunningham (Coventry, South-East) : Does my hon. Friend agree that, despite the Secretary of State's announcement, the increases will not compensate old-age pensioners and one-parent families, who will suffer as a result of the increased scope of VAT?
Mr. Dewar : There is no argument about that. The Secretary of State seems determined to make me famous and perhaps I should be flattered, but, as so often happens, the fame is ill earned. As he knows, there is no way that the construction he seeks to put on what I said can properly be put on it. I make that point in passing, but I agree entirely with my hon. Friend.
On this non-partisan occasion, I am minded to be charitable, but the best I can do is say that it is a partial and inadequate rebate for what most people consider an offensive and regressive form of taxation. It will leave many important groups in society at a considerable disadvantage.
I was in Aberdeen at the weekend ; it is a good place to contemplate severe weather. I was attending a public meeting there and it was drawn to my attention forcefully and in a sensible way that the imposition of VAT on domestic fuel will strike at certain groups who can ill bear an additional burden--we think immediately of the infirm and pensioners living in poverty, but we often forget people on low incomes with young families who find it particularly difficult to cope.
There is another problem of which at least one Conservative Member is aware. The imposition of VAT on domestic fuel represents an erosion of zero rating in a way that makes the whole VAT system much more regressive.
I shall not pursue the argument at great length, but it is worth reminding the Minister that at the time of the big hike in VAT, when Ministers were throwing money at the problems of the poll tax, we were told that we did not need to worry, and that VAT was not regressive as vital areas of expenditure for low-income families were zero-rated. It is unfortunate that the Minister offered no adequate compensation in the uprating statements ; it means that the problem will get worse.
Mr. Lilley : Is the hon. Gentleman not aware that it his own party's commitment, both unilaterally and by its signing of the European socialist manifesto, to transfer greater powers from the House to the European Community in the setting of our taxes? If we applied that to VAT, there is absolutely no doubt that the Community and Commission would seek to remove entirely the zero rating. For him to regret the potential demise of zero rating--something we have no intention of permitting--is pretty extraordinary when his party would hand over powers that would ensure its end.
Mr. Dewar : One of the pleasant things about debating with the Secretary of State is that he never loses his ability to astonish me. The zero-rated areas, where they existed, were retained until 1996 by agreement with the British Government and the European Union. There would then have been further discussion. No one seriously believes that it would not have been possible to retain them. However, if we unilaterally withdraw them, of course there will be no prospect whatsoever of retaining them.
Column 992I know--and I pay tribute to it--no one in British politics more genuinely and passionately opposed to everything that European Union stands for than the Secretary of State for Social Security. I have heard him out loose in the country giving speeches to student audiences, and although I thought his views were perverse and extraordinary, I never doubted that they came from the heart. I find it astonishing that a member of a Cabinet that has just agreed to remove an area of zero rating in the knowledge that we can never return to it, should accuse me of being a traitor. It shows an effrontery which is endearing but totally implausible. I hope that he will not return to that.
I return to the orders. Income support, housing benefit and family credit increase by 3.9 per cent., including the VAT compensation. In his uprating statement on 1 December last year, the Minister told us that the increase was higher than most people in work will receive. I understand that is probably correct mathematically, but we all know that, even with the uprating, those on income support will find it extremely hard to make ends meet.
I think that I am correct in saying that after April, a husband and wife with two children under 11 will get £113.05. I accept that there are passported benefits, of which housing benefit is the most significant, and that there are a number of other aids and additions, but a family of four living on that figure will have very little room for comfort. It does not represent a cause for pride after many years of stewardship by the Conservative party.
The statistics on poverty tell a shameful story. The Minister will have studied the recent reports from the Institute of Fiscal Studies which showed that the richest 10 per cent. were £30 a week better off today than they would have been were the 1985 tax regime still in place, while the poorest 10 per cent. were £3 worse off.
The Minister would probably say that taking the extremes of the argument sometimes produces a distorted picture. That is a danger. There is always that possibility in trying to extrapolate an argument from a small group, but the bottom 40 per cent.--a very large slice of the population--is significantly worse off than they would have been under the 1985 tax regime.
