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The Secretary of State for Social Security (Mr. Peter Lilley): This has been a good debate. We heard a splendid opening speech from my right hon. Friend the Secretary of

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State for Health, which entirely demolished the rather negative and unconstructive contribution from the right hon. Member for Derby, South (Mrs. Beckett).

There have been some excellent contributions from my hon. Friends, especially from my hon. Friend the Member for Bournemouth, West (Mr. Butterfill), who raised some important points about the pensions Bill, and I will respond to him in detail.

I agree that we must balance the security of funds, which is very important, with the need to keep costs for employers to a minimum, as we do not want to discourage employers from continuing to organise pension schemes for their employees. But I would disagree with him, as I would with the hon. Member for Glasgow, Garscadden (Mr. Dewar), about the funding of the regulator. It is appropriate that the schemes themselves should fund it, because not all taxpayers have the benefit of occupational pension schemes, and therefore I do not see why they should meet that cost. [Interruption.] Everybody goes to school at some stage, but not everybody has an occupational pension scheme.

I welcome the contributions from my hon. Friends the Members for Bournemouth, East (Mr. Atkinson) and for Southampton, Test (Mr. Hill). They raised concerns about the position of absent parents and of parents with care under the CSA and emphasised the need to balance those two positions.

The hon. Member for Garscadden, like the right hon. Member for Sedgefield (Mr. Blair), seems to want me to make some immediate changes to the CSA, without waiting to consider fully and sensibly the important report from the Select Committee, which I will do. I would simply remind him of the warning that was given to me in the report from the Commission on Social Justice, which warned against the Government

"rushing into . . . ill-considered changes in response to immediate public pressure"

on the CSA.

We will, of course, respond as soon as we reasonably can to the Select Committee. I think that it is appropriate to indicate then the sort of changes that we would wish to make.

My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) made some characteristically constructive comments about both housing benefit and disability issues, on which he speaks with great authority. Interesting contributions were also made by Opposition Members--especially the Chairman of the Select Committee on Social Security, the hon. Member for Birkenhead (Mr. Field), who was characteristically generous in his remarks about my recent speech in Ulster, and made a constructive response to it.

I believe that the job seeker's allowance is an important aspect of our response to the problems that I identified in that speech, as are the changes that we have made in family credit. The point of my speech, however, was to highlight a supremely important issue--I thought it extraordinary that, in 400 pages, the Commission for Social Justice did not address it specifically--to which we should all devote attention if we are to deal with the major issue now faced by the western world.

The hon. Member for Kingswood (Dr. Berry) made an important contribution on disability issues. I am grateful to him, and to the hon. Member for Garscadden, for welcoming the Government's proposal for a disability Bill;

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I shall say more about that in the main part of my speech. The hon. Member for Belfast, South (Rev. Martin Smyth) made a number of important points, which I shall ask my right hon. Friend the Secretary of State for Health to consider.

The hon. Member for Garscadden raised the question of VAT on fuel, complaining that the £1 for single people and £1.40 for couples that will be included in this year's pensions to help people cope with VAT was inadequate. He thought that people would be surprised about that; I think that people will be rather surprised that the hon. Gentleman raised the point. Exactly a year ago, according to The People , "Shadow Social Security Secretary Donald Dewar said: `The Government has to add something on to take account of that and they could do it with an extra 50p on pensions.'"

Now the hon. Gentleman is complaining when we give two or three times that amount.

Mr. Dewar: Will the Secretary of State give way?

Mr. Lilley: I want to make some progress.

Mr. Dewar: I shall take only 10 seconds of the Minister's time to remind him that we have engaged in correspondence and a number of exchanges on that subject. He knows that he is not putting a true construction on the quotation; I am surprised at him, and disappointed.

Mr. Lilley: I simply quoted what the hon. Gentleman said word for word, in its entirety.

I welcome the choice of social security for today's debate. Reform of social security is now rightly top of the national political agenda. That is not just because it is the largest component of public spending, constituting a third of total public expenditure; it is also because social security is one of the most sensitive issues facing us all. It concerns vulnerable people who are sick, disabled, elderly, unemployed or caring for children and families. It is also crucial to our economic success, determining our tax burden, our incentives and the flow of savings to industry.

The total cost of social security is now some £85 billion, which means that just to finance it, on average, every working person must pay £15 every working day. It is therefore vital that any Government, or any party seeking to represent itself as a credible alternative Government, should have a strategy for the reform of social security to ensure that the system is modern, that it is focused where it can do most good and that it does not outstrip the nation's ability to pay.

