The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans): None, but in the course of the long-term review, we are examining and encouraging discussion on all aspects of the benefit system.
Mr. Illsley: Does not it seem a bit strange that the party and the Government who have done so much to encourage home ownership over the past 15 years now see fit to do away with mortgage interest payments--or even to reduce them--when repossessions are running at 1, 000 a week? Rather than reducing the assistance available to people who are losing their jobs and who are being placed in difficulties, should not the Government be doing more to help them?
Mr. Evans: The hon. Gentleman obviously did not listen to my answer, which was "none". The Government have very much in mind the need to maintain an effective and appropriate safety net for those who purchase their homes.
Mr. Brazier: I welcome my hon. Friend to his well-deserved new position. Sympathy is obviously required for existing mortgage holders who find themselves in, or close to, difficulties. However, as we are the party that is committed to value for money, is not it time that we drew a line and said that, for future mortgages, the taxpayer is not willing to take on such a burden because private insurance is available? People should in future take that out at the same time as they start their mortgages.
Mr. Evans: My hon. Friend has made a point with his customary force. The Government have in mind the importance of an appropriate safety net. Although insurance may have some part to play, it may well not be the complete answer to providing a safety net.
The Parliamentary Under-Secretary of State for Social Security (Mr. James Arbuthnot): Many measures are being developed to improve the security of the entire benefit system. They include strict checks to help discover cheats when they first try to make a false claim and more use of computers to weed out frauds already in the system. My right hon. Friend the Secretary of State for Social Security has reinforced his commitment to crack down on fraud by appointing a senior official to head a special security branch within the Benefits Agency.
Mr. Waterson: I am grateful for that answer. I take this opportunity to give my hon. Friend a warm welcome to the Dispatch Box. Will he confirm that he has already clamped down on fraudulent claims by benefit tourists and by new age travellers? When will he do the same for payments of housing benefit to convicted prisoners and yuppies who try to avoid national insurance contributions?
Mr. Arbuthnot: I am grateful to my hon. Friend for his kind remarks. I confirm that we have introduced an habitual residence test because it is quite wrong to allow tourists to claim benefits when they have no intention of looking for work in the United Kingdom. We are also introducing changes for new age travellers. It will be impossible for the unemployed to claim benefit unless they can prove that they are both available for, and actively seeking, work. As to prisoners on housing benefit, subject to certain conditions, single prisoners get housing benefit for up to a year for rent on empty houses. In response to genuine public concern about that being over-generous, we intend to limit the period to 13 weeks from next April. My right hon. Friend the Secretary of State for Social Security has also announced that he intends to put an end to scams involving the use of diamonds and wine to fiddle national insurance claims.
Mr. Frank Field: I also welcome the Minister to the Dispatch Box. I hope that he takes a lot more action on that front than his colleagues have over the past 15 years. Would not the most effective way to deal with gang attacks on the benefits system be to give everyone a free giro account? Why was such a step, which would have saved taxpayers billions of pounds, not taken 15 years ago?
Mr. Arbuthnot: For a long time, the Government have given high priority to attacking fraud, and the year-on-year savings show that that is the case. This year we have made the highest ever saving--£654 million, which is up 17 per cent. on last year's figure.
Column 613As regards the hon. Gentleman's other point, we are introducing an automated benefit payments system, which will probably take the form of a card. It will stop fraudsters, help taxpayers and be good for rural post offices.
Dame Elaine Kellett-Bowman: I also welcome my hon. Friend to the Front Bench. May I ask him to commend the fraud squad at my local DSS office, which covers Lancaster and Morecambe? Although it is a small squad, it is extremely efficient and has saved a substantial sum since it was set up, all of which can be devoted to helping those who are in real need.
Mr. Arbuthnot: My hon. Friend is right, and I certainly commend her local fraud squad. Everyone in the system must remember that every pound that is wrongly claimed in benefit is a pound that is not available to those in genuine need. I congratulate my hon. Friend on bringing that to our attention.
Mr. Skinner: Is the Minister aware that, a couple of years ago, a House of Commons Committee found that more than £200 million was lost to the Exchequer as a result of firms not passing on the tax and insurance that they had taken out of the pockets of many low-paid employees? There have been hardly any prosecutions as a result of the loss of that enormous amount of money. What steps are the Government now taking to recover that?
