---

Mr. Dewar : The Minister so often tempts me to intervene. However, he is being a little unfair. I said that I considered the figures to be surprisingly low, which illustrates or underlines the fact that only a small percentage of the work force was covered by the provision. Will the Minister give us some idea of what is in the ministerial mind? I recognise that consultation is taking place, but presumably it is a concession granted on the basis that there is a need for action. Is that a fair assumption?

Mr. Hague : The Bill was changed and the Government are consulting industry and trade unions in an effort to make the alternative scheme work. If such a way can be found, we shall lay regulations before the House. If it cannot, there will be a report, as the hon. Gentleman knows. There would be little point in giving a commitment now that there must be a debate on that report if in the meantime employers agreed that for some reason such a scheme would not work. There are many mechanisms in the House and in the other place for securing a debate and no doubt they can be pursued if necessary.

The hon. Gentleman asked about the job seeker's allowance and the reduction from 12 to six months in contributory payments. Two thirds of people who become unemployed leave the count within six months and many of those who remain will be able to claim job seeker's allowance on a means-tested basis or national insurance credits. The measure targets resources on those in need. That is one of the themes that the Government pursue in their reform of the social security system. The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) began his speech by saying that he had lost an argument that he was right to lose. That comment could have come only from the Liberal Democrat Bench. I hope that the hon. Gentleman will forgive me for that little unfairness to him.

He talked at some length about pensioners' living standards. That raises the debate which often arises during Question Time and other times in the House about pensioners' living standards which, as one of my hon. Friends observed, have improved by 42 per cent. on average over the past 15 years. The percentage of pensioners in the bottom quintile of income distribution has fallen from 38 per cent. in 1979 to 24 per cent. on the latest figures. Therefore, some of the points that the hon. Member for Newport, West (Mr. Flynn) made earlier are not valid. His comments about pensioners incomes are not true. In general, pensioners have benefited greatly in the past 15 years. The Government, recognising that not all have

---

Column 1026

shared equally in that, have directed additional resources to those at the bottom of the income scale--£1 billion in extra resources since 1988.

Mr. Kirkwood : I understand the Minister, but in relation to the changes in VAT, relatively small proportions of retired people are suffering terrible adverse financial hardship. What specifically is he doing to address that?

Mr. Hague : As the hon. Gentleman knows, all pensioners are receiving the additional amounts to help with VAT--50p in the first year for single pensioners and 70p a week for couples--a substantial piece of assistance which will pay the lion's share of pensioners' increased fuel bills as a result of value added tax.

Like those on the Opposition Front Bench, the hon. Member for Roxburgh and Berwickshire also implied that social security spending should be higher, but again it is not clear how he proposes to finance it and from where he proposes to take the larger share of the gross domestic product that he would spend on those measures. The hon. Member raised a number of points about residential care. They are matters for my ministerial colleagues at the Department of Health that I shall draw to their attention. The hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) also raised a number of matters relating to the Department of Health and the Department of Employment. The hon. Member for Islington, North (Mr. Corbyn) who sadly is not with us--

Mr. Dewar : He has been committed.

Mr. Hague : The hon. Member for Garscadden says that his hon. Friend has been committed ; I am not sure where.

The hon. Member for Islington, North referred to a caricature of the Government's position as no longer being able to afford the universal pension or the welfare state. That is not the case. The Government's objective is to ensure that the welfare state is sustainable and affordable in future.

Like many Labour Members, he called for the state pension age to be reduced to 60, although that is not the policy of the Opposition Front Bench. I wonder whether the hon. Gentleman considers that to be the best use of £12 billion--that is what it would cost to equalise the state pension age at 60 instead of 65. That money would go to men between 60 and 65, many of whom would still be in employment or have occupational pension schemes in addition to anything they might receive from the state.

Most of the comments of the hon. Member for Strathkelvin and Bearsden referred to my colleagues in other Departments and I shall draw his remarks to their attention. He also made a plea for child benefit to continue. The Government's manifesto commitment to child benefit is clear, but I advise the hon. Gentleman to have a word with his hon. Friends on the Labour Front Bench before the Social Justice Commission concludes its deliberations.

The hon. Member for Newport, West has left the Chamber, so I shall move to some of the other remarks made during the debate. The hon. Member for Garscadden referred to my right hon. Friend the Secretary of State as interested only in costs and not in a sensible and coherent set of reforms. My right hon. Friend the Secretary of State set out very clear principles for the reform of the social security system : to focus help on those in greatest need, to diminish

---

Column 1027

disincentives, to improve the delivery of benefits, to bear down on fraud and to encourage personal responsibility. The measures that he has announced are in line with that.

The Government's commitment to the system has been shown by our record since 1979. Extra help has been focused on those in greatest need, such as less well-off pensioners, to whom I have referred, and low-income families who have had extra help over the past few years totalling £1 billion. Extra benefits to disabled people have totalled £5 billion since 1978- 79 in real terms.

The focus of those policies is continuing with the uprating statement : to be generous to those in need while being realistic about what the nation can afford. The uprating will provide a typical low-income working couple with two children with an increase of £4.30 per week. The income of an unemployed couple with two children will also increase by £4.30 per week ; that of an unemployed lone parent with one child will increase by £2.90 per week. A typical unemployed family will be £17 a week better off in real terms, after allowing for inflation, than in 1979.

We should compare that with the record of the Government in the 1970s, when spending on families fell by 7 per cent. in total. They have little right to criticise us on these matters.