Conservative Members have a clear strategy for social security reform. I spelled it out in my Mais lecture, and the Gracious Speech takes it further forward. Each of the three Bills will deal with at least one of our key objectives.

Our first objective is to reinforce incentives to work. The job seeker's allowance Bill contains important new incentives which have been widely welcomed, and which I thought would be a litmus test of the Labour party's conversion to modernism. However, it has chosen not to endorse the Bill, which I think makes it backward-looking. These incentives include increasing the ceiling of partners' hours from 16 to 24, which will help some 20,000 people. National insurance credits will be extended to those working part-time, which will also help a substantial number of people. Most important of all, the back-to-work bonus will enable people who are working part-time on benefit to accumulate a credit of up to £1,000, which is

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cashable upon taking up full-time work. That measure will assist 165,000 people per year. Finally, the employment on trial rules will be relaxed to enable people to try out a new job and leave if it does not work out, without loss of benefit. This will assist 200,000 extra people.

Our second major objective, contained in the pensions Bill, is to encourage increased self-provision, especially for retirement. Three years ago this month, confidence in occupational schemes was dented by revelations following the death of that socialist millionaire, former Labour Member of Parliament and principal Labour spokesman in the press, Robert Maxwell.

I would not normally have mentioned his allegiance but, in the climate of modern-day McCarthyism-- or perhaps it should be called "Prestonism" nowadays-- which has been fostered recently in the press, we have been led to believe that corruption and fraud are associated exclusively with one party.

Prestonism assumes that it is more important to rake up a perfectly innocent seven-year-old hotel bill than devote any attention to a £500 million fraud perpetrated by a socialist. The Guardian would not devote any space to fraud by a socialist millionaire who extracted hundreds of millions of pounds from pension funds, because it prefers to devote its entire front page to stories about Tory Ministers extracting teeth on a Saturday. But it was an important issue.

Mr. Dewar rose --

Mr. Lilley: I have given way once to the hon. Gentleman; that is enough. He conspicuously ignored the problems of his former colleague.

Mr. Dewar rose --

Mr. Lilley: I will not give way.

In this Bill, we will implement the essence of the recommendations put forward by the Goode committee. We will create a strong regulator, which will be widely welcomed.

Pensions are a success story, despite what the hon. Member for Garscadden said. A total of £500 billion is invested in pension funds in this country. We want to build on our success and increase the £52 billion flow of new investment which those funds make available to British industry each year.

Thirdly, we wish to focus help on those who are in greatest need. That is the aim of the disability Bill. We already focus increased financial help on disabled people, and we spend five times as much on disabled people in real terms as was spent under Labour. We help six times as many people with the cost of care and eight times as many with mobility needs. But disabled people want opportunities even more than cash, and we support them in that endeavour.

Mr. Tom Clarke (Monklands, West): Obviously, many hon. Members took part in the debates last Session and considered the Government's consultation document. Given that the document did not refer to transport and education, have they changed their mind, and will those matters be included in the Bill?

Mr. Lilley: My hon. Friend the Minister for Social Security and Disabled People will make a statement to the House shortly about the measures included in the disability

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Bill and legislative package. He has had a very constructive dialogue with disabled people and business men and women involved in this sphere. He will come forward with proposals that will be widely welcomed in the House. They will go further than our original proposals put out for discussion, and I therefore hope that they will meet the genuine needs and desires of disabled people. I recognise that the hon. Member for Monklands, West (Mr. Clarke) and many other hon. Members want to see those needs satisfied, as do we all. Mr. Berry rose --

Mr. Lilley: I should be grateful if the hon. Gentleman would allow me to continue.

We believe that it is possible to make progress, which will be widely supported and accepted, without imposing excessive burdens on industry. I hope that those measures will have the support that many hon. Members on both sides have said they may be willing to give. The debate has revealed that the Labour party has no strategy for social security. Its motion calls for the abandonment of the job seeker's allowance and abandonment of the incapacity benefit, going straight back to invalidity benefit. That benefit has no objective medical test, which has allowed the number of people claiming it to double over a decade, during which health has improved.

It would impose an extra £1 billion or more of costs on the budget, and it would mean that the benefit was not well targeted. It would put general practitioners back into the invidious position of being split between loyalty to the taxpayer and loyalty to their patients. I cannot believe that a sensible, modern party would want to go back in that direction. I note that even the Commission on Social Justice does not recommend that the Labour party should do so.