Mr. Arbuthnot: I am grateful to the hon. Gentleman for what I take as his support for the Government's strategy on preventing fraud. We have a strong strategy, which depends on prevention, detection and deterrence, and we are now concentrating on the prevention of fraud. We shall introduce new electronic measures, more home visits and computer data matching and automated benefit payments systems. Those measures will ensure that the social security system will not be seen as a soft touch, as it has been in the past.
3. Dr. Spink: To ask the Secretary of State for Social Security what are his objectives for the delivery of social security benefits; and what new initiatives he is considering to ensure sufficient delivery with reduced opportunity for fraud.
The Secretary of State for Social Security (Mr. Peter Lilley): I have three clear aims: to ensure that pensioners and others can choose to be paid via the Post Office, to reduce administrative costs and to crack down on fraud. That is why in May I announced our intention to automate the process by which benefits are delivered at post office counters. That is good news for customers, good news for taxpayers and good news for post offices.
Dr. Spink: I thank my right hon. Friend for that answer. Will he confirm that he intends to involve the private sector in the automation of benefits delivery and that that improvement will enable those changes to be made more cost-effectively, more efficiently and more quickly and will be welcomed by sub-post offices?
Column 614be an immense operation. We have already invited expressions of interest, and more than 90 firms have expressed an interest in taking part in the consortia. Post Office Counters is now trying to narrow the number of those who will be invited to tender. The result will be that we shall be able to involve private sector finance and private sector expertise to get fraud savings more quickly, more efficiently and better.
Ms Lynne: Is the Secretary of State aware that the merging of income support and unemployment benefit under the job seeker's allowance will discriminate unfairly against 18 to 24-year-olds who have been in previous employment? They will have £9.55 less than they have at the moment. Is not that unfair?
Mr. Lilley: I am not quite sure what that has to do with the delivery of benefits through post offices, but in the spirit in which the hon. Lady asked the question, let me say that I shall be making a statement immediately after Question Time about the job seeker's allowance. We shall bring together income support and the contributory unemployment benefit in a single structure of benefits. We shall naturally have a single structure of rates, including the lower rate for the under-25s, as is long established for those who are on income support. That is right and it reflects the lower level of financial expectations, and often of costs, of younger people and the shorter period during which they have been paying into the system.
Mr. Jenkin: Will my right hon. Friend join me in welcoming the Home Secretary's announcement on a voluntary identity card system in the United Kingdom? Would not a voluntary benefit claimant's card, for use in sub-post offices and post offices, be good news not only for the Government, as it would save taxpayers' money in relation to fraud, but for sub-post offices, which would then provide a secure route for the delivery of benefits?
Mr. Lilley: Yes, the proposals to which I have just referred will probably result in the introduction of a payments card for those whose benefits are paid through post offices. It would be voluntary in the sense that if they wish to have benefits paid through the banks, they will have whatever means the banks require to identify and ensure secure payment. That sensible approach will benefit pensioners and others, and will save the taxpayer money, as about £150 million-worth of fraud should be eliminated. It is right that my right hon. and learned Friend the Home Secretary should approach cautiously the issue of a national identity card, as he is through the discussion of a Green Paper and consideration of whether there is a prospect of widening the use of the benefit card. However, that is very different from a compulsory identity card, which would not be the same as my proposal.
Column 615many occasions that the Government are keeping the policy under close review and that continues to be the case. We have no specific proposals at this stage.
Mr. Miller: I am sure that the Minister will acknowledge that I have written to him in support of fathers and mothers affected by the inadequacies of the Child Support Act. Will he confirm that he and his officials met many groups over the summer and that all of them pressed the case for sweeping changes to the Act? Will he now give a commitment that such changes will be introduced as a matter of urgency, in the interests of all parts of families?
Mr. Burt: I and colleagues met several groups over the summer. However, one of the problems is that people's interests in the matter are not necessarily the same. The reforms that some people want may not be wanted by others. As I said at the start of my reply, we keep the policy under review. The hon. Gentleman will be aware that the Select Committee on Social Security is considering the matter at the moment. It would be presumptuous of us to comment on policy direction before the Select Committee has reported.