Against that background, I protest against any proposition that the present benefit rates are generous or allow people to sit back and think that they have no cares in the world and they can continue to jog along, not as the historical Earl of Durham did on £40,000 a year, but on £113.05.
Mr. David Willetts (Havant) : Does the hon. Gentleman accept that the Institute of Fiscal Studies report says nothing about the living standards of any group of the population ; it is about the impact of tax changes? If those tax changes were compensated for by increases in benefits, as happened with the community charge, there would be no fall in living standards, even if the IFS figures showed an increase in tax payments.
Mr. Dewar : I understand the point that the hon. Member is making, and, as always, it is a sophisticated and perfectly fair one, but I think that he would also agree with my general proposition that the gap between those who have and those who have not has been exaggerated and broadened by Conservative tax policy. I am sure that he
Column 993would worry about--and I do him the credit of thinking that he would worry about it. Also, on the kind of rates that I have quoted, it is very difficult for people living on income support, particularly in a time of general recession when it is often impossible, with the best will in the world, to find work. It is not an easy situation. I am just protesting gently about the somewhat righteous air with which the benefit figures are paraded and we are asked to be grateful for what we have been given.
The Minister also dealt, very properly, with pensions and their uprating. I must confess that I am not as happy--he would not expect me to be--with the situation as he is. He well knows--it has been much debated and advertised- -that the basic state pension has been falling as a percentage of average earnings for a considerable time : 15 per cent. at the moment and likely to drop to 7 or 8 per cent. in 20 or 30 years' time.
The Minister tried to tempt me in the debate and perhaps I can now tempt him a little into the interesting exchanges between his colleagues. The Chancellor, he may remember, in the press briefing reported in The Times of 2 December and very widely noted, made it clear that he thought that it would not be right to allow the state pension to be vestigial. He had said in the Budget speech that it was the cornerstone of the welfare state. so we have the Chancellor assuring us that it would not become vestigial, and three or four days later we have the Chief Secretary to the Treasury looking forward to the day when it would be nugatory.
I am tempted to ask the Secretary of State for Social Security to act as honest broker between his two colleagues, but it is probably a vain hope because I think I know where he lines up on this occasion--with the Chief Secretary to the Treasury. He told us in the corresponding speech last year :
"We are committed to linking the basic pension to prices."--[ Official Report, 10 February 1993 ; Vol. 218, c. 1042.]
The way in which he said it and the spirit in which it was said made it clear that, whether it became nugatory or not, he would not move from that position.
That means--this is something about which we should all worry--that if we are to deal with pensioner poverty we must rely more and more on the pensioner premiums within the income support system, and that will be a growing feature of Conservative policy in the years ahead, together with all the problems that go with a heavily means-tested system, which I think are unacceptable to the public as a whole.
Mr. Jenkin : The hon. Gentleman is perfectly at liberty to criticise that policy if he wishes, but is he offering an alternative? Is he implying that there is more money in the pot somewhere with which to increase the basic state pension over and above inflation every year, in order to prevent what would otherwise happen to it?
Mr. Dewar : I said something in an earlier exchange, and I do not want to tire the House by going over the same ground again ; but I do not believe that the money that we have is being spent in the best possible way, because of the economic circumstances and the ever-increasing claims from the number of people who are dependent. The hon. Member will know that when the Conservative Government came to power there were 4.4 million people dependent on supplementary benefit. Now,
Column 994with the equivalent, which is income support, we are looking at close to 10 million people. I think that 9.9 million was the last figure that I saw. It has a dramatic effect on the economics and finances of the welfare state.
After all, we have the Minister incurring considerable unpopularity in order to drive out of the benefit queue comparatively small numbers of people with his various adjustments and trimmings. Those are literally handfuls of people compared with the kind of growth to which I have referred. So there is a strong case for saying it is not a simple equation.
May I also say to the hon. Member--we may have occasion to debate this at another time--that, in any event, it is not simply a matter of the basic pension. The basic pension ought to reflect increasing national prosperity, but it is clear that, for a long time, we must still wrestle with problems of pensioners in poverty. A number of schemes that the hon. Member will know about are under consideration and have been publicly discussed ; they involve ways in which we can deal with pensioner poverty and with basic pensioners' incomes which are probably preferable--certainly in theory, and I hope workable in practice--to relying increasingly on a deepening tranche of income support premiums. In any case, there is a continuing debate in which I am sure the hon. Member and the Secretary of State will want to take part.