The amendment is remarkable as much for what it omits as for what it includes. Financially, the most momentous decision in the Bills mentioned in the Gracious Speech, albeit the most long-term, is the equalisation of the state pension age. If we had chosen to equalise at the age of 60 instead of 65, it would have cost an extra £12 billion a year. Yet that was not even mentioned by the hon. Member for Garscadden.

That is all the more remarkable, because he gave it pride of place in his speech at the Labour Party conference, when he warned his party against joining the Government in the "Gadarene rush" to equalise retirement at 65. Who are the mad swine who are joining in the Gadarene rush? My right hon. and hon. Friends will recall that those who performed the Gadarene rush were swine possessed of a devil that had been cast out by our Lord.

We are being joined in the Gadarene rush by none other than the Commission on Social Justice. It does not think that it is a mad idea. It says:

"it is quite reasonable to start phasing in a common pension age of sixty- five in the next century".

Sir Gordon Borrie, who might think it a touch uncomradely to be likened to a mad pig possessed of a devil rushing headlong into a lake, wrote:

"as people live longer and as health improves . . . reducing the working lifetime and increasing the retirement period does not make sense".

What makes it all the more remarkable is that the hon. Member for Garscadden had in his hand a copy of the report when he made his speech to the Labour party conference. On the cover it says: "Essential reading for everyone who wants a new way forward for our country".

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It is a shame that the hon. Gentleman did not read as far as page 284. I got there, but only by dint of starting at page 283. Does the Commission on Social Justice fill the huge vacuum that up to now has constituted Labour's social security policy? Alas, no. There is a welcome change in rhetoric, but no change in substance. Recently The Independent published a costing of what it considered to be the key proposals in the report of the Commission on Social Justice, and those which could be readily costed. It found that it came to £7 billion. However, it had a reassuring headline which said:

"'Social Justice' plans almost pay for themselves".

Alas, it turned out that the so-called £7 billion of savings all involved increases in the income tax burden on ordinary people. After today's debate, the House will reject the Opposition's amendment. It will realise that only the Conservative party has a coherent programme for social security reform, that that is essential for any modern Government and that the Labour party has fallen at the first hurdle in its attempts to prove itself a modern Government. I urge the House to reject the amendment tabled by the Opposition. Mr. Derek Conway (Shrewsbury and Atcham) rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to. Question put accordingly, That the amendment be made:-- The House divided: Ayes 272, Noes 309.

Division No. 1] [22.00 pm


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Abbott, Ms Diane

Adams, Mrs Irene

Ainger, Nick

Ainsworth, Robert (Cov'try NE)

Allen, Graham

Alton, David

Anderson, Donald (Swansea E)

Anderson, Ms Janet (Ros'dale)

Armstrong, Hilary

Ashdown, Rt Hon Paddy

Ashton, Joe

Austin-Walker, John

Banks, Tony (Newham NW)

Barron, Kevin

Battle, John

Bayley, Hugh

Beckett, Rt Hon Margaret

Beith, Rt Hon A. J.

Bell, Stuart

Benn, Rt Hon Tony

Bennett, Andrew F.

Benton, Joe

Bermingham, Gerald

Berry, Roger

Betts, Clive

Blair, Rt Hon Tony

Blunkett, David

Boateng, Paul

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (Dunfermline E)

Brown, Nicholas (N'c'tle u Tyne E)

Bruce, Malcolm (Gordon)

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Burden, Richard

Byers, Stephen

Caborn, Richard

Callaghan, Jim

Campbell, Menzies (Fife NE)

Campbell, Mrs Anne (C'bridge)

Campbell, Ronnie (Blyth V)

Campbell-Savours, D. N.

Canavan, Dennis

Cann, Jamie

Carlile, Alexander (Montgomery)

Chidgey, David

Chisholm, Malcolm

Church, Judith

Clapham, Michael

Clark, Dr David (South Shields)

Clarke, Tom (Monklands W)

Clelland, David

Clwyd, Mrs Ann

Cohen, Harry

Connarty, Michael

Cook, Frank (Stockton N)

Cook, Robin (Livingston)

Corbett, Robin

Corbyn, Jeremy

Corston, Jean

Cousins, Jim

Cox, Tom

Cummings, John

Cunliffe, Lawrence

Cunningham, Jim (Covy SE)

Cunningham, Rt Hon Dr John

Dafis, Cynog

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