Mrs. Roe: Does my hon. Friend agree that top priority must be given to sorting out the operation of the Child Support Agency? Does he also agree that policy change inevitably leads to disruption and that such changes should be kept to a minimum?
Mr. Burt: My hon. Friend has made two significant points. First, with regard to the agency's administration, it is common currency in the House that the agency's first year was not a good one, and that was acknowledged by the agency in its report. During the summer, we took steps to implement administration reforms to ensure that more people receive more maintenance and that all cases are dealt with better. There is already some fruit from that. From April this year, about 300,000 cases have been cleared, compared with just over 360, 000 for the whole of last year. We are endeavouring to ensure that administration is better. We know just how much that means to all hon. Members.
Secondly, I agree that policy changes cause disruption. Therefore, they are not easy matters to bandy about. All policy changes must be thought through extremely carefully.
Mr. Barnes: Why is the agency's operation entirely inept? Why is the principle upon which the agency is operating entirely heartless and one which requires considerable transformation? Will not it be like the operation of the poll tax in respect of which there were transitional demands and transitional alterations until finally it was transformed into something else? The operation needs to be transformed.
Mr. Burt: No. In answer to the hon. Gentleman's major point, I do not think that it is wholly inept. I certainly do not think that the principle behind it is heartless. That principle has been endorsed by the House on several occasions since the Child Support Act was passed. We all want to ensure that the principles
Column 616behind child support are delivered properly. That is our determination and I believed that it was the determination of the whole House.
Dr. Michael Clark: Is my hon. Friend aware that many people are under the misapprehension that the CSA chases only those absent parents-- generally fathers--who have paid money in the past? When my hon. Friend deliberates on the changes, will he bear that point in mind? What proportion of cases now involve chasing fathers who have paid nothing in the past? How will that change in future?
Mr. Burt: The misapprehension that my hon. Friend speaks of is appropriately raised. It has always been considered that the agency would look for those who had not previously paid maintenance as well as for some of those who had previously paid maintenance but whose maintenance payments needed to be raised. Of the 210,000 cases taken on since April this year, more than 77 per cent. involved those who have not regularly paid maintenance. We have also been pursuing 45, 000 absent parents who had disappeared. I remind the House that, under the previous system, there was no mechanism for finding those absent parents, and we have been successful in 80 per cent. of cases. That is a solid gain for the children involved and for the mothers who have been looking for those fathers.
Mr. Ingram: I congratulate the Minister on keeping his job in a very changed Department. [Interruption.] Perhaps commiseration is much more appropriate. Will the Minister comment on reports in Sunday's edition of The Observer that the Chief Secretary to the Treasury has privately told Conservative members of the Social Security Select Committee to oppose fundamental changes to the Child Support Act? If the Government do not favour taking clean-break settlements into account, do not want a disregard for parents on benefit and do not favour changing the existing formula for calculating maintenance, what changes do they favour, or would that question be more appropriately put to the Treasury, which seems to be running the Department?
Mr. Burt: I dealt with policy in my first answer, when I said that we continue to keep the policy under review and that we must consider carefully what representations are made to us. As the hon. Gentleman will appreciate, newspaper comment on this topic abounds. If the Government were to take notice of every report, they would do nothing else.
Mr. Cormack: Does my hon. Friend accept that I have brought cases to his notice which show that some conscientious fathers are now required to pay wholly unrealistic amounts which bear no relation to either their obligations or their means?
Mr. Burt: It is precisely because of the depth of concern expressed by my hon. Friends that we are looking carefully at the matter. The formula, which was put into place with considerable support in the House, is causing more maintenance to be paid, and that has been uncomfortable on some occasions. It is because of those cases that have appeared to be particularly hard that the Government are taking the time that they have-- indeed, that is why the Select Committee has taken the time that it has--to make sure that they see the way forward clearly and carefully.
Mr. Burt: Extra help worth more than £1 billion in the current year has been directed through the social security system toward low-income families with children. The new child care disregard will benefit about 150,000 families, and through that and other improvements to family credit we are helping more than 500,000 families to be better off in work.