It is in a sense ungrateful of me to say that this is no more than was promised, that the uprating has been just what we would expect and is all very routine. The Minister is entitled to ask whether he has not done well, because he has kept the promise. When we remember what was said, for example, about no more VAT increases and about tax cuts year on year, I suppose that the Minister might try to claim that he had performed rather better than the Government as a whole, since manifesto promises have gone up in flames left, right and centre.
I find it just a little odd that the right hon. Gentleman should accuse me of abandoning pledges and promises, given the record of his own Government. He accused me of it last year as well. I suspect that he will accuse me of it next year and, when he is on the Opposition Benches, he will accuse me of it then. It is a form of words which is now in his head and in which he is well practised.
I thought it interesting that in last year's debate, the accusation was levied not at me but at my right hon. and learned Friend the Leader of the Opposition. What did the Secretary of State say about him ? He accused him, at the previous election, of trying to increase national insurance contributions, a particularly hideous crime, I should have thought, and practically unthinkable. He added that not only was my right hon. and learned Friend trying to increase national insurance contributions, but, what was worse, he was trying to cut the benefits given to those who paid the contributions, another particularly unpleasant phenomenon and one about which he was quite severe.
I do not know--I do know ; let us not be coy about it. I remember distinctly, in the week before we rose for the Christmas recess, the Government bulldozing through a Bill to increase national insurance contributions by 1 per cent., which would produce considerably more revenue, as the Secretary of State will know, than a penny on the standard rate of income tax. We have also had the job seeker's allowance announced and the incapacity benefit Bill launched on its way.
Column 995It seems to me that if the thoughts of the Labour party were thus roundly condemned, it must be nothing to the personal unhappiness of the Secretary of State in having to implement exactly the same policies as a Minister.
I should like to say a word or two, because the Secretary of State did, about the incapacity benefit that is being introduced. I pay tribute to my colleagues on the Standing Committee considering the Bill, who, I understand, are sitting very unreasonable hours and well into the evenings on a measure where there has been no sign of obstruction or anything other than constructive discussion. I sympathise with them and regret the way in which the Government are conducting their business.
The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt) : Scandalous
Mr. Dewar : I think I heard the Under-Secretary saying, "Scandalous." I agree with him entirely ; it is. We will agree that the word "scandalous" is applicable to the circumstances that I have described.
Incapacity benefit is a way of excluding people from benefit. The Minister knows very well our doubts about the mechanical test, about the confusion between disability and the capacity to work. I am sorry that the outcome will be a considerable number of people added to the unemployment register. That is something which the Minister's own Back Benchers may want to worry about in the near future. The Secretary of State gave us an interesting estimate on Second Reading. He reckoned that, in the first year of incapacity benefit, 95,000 people would be added to the unemployment register as a result of the measure and that, in the second year, 190,000 would be added. The Department of Social Security is working hard to manufacture unemployment. No doubt it will be suggested that it was "Lilley's lump" that did it, but I suspect that the Government will experience some problems. As I have said, long-term unemployment is on the increase, and I fear that those in the category that we are discussing will be added to the list after 12 or 24 months--those being the subdivisions of the category. I hope that I am wrong, but I do not think I am.
While the Government talk about how well they have done in regard to upratings, let me remind the House that some of those who survive the new test and receive the new incapacity benefit will be £30, £40 or even £50 a week worse off as a result of the hidden cuts in the formula. I need not cite extreme examples ; it is easy to identify such cases. Those hidden cuts will make life much more difficult for people in a very vulnerable category.
I am not remotely referring to lead-swingers, scroungers or people who have settled for a comfortable life with the aid of a doctor who is not quite as stringent as he should be. I am talking about people who have survived the hoops and hurdles of the new test, and are genuinely eligible for help. They will find that much of that help has gone. The job seeker's allowance will not be introduced until April 1996, which could be described as the medium term ; but, as a result of the cutting of the period conferring automatic eligibility from 12 to six months, some 100,000 people will lose their entitlement to unemployment benefit. The income support dependency figures will rise, which I consider very unfortunate.
