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The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans) indicated dissent.
Mr. Smith: The Minister suggests that rent does not have to be paid in advance. I do not know whether he has gone out looking for private rented accommodation in the recent past but he is living in more of a fantasy land even than most of the Government if he believes that rent will not be requested in advance by private landlords.
In addition, the Government should bear in mind the problems for local authorities, which will have to adjust all their computerised systems for the payment ofhousing benefit to take account of the changes that the Government are introducing. Despite all that, the Government make dramatic claims about the amount of money that they will save by the measure.
In a written answer to me on 29 January 1996, the Government said that the amount that would be saved by the change in the payment arrangements for housing benefit would be £105 million in the first year, 1996-97, and in the second year, £120 million. I would like the Government to tell us how they have calculated those figures because the only direct saving that they make by that change is to shift in the course of one year expenditure from one month into another. That will produce a cosmetic saving in the Government's accounts. They must be relying on the expectation that, somehow, the change will make a substantial difference to the fight against housing benefit fraud. If that is the case, I want to know how they intend to achieve those savings because they are considerable--the largest of any of the measures in the uprating statement.
Mr. Duncan:
Will the hon. Gentleman give way?
Mr. Smith:
No, I have already given way to the hon. Gentleman.
The Government have also announced in the orders that they are to freeze the level of cold weather paymentsfor pensioners on income support. [Interruption.]The Secretary of State expresses some astonishment. The amount for cold weather payments in the motions is the same in cash terms as it was in the current year. I am surprised that he does not know the content of his own orders and regulations.
The issue is especially appropriate today because we are reminded by the cold weather of the great difficulty faced by many elderly people struggling to pay their heating bills. There are two things which at the very least the Government should do--quite apart from the relatively small amount of money that it would take to be more generous in uprating the payments in line with the broad uprating of other benefits.
First, the Government should pick up the point that was made at Question Time by my hon. Friend the Member for Croydon, North-West (Mr. Wicks). The Government, sensibly, have said that when cold weather for the specified period is forecast, people will be entitled to cold weather payments. They will not have to wait until after the cold weather to be sure that the benefit will be guaranteed. Why on the earth are the Government not more active about making sure that as soon as the cold weather is forecast, everyone knows about it so that those people in areas that will qualify for cold weather payments can be confident that they will get the money, and can put on their fire for a longer period than they would otherwise want to do? The Government have said that they are prepared to use forecasting but they do so with great reluctance. They ought to use it more often.
Secondly, there is the point raised by my hon. Friend the Member for Barking (Ms Hodge) in her question to the Secretary of State this afternoon. It does not make sense that the residents of Nos. 450 to 472 Lodge avenue have received one cold weather payment this winter, when the residents of Nos. 453 to 469 Lodge avenue have received four cold weather payments over the same period. I appreciate the Secretary of State's point that somewhere and somehow lines must be drawn. However, there are absurdities in the system, of which Lodge avenue is one example. The Secretary of State should examine the system of cold weather payments to see whether it is possible to eliminate those absurdities.
As I have said, I shall be advising my hon. Friends to oppose the child support regulations. We agree with the principle that both parents must accept a financial responsibility for the upkeep and welfare of children. However, the order increases demands on the absent parent who is in receipt of income support. In many cases, the child and the parent with custody will derive no real benefit from the order because the Treasury will get the money. That is the whole point of the Government's action: they have told us that they will raise £10 million in the first year as a result. In the majority of cases, the Treasury, and not the child, will benefit in real terms.
The absent parent will face a sharp reduction in what is already a breadline income. The Government propose to take money from absent parents and give it to the Treasury. Those absent parents presently get no needs allowance for the upkeep of children when their income support is calculated and, according to the calculations endorsed by the Government, that income support is intended to keep only one person together in body and soul. A further deduction will put those parents well below the poverty line. The Government must think about what they are doing. Both parents have a clear responsibility to ensure that their children are provided for, but the absent parent who is in receipt of income support should not be forced to live below the breadline. That is what the Government's order will do.
Ms Gordon:
Does my hon. Friend agree that it would be damaging to children if absent parents were deeply distressed by being forced to live in dire poverty?
Mr. Smith:
I agree with my hon. Friend, who takes a very keen, cross-party interest in the work of the Child Support Agency and in the operation of the Child Support Act 1991. The welfare of children is very important,but we should not forget about the welfare of both parents.In making a change, the Government are forgetting about the welfare of the absent parent.
Some of the orders before us tonight relate to pensions. They bring into focus two aspects of pension provision about which I shall press the Government. The first relates to the claims made by the Secretary of State--in this place today and elsewhere--about personal pension provision in this country. Conservative Members have made much of the £600 billion--it is a wonderful figure--invested by British pension holders, most of whom hold occupational pensions. The number of occupational pensions holders has decreased during the life of this Government and I shall deal with the reasons for that in a moment.
Mr. David Shaw (Dover):
And private pensions and life insurance.
Mr. Smith:
That is not what the Secretary of State says: he makes the claim for occupational and private pensions. The Government have deliberately encouraged people to opt out of occupational pensions and into personal pensions, and about 1 million people have done so. The Government commissioned an advertising campaign several years ago encouraging people to do precisely that. Between 4 million and 5 million people have also opted out of state earnings-related pensions schemes and into personal pension schemes. Many of those who have opted out of SERPS or occupational pensions and into personal pension schemes may now be worse off than before.
Everyone agrees that there was a problem with mis-selling. I believe that the Government bear a heavy responsibility for deliberately encouraging people to opt for personal pensions when we know that that was not a sensible step in many cases. The Government have made all sorts of complacent claims; I am staggered that they believe that personal pensions are the be all and end all of pension provision in this country. We know not only that a large number of personal pensions were mis-sold, but that personal pension holders often lose 25 per cent. or more of their pensions in administration and commission fees. About £1 in every £4 that savers invest in personal pension schemes disappears in administrative costs. That is not good value for the saver.
Mr. Nick Hawkins (Blackpool, South):
I hope that the hon. Gentleman will not get so carried away withthe Labour party's politics of envy that he runs down the enormous contribution of the financial services industry--in which we lead the world--to the United Kingdom balance of payments and to our national income.
Mr. Smith:
Far from it--I shall ensure that the financial services industry flourishes still further under a future Labour Government. The pension products that are available to British savers should provide good value for
Mr. Corbyn:
In addition to the 25 per cent. administration charges, is my hon. Friend aware of another serious danger? The majority of personal pensions that have been sold are nowhere near maturity, but there is no guarantee as to who will support or bail out those individuals who have spent a large proportion of their working lives paying into pension schemes if the pension companies, institutions or funds collapse.
Mr. Smith:
My hon. Friend makes an interesting point: we need a good and proper regulatory framework to protect all investors in every pension scheme.
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