Dr. Jones: Does the Minister realise that while Tory Members have been dining at the Ritz, the number of children growing up in poverty has been increasing dramatically, with one in four now growing up in families for whom even an 1876 workhouse diet is too expensive? For the sake of those children and for the rest of us who are increasingly affected by divisions in society, is not it time that the Government got to grips with the magnitude of the problem?
Mr. Burt: I am sure that the House is aware that, since 1979, average income has risen by 36 per cent. It is common sense to understand that unemployment levels over the years have affected the figures for those on the lowest incomes--we know that. Therefore, the best way for the Government to proceed is through increasing opportunities for employment. That is why our unemployment rate is going down in comparison with the rate in the European Community, where it is going up. That is also why the unemployed have been protected. The hon. Lady might care to know that a couple on unemployment benefit with two children are now 24 per cent. better off in real terms than they would have been under the equivalent benefit under the previous Labour Government. If the hon. Lady supports the idea of a minimum wage, she should be aware that it is calculated to make poor families still poorer as fathers lose their jobs.
Mr. Peter Bottomley: Does my hon. Friend accept that the child additions for those on income support and the new arrangements to help those caring for children to get back to work will be welcomed by hon. Members on both sides of the House? Will he continue to ensure that the House is aware of the figures which illustrate that those who are, sadly, out of work or dependent on income benefit are sharing in the increased standard of living? Will he ensure that our policies are directed not only at getting more people back to work but at continuing to protect those at the bottom of the heap?
Mr. Burt: Yes, my hon. Friend makes a valid point. As I said a moment ago, the benefit system has tried to protect those who still find themselves unemployed. I gave the comparison of unemployment benefit rates for a couple with two children which shows how that is done. The crucial point is to help people back into work. Other parties do not have a monopoly on that particular aspect of social welfare. For some years, the Government have seen the welfare system as an opportunity to move people back into work--we will hear more about that today--but the family credit system has been uniquely successful in ensuring that
Column 618that happens. That is contributing in no small way to the improvement in living conditions for many low-paid families.
The Minister for Social Security and Disabled People (Mr. William Hague): All benefits for people who are incapable of work are subject to medical control procedures, which may include a medical examination by a doctor from the Benefits Agency medical services for a second opinion about a person's capacity for work.
Mrs. Roche: Given that the report on the new tests was published more than a month late, and that there were considerable delays in issuing copies of the report to members of the public, will the Minister stick to his departmental pledge that there will be a three-month consultation period so that members of the public, including many of my constituents, who have grave concerns about the new tests can make their fears known to the Government?
Mr. Hague: It is important to ensure that the tests are soundly based, and that is why the time was taken to consider the work of the panel of 80 experts which led to the document mentioned by the hon. Lady. That has meant that the time for consultation is compressed. Obviously, it is also important that the tests come into force at the time next year that the Act states. That means that the consultation period is shorter than intended, but I hope that all who are interested will take the time available to contribute to the document and to send their views to the Government.
Mr. John Marshall: I congratulate my hon. Friend on his promotion. Can he tell the House the trend in the number of recipients of invalidity benefit over the past 10 years, at a time of improved health standards? Does not that increase lead one to suspect that some people who have been getting the benefit should not have been getting it?
Mr. Hague: My hon. Friend refers to an important point. The number of people on invalidity benefit has increased from about 700,000 to more than 1.5 million. The Government's reforms are intended to ensure that incapacity benefit goes to people who are genuinely incapable of work. The social security system should be geared to looking after people in that position, not to people for whom the benefit was not originally intended.
Mr. Bradley: I welcome the Minister to his new range of responsibilities, and I welcome all the extra Ministers whom the Government have put up against the quality, if not the quantity, of the Opposition Front Bench. Can the Minister confirm that, since he belatedly published the medical test, the Government's original estimate that there will be an extra 200,000 people claiming unemployment benefit but not eligible for the new incapacity benefit is still the case? What will be the impact of the new job seeker's allowance on those
Column 619people who are in receipt of invalidity benefit but who will fail the new medical test and be expected to go on to other benefits?
Mr. Hague: Yes, I can confirm that our estimates of the numbers involved are the same as before; we have had no reason to change them. Obviously, for people who are not eligible for incapacity benefit, the full range of other benefits of the social security system are available, as, indeed, they are to everyone else.