May I ask the Minister some specific questions? The guaranteed minimum pension is being uprated again, but I
Column 996have heard--I do not know whether it is true --that the Government are thinking of abandoning it. I do not suggest that they are contemplating total abolition, with no replacement provision ; but I am told that the Department has discussed with industry the possibility of a substitute. That, of course, applies only to occupational pensions. I am always open to arguments, but I should be interested to know whether any changes are in the offing. There is no equivalent of the guaranteed minimum pension in the private pensions sector. I know that regulation is Treasury- oriented, rather than social security-oriented ; but investigations conducted by the Life Assurance and Unit Trust Regulatory Organisation, and by KPMG Peat Marwick on its behalf--and work done earlier by the Consumers Association, whose views are neatly summed up in the title of its press release " The Billion Pound Rip-off "--suggest that the Minister's pride in announcing that, since 1988, some 5 million people have moved into the private pensions sector is another reason for examining the lack of regulation.
We should also consider the number of people on very low incomes--perhaps below £9,000 a year--who have invested in private pension plans, despite the general advice of the industry that such action is unwise in view of the charges and commissions involved. It would not be fair to plunge into a debate on that ; I am simply flagging my genuine concern about what is happening. It is difficult to achieve a satisfactory regulatory framework when pension plans are sold by people whose livelihood depends largely on commission. I hope that the Minister will also say a word about statutory sick pay. That will interest at least one hon. Member who is present : I understand that Lord Jenkin has featured prominently in debates in the other place, one of whose Members described him to me as a Tory grandee. I do not know whether Lord Jenkin himself would accept that description ; I always associated him with the "brush your teeth in the dark" days of 1973-74, and I am not sure whether such conduct, or such advice, is becoming a grandee.
Anyway, Lord Jenkin led the charge in the House of Lords. I am anxious to know exactly what is happening ; I know that an amendment was brought to this House, and was dealt with ably by my hon. Friend the Member for Manchester, Withington (Mr. Bradley), but I am not sure what the next stages will involve. I think that it is generally agreed that the vast majority of sickness-related absences in small businesses are limited to four weeks, which makes the 100 per cent. rebate granted after four weeks considerably less generous than it appears.
I was genuinely surprised when Lord Astor--answering Lord Redesdale--said in the other place that a reduction to two weeks would increase the cost to the Treasury from £25 million to £30 million. The comparative modesty of the figures may illustrate how few employees will be covered, even with the increase in the national insurance contribution limit to £20,000.
I should like to hear a progress report from the Minister, along with some indication of where we go from here. I hope that he will seriously consider the two-week measure ; I know that the Federation of Small Businesses, and Bill Anderson and his colleagues in Scotland, are very keen for some progress to be made.
If the Secretary of State hardens his heart and says no, what will happen to the report that will be substituted for an order or regulation? Presumably, it can be debated ; but
Column 997under what auspices? Will the Government make time for both Houses to discuss a report that says no--despite the efforts that both Houses have made? If such a report is published and there is no opportunity for scrutiny, debate or consideration, it will be seen largely as a swiz.
Sadly, many of the problems that featured in the corresponding debate last year are still with us. My hon. Friend the Member for Withington recently drew attention to the lack of progress on the independent living fund of 1993, and the fact that only £500,000 of an allocated £4 million budget had been taken up. The Minister of State says, "Ah, but that is worth £5 million or £6 million in a full year." If I remember rightly, the old scheme went up to £19 million or £20 million. It is a very disappointing result ; people in social work tell me that there are immense practical difficulties, and that the scheme is just not working well. The Minister may well want to consider that aspect a little more closely than it
has--apparently--been considered in the past.
The other day, my hon. Friend the Member for Burnley (Mr. Pike) was given an interesting answer about the social fund and its administrative expenses. I accept that discretionary schemes are always expensive, but it is nevertheless startling to learn that those administrative expenses amount to 45 per cent. of the sum disbursed. That makes the case for a simplification of the scheme ; we find the cash limiting particularly distorting.