Mr. Kirkwood : Where were you in the 1970s?

Mr. Hague : I was at school, but I was watching closely the activities of the Labour Government. I recall writing down these figures at the time.

As my right hon. Friend has described, therefore, we have kept our manifesto pledges to pensioners and to families. We have gone beyond that in providing substantial extra help with the cost of VAT on fuel. We are laying the foundations for reforms of social security which will preserve and sustain it in the future, and in doing so we are moving in step with many other countries of the western world who are also reforming their social security systems ; countries throughout the European Community and across the rest of the world. They are raising contributions in France and in most other member states of the European Community ; they are linking the uprating of benefits to prices rather than to wages in the Netherlands, France and Italy ; reducing unemployment benefit in Germany, France and Spain and reducing its duration in Denmark and Germany ; reducing disability benefits in the Netherlands and Ireland ; tightening up on sickness benefits in Italy, Spain and the Netherlands ; reforming pensions by raising the pension age in Italy, Portugal, Germany and Greece ; freezing family benefits in France and the Netherlands, or targeting them more closely in Germany ; tackling fraud in Belgium, France, Germany, the Netherlands and Portugal ; and encouraging more private provision of pensions in Italy, Ireland, Greece, Portugal and Spain.

Alone in the European Community, the Labour party is content not to have a policy for the reform and improvement of the social security system and content to make complacent criticisms of Government policy without having an alternative to put in its place. If this is not the right percentage by which to uprate benefits, what is the right percentage? Hon. Members on the Opposition Benches have not told us. If it is not the right way to reform incapacity benefits, what is the right way?

If ours is not the right approach to the state pension age, how would they finance the alternative approaches which

---

Column 1028

they are themselves divided about adopting? If our proposals for ensuring that the social security system can be sustained in the future are not the right ones, what are the alternatives? The speeches of those on the Opposition Front Bench always draw back from a definitive policy. They always leave the implication that spending would be higher if they were in office, but they are all the time fearful of the brooding presence of the hon. Member for Dunfermline, East (Mr. Brown), who has told them not to make any specific commitments.

We bring to the House tonight orders which provide specifically for the uprating of social security benefits, for the indexation of guaranteed minimum pensions provided by employers, for the reduction of employers' national insurance contributions, for a new system of assisting small employers with the cost of statutory sick pay ; and we do so in the context of policies that will ensure that our social security system is affordable and well targeted in the future. They are policies which are realistic and well judged, to which no alternative has been expressed in the debate and which we are confident will therefore enjoy the approval of the House.

Question put : --

The House divided : Ayes 228, Noes 53.

Division No. 129] [9.01 pm

AYES

Ainsworth, Peter (East Surrey)

Alison, Rt Hon Michael (Selby)

Allason, Rupert (Torbay)

Arbuthnot, James

Arnold, Jacques (Gravesham)

Arnold, Sir Thomas (Hazel Grv)

Ashby, David

Atkinson, David (Bour'mouth E)

Atkinson, Peter (Hexham)

Baker, Nicholas (Dorset North)

Baldry, Tony

Banks, Matthew (Southport)

Batiste, Spencer

Bellingham, Henry

Bendall, Vivian

Beresford, Sir Paul

Biffen, Rt Hon John

Blackburn, Dr John G.

Bonsor, Sir Nicholas

Boswell, Tim

Bottomley, Peter (Eltham)

Bottomley, Rt Hon Virginia

Bowden, Andrew

Bowis, John

Boyson, Rt Hon Sir Rhodes

Brandreth, Gyles

Brazier, Julian

Bright, Graham

Brown, M. (Brigg & Cl'thorpes)

Browning, Mrs. Angela

Bruce, Ian (S Dorset)

Burns, Simon

Burt, Alistair

Butcher, John

Butler, Peter

Butterfill, John

Campbell, Menzies (Fife NE)

Carlisle, John (Luton North)

Carlisle, Kenneth (Lincoln)

Carrington, Matthew

Carttiss, Michael

Cash, William

Chapman, Sydney

Clappison, James

Clifton-Brown, Geoffrey

Coe, Sebastian

Colvin, Michael

Congdon, David

Conway, Derek

Coombs, Simon (Swindon)

Cope, Rt Hon Sir John

Currie, Mrs Edwina (S D'by'ire)

Day, Stephen

Deva, Nirj Joseph

Devlin, Tim

Douglas-Hamilton, Lord James

Dover, Den

Duncan, Alan

Duncan-Smith, Iain

Dunn, Bob

Durant, Sir Anthony

Elletson, Harold

Evans, Jonathan (Brecon)

Evans, Roger (Monmouth)

Faber, David

Fabricant, Michael

Fenner, Dame Peggy

Fishburn, Dudley

Forman, Nigel

Forsyth, Michael (Stirling)

Forsythe, Clifford (Antrim S)

Forth, Eric

Fox, Dr Liam (Woodspring)

Fox, Sir Marcus (Shipley)

Freeman, Rt Hon Roger

French, Douglas

Fry, Sir Peter

Gale, Roger

Gallie, Phil

Gardiner, Sir George

Garel-Jones, Rt Hon Tristan

Gill, Christopher

Gillan, Cheryl

Gorman, Mrs Teresa

Griffiths, Peter (Portsmouth, N)

Grylls, Sir Michael

Hague, William

Hamilton, Rt Hon Sir Archie

Hamilton, Neil (Tatton)

Hampson, Dr Keith

Hannam, Sir John

Hargreaves, Andrew

---