Mr. Arbuthnot: Yes. Our proposals are set out in the White Paper "Security, Equality, Choice: the Future for Pensions" and we have undertaken to bring forward legislation to implement them at the first available opportunity.
responsibilities and also welcome his proposals, which will bring to millions of employees a sense of security about their retirement and encourage employers to continue to provide occupational pensions. Does my hon. Friend share my concern at proposals which would be detrimental to the interests of those on occupational pensions such as the proposals made by the so-called Commission on Social Justice?
Mr. Arbuthnot: I am grateful to my hon. Friend for his kind remarks. He is right to welcome our proposals in the White Paper. A recent survey by Alexander Clay and Partners showed that almost nine out of 10 companies welcomed our White Paper and the key proposals in it. They felt that we had struck the right balance between security of pensions for employees and keeping costs to the minimum for employers. As regards the Commission on Social Justice, I have not yet read its proposals in full and I need to study them with care. My initial reaction to what I have seen of them is one of disappointment as they might impose considerable costs on top of the national insurance contributions for which employers are already liable and which we opted out of the social chapter specifically to avoid. I should like to know what the Labour party thinks would be the costs of the proposals. Unless it faces up to that, it can never be taken as a serious party.
Mr. Rooney: Will the Minister confirm that in his world of a deregulated labour market with constant changes of employment and patterns of unemployment and part-time work, the only suitable pension for workers is the state earnings-related pension scheme?
Mr. Arbuthnot: The Government aim to maximise the choice and flexibility in the provision of pensions. We recognise that there is a definite need for additional pensions over and above the state retirement pension, but the state retirement pension will remain the sound foundation of our pensions policy.
Mr. Hawkins: I join in welcoming my hon. Friend to the Front Bench. I also welcome the Government's proposals for member-nominated trustees of occupational pension schemes. Does my hon. Friend agree that
Column 620member-nominated trustees with time off for training and information for members will greatly safeguard the interests of members of occupational pension schemes?
Mr. Arbuthnot: Yes, I agree. It is right that members of schemes should have the right to nominate a third of the trustees as that will give them a say in the running and safeguarding of the assets of their pension fund. As my hon. Friend says, training is vital. That is why we intend to make employers give employee trustees paid time off. We do not think that it is right to prescribe that for all trustees, but we believe that it is extremely important.
8. Mr. Pike: To ask the Secretary of State for Social Security what change would result in the administration costs of the social fund if loans were to be ended and the resources used for grants only.
Mr. Roger Evans: It is impossible to make a useful comparison between the present system of grants and loans with the hon. Gentleman's hypothetical grants system. But if grants were to replace loans entirely, for the same amount of money far fewer people would be helped.
Mr. Pike: Does the Minister accept that that answer must be nonsense when in a previous answer the Under-Secretary of State said that more than 45 per cent. of the social fund was used in administrative costs and that a large part of that was due to the administration cost of giving loans? Is not the system targeted to help the poorest section of the community? Is it not nonsense to try to administer a scheme with all the costs involved and to ask people to pay back loans when they cannot afford to pay them back in any case?
Mr. Evans: The answer is firmly no. In fact, people pay back the loans. The recovery level is very high indeed. The hon. Gentleman has not appreciated the force of the point that for £43 million net cost, total loans of £255 million in total are currently advanced. What might be described as the multiplier effect of giving loans increases the amount of help given fivefold. Any system that is designed to be attuned to specific needs and responsibilities is bound to be more expensive to administer.
Mr. Hendry: Will my hon. Friend confirm that, for a total outlay of £280 million over the life of the fund, it has been possible to offer loans of £1.2 billion? Does that not show the benefits of recycling money in that way?
Mr. Evans: I am grateful to my hon. Friend. He has cast the figures that I gave a moment ago over the period since the scheme was introduced and they point my previous reply. By making a loans system operate in the way that we have done, we have vastly increased the amount of help given.
Mr. Lilley: I intend to move as rapidly as possible to an automated system for paying benefit at post offices. That will reduce costs for taxpayers, be more secure for customers and guarantee the future of post offices.