One thing has changed. In last year's debate, we heard a great deal about the Chief Secretary to the Treasury. The Minister made considerable mention of the social security review that he had instituted, and I have the impression that he was a dominant figure. I realise that the Chief Secretary is now rather devalued : he made the mistake of making too many speeches. Worse still, quite a lot of them were read, and some very odd things emerged.
I read with great interest the speech that the Chief Secretary made to the rather quaintly named Conservative Way Forward Group. I recommend the speech to the Secretary of State ; indeed, the right hon. Gentleman probably knows it well. I do not know that the Chief Secretary's "back to basics" ideas will have been of much help to that group, but they were interesting.
I had not realised--I do not know whether you had, Madam Deputy Speaker-- that the decline of this country could be dated precisely to the time when we allowed Marx and Engels in to live and work freely here. I was interested to discover that some universities wallow in self-satisfaction. Apparently, they are good places from which to pour scorn on the world outside. We were told that through those universities had passed nearly all the people who enjoy influence today and that, as a result, a fine tradition of national tolerance had been corrupted into a new tendency to nihilism. I think that must be a reference to Oxford and Cambridge. My understanding is that the Secretary of State went to Cambridge, as did the Chief Secretary. I hope that they were not in any way corrupted by nihilism. In any case, according to the Chief Secretary's interesting speech, a university education is the source of national decline.
When we were dealing with last year's uprating, we were told that there was a grand design. At least that was the implication of every comment. Now the Secretary of State--and I understand why--is anxious to say that he
Column 998does not believe in the "big bang" approach. [Interruption.] I mean that, in terms of social security reform, he does not believe in the "big bang" approach.
Lest the right hon. Gentleman think that I am being risque , let me make it clear that this is a term that he himself has used. [Interruption.] I misunderstood. I thought that the right hon. Gentleman was protesting about my language, but apparently he said this last year. In any case, the "big bang" approach is now unfashionable, and it seems to me that we are proceeding by way of opportunity cuts. We are taking little areas of the social security system. Hence the incapacity benefit and the job seeker's allowance. As these policies begin to unfold, it is clear that the Government are doing a great deal of damage. It is important that I should get this right lest I be accused of guilt by association. The ingenuity of the Secretary of State is becoming a byword--certainly in my circle--so I am anxious to get these matters straight.
I should like to finish on an obvious but important note. The Government have accused me of being somewhat silent. This is a charge that is not comonly made against me, but I am always prepared to stand new types of abuse. The Secretary of State has put forward his version of Labour party policy. We shall have opportunities to debate the future of the pension system and the retirement age. We have made clear our belief that the important features are choice and flexibility, and in that regard we have the support of many people in the industry. I assure the Secretary of State that we have not made the commitments to which he referred rather briefly and, I thought, somewhat jokingly.
If we are to talk about consistency in these matters, I have to congratulate the Secretary of State on one very important inconsistency. For a long time he talked about opting out of the basic state pension. Conservative Back Benchers who are in the Chamber will remember it. Working parties were set up, and there were specific references to at least the possibility of opting out. As I have done once before, I now record my thanks to the Secretary of State for having ruled that out as a possibility. The clarification was helpful.
The right hon. Gentleman will remember "The Walden Interview" of 5 December, in which, despite a spirited plea from Brian Walden that he should not disappoint his fans--a small and select group--he made it very clear, as a pledge for himself for ever, that there would be no opting out of the basic pension. Many of us regarded that as important and helpful.
I hope that the right hon. Gentleman will make other things clear.
Mr. Lilley : The hon. Gentleman is right, but I hope that he will make it clear that I was primarily ruling out means testing of the pension. Would he care to comment on the views expressed at the weekend--stated on television on Saturday evening and repeated on "The Frost Programme" at breakfast time on Sunday--by his right hon. Friend the Member for Islwyn (Mr. Kinnock), the former Leader of the Opposition? Was the right hon. Gentleman authorised in any way to float this idea? Is it in line with the original request of the current Leader of the Opposition that the Commission for Social Justice should consider the means testing of all conceivable benefits? Or is the former Leader of the Opposition just a maverick to be ignored?