Mr. Whittingdale: Does my right hon. Friend agree that the plans that he has announced represent a massive vote of confidence in the future of the sub-post office network and give the lie to suggestions that that network is under threat? Does he further agree that the increased opportunities available to sub-post offices as a result of those plans will allow them to win new business, thus ensuring their continued survival?
Mr. Lilley: My hon. Friend is right on both counts. When I announced the proposals to the National Federation of Sub-Postmasters, it especially welcomed the fact that our decision to computerise post offices was the clearest possible commitment that we could give that we would continue to deliver benefits through post offices for the foreseeable future. Once that network is installed, it will open up to sub-post offices the opportunity to undertake other business through the computer system, such as the payment of electricity and gas bills, or any other business that they might be able to secure which is not possible at present. It opens up a rosy future for sub-post offices.
Mr. Hain: Does the Secretary of State accept that the majority of sub-postmasters, while welcoming the automation of benefit payments as I do, believe that post office privatisation will threaten rural sub-post offices and small post offices and that the social security claimants whom he is seeking to help by automation will find their local post offices being closed by the thousand? Why do not the Government abandon their crazy proposal for post office privatisation?
Mr. Lilley: No, they mostly realise that that sort of propaganda is the sheerest nonsense. Sub-post offices are private enterprises and sub- postmasters know the benefits of private enterprise. We want to reinforce their ability to provide excellent service to their customers. That is why we are considering the proposals laid out in the Green Paper. Whatever happens, the future of sub-post offices is secure as a result of the decisions that I announced.
Mr. Arbuthnot: The great majority of schemes are well run. We will, therefore, impose the minimum burden on schemes and employers consistent with providing adequate security. We propose a clear framework of statutory obligations on employers, trustees and professionals, backed by a powerful regulator who will focus on schemes with problems.
Column 622all personal wealth in Britain or some £500 billion, which is a greater sum than in all the other countries of the European Union put together?
Mr. Arbuthnot: I will indeed confirm that. Our pension policy is the envy of Europe. We have given millions of people the right to build up funds for their retirement. Our proposals will be very good for pensioners and for the future economy of this country.
Mr. Flynn: Do the Government accept that the major fraud in occupational pensions involved the 500,000 people who were persuaded against their financial interests to leave occupational pensions and go into personal pensions? Will the Government accept their debt in that? Will the hon. Gentleman explain why, while the Prime Minister is promising to double the standard of living in the next 25 years, he is also promising to halve the value of the state pension in the same period?
Mr. Arbuthnot: Dealing backwards with that rather backwards question, the Government have always promised that the state retirement pension will be uprated in line with prices. That is a promise that we have kept and will keep.
As regards the mis-selling of personal pensions, an announcement is expected shortly and the hon. Gentleman should curb his impatience. The Government have made it clear that we expect the Securities and Investments Board to ensure that there is a full investigation of any mis-selling, and that anybody who has suffered a loss through mis-selling should have redress.
As regards pensioners' incomes, pensioners in this country have had their incomes increased on average by 50 per cent. in real terms since 1979. That is a higher increase than the rest of the population. The Government have been able to give £1.2 billion since 1988 to those without other earnings who have not had those increases. Pensioners are doing extremely well.
Mr. Lilley: In addition to the measures to replace order books and girocheques which I announced earlier, we plan to improve security in advance of this by the electronic stop notice system which has been successfully tested in parts of London and is soon to be extended. The trial reward scheme for post office staff has also been extended, following the excellent results achieved in Birmingham.
Mr. Luff: Will my right hon. Friend confirm that there has been a huge increase in the amount of fraud that has been stopped by the Benefits Agency in terms of both order books and giros? Is not the reason why sub- postmasters in Worcestershire have given such a warm welcome to his plans that they realise that the plans will not only help to contain fraud but will guarantee the future of their own sub-post offices?
Mr. Lilley: Yes, indeed. The plan has been particularly warmly welcomed in south Worcestershire, and elsewhere in the country. Sub- postmasters are aware of the level of fraud and abuse of the archaic order book system, and they are anxious to see the move to automated payment
Column 623in the interests of the wider community, as well as their own self-interest. The system will be more secure for them and for pensioners and it will be less open to fraud and abuse.