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The Parliamentary Under-Secretary of State for Social Security (Mr. Oliver Heald): No, £15 billion.

Ms Harman: He said that it would cost everyone £15 billion immediately and that it would mean a cut of £20 a week in everyone's pension. All that we are saying is that there should be more flexibility and choice. The Government should accept that instead of trying to rubbish it.

Mr. Lilley: What greater flexibility is the hon. Lady proposing to introduce than exists at present? Anyone who defers taking the pension by a year receives an increment of 7.4 per cent. for the rest of their life, twice that if they defer for two years, and so on. We have that built into the present system. The only difference between the hon. Lady's proposals and ours is that she would let

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everyone retire at 60 rather than 65, but people would have to do so on a basic pension which was £20 a week less for the rest of their life.

Ms Harman: The Secretary of State understands that we are not forcing anybody to retire early. He has recognised the flexibility in being able to retire after the pivotal age of 65. If people postpone their retirement until after 65 or 60, they can draw down their pension at a higher rate. All we are saying is that there should be a bit of flexibility and choice for those who want to retire earlier and draw down their pension at a lower rate. The Secretary of State is making a big mistake in giving plenty of publicity and exposure to our proposal for a more flexible welfare state that meets modern patterns of employment. When people discover our proposal, thanks to the right hon. Gentleman, it will be popular with them.

Mr. Heald: Between now and 2010, when the arrangements change, the pensionable retirement age for women will be 60. Is the hon. Lady seriously saying that, between now and 2010, she would cut women's pensions by £20 a week?

Ms Harman: Conservative Members are becoming more desperate and advancing ever more ludicrous, complex and unrealistic suggestions. The point is simple: the pivotal age is 65 and will be for both men and women. All we are saying is that there should be flexibility before the pivotal age, as there is after it. I shall move on, because I do not think that Conservative Members understand even that simple point.

The cost of the Government's failure to tackle poverty and unemployment is borne not only by those who claim benefits, but by the taxpayer. As this is the last Budget before the general election, today's debate provides an opportunity to review the Secretary of State's record, about which he boasted at the start of his speech.

When the right hon. Gentleman became Secretary of State, he claimed that he would cut the social security budget, but he has not. During his years as Secretary of State for Social Security, the budget has increased by more than £14 billion a year. That is his record.

The Secretary of State claimed again today that he has at least cut the growth in social security spending to less than the growth in GDP, so that the economy now grows faster than the social security budget. That is, however, what always happens when an economy begins to move out of recession. To the extent that that has happened, it is nothing to do with him, but is entirely cyclical.

The right hon. Gentleman claimed again today that it is the cost of universal benefits, particularly pensions, that has driven up the social security bill, but it is not. Two thirds of the increase in spending on social security is due to the growth of income-related benefits, which is the direct result of poverty and unemployment. It is not demography that is pushing up the social security budget, but poverty. It is not the elderly who are pushing up the social security budget, but this Secretary of State.

The consequence of the Government's failure on work is that, under the Tories, Britain has become divided as never before. The Government have created a fractured society, with a gaping chasm between those who are okay and those who are at the absolute bottom. Under the Tories, the welfare state is losing popular support: those who have to

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depend on it resent it and those who have to pay for it resent it. One of the reasons why a growing number of people resent the welfare state is that they do not want their hard-earned money being ripped off by fraud.

No matter where fraud is committed on the public purse, it must be stamped out. The welfare state must, at all times, remain vigilant in the battle against fraud. However, although the Secretary of State has claimed that he will save billions on fraud, he will not take the tough measures that are required to clamp down on fraud. In particular, he will not tackle organised landlord fraud--which has partly caused the spiralling benefit bill--because he is in the pocket of the private landlords.

Mr. Lilley rose--

Ms Harman: I shall not give way until I have asked the right hon. Gentleman this: if he is serious about fraud, in addition to checking up on individual claimants, why will he not introduce a tough new offence for landlords that is backed by tough new penalties, or allow councils to stop paying money to landlords and pay it instead to tenants? Why will he not do that? All his assertions are worthless if he does not.

Mr. Lilley: The hon. Lady knows that we have done that. I ask her to withdraw her statement that I am in the pocket of the landlords. It is untrue and dishonourable.

Ms Harman: His party--[Hon. Members: "Withdraw."] I shall rephrase my assertion and see whether we can come to an agreement about the situation.

Mr. Lilley: On a point of order, Mr. Deputy Speaker. Is it in order to ascribe to any hon. Member a pecuniary relationship with people with whom they do not have such a relationship, or to say that they are in the pocket of an interest group when they are not and when they certainly do not take money from trade unions?

Mr. Deputy Speaker: Order. Am I to understand that the hon. Lady was talking about the Government at large and not an individual?

Ms Harman: I was talking about the Government at large and about a political relationship, not a pecuniary relationship. The record of this Government is that they have stood idly by while the public purse has been ripped off because they have not been prepared to take action against landlords who are making themselves millionaires at the expense of the public purse. If the Secretary of State wants to show that he is prepared to take action to protect the public purse, without fear or favour, he will adopt our recommendations in respect of the Social Security Administration (Fraud) Bill.

The welfare state has an important role to play as part not only of an efficient economy, but of a just society. There have been huge social and economic changes since Beveridge created the welfare state in 1945. Those years have seen more women working, more lone mothers because of family breakdown, the end of the family wage with the fall in manufacturing, the end of the job for life, the end of skills that last a lifetime, a massive rise in economic activity; and an aging population as people live longer.

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Those are challenges that the welfare state can meet, but it needs to be renewed so as to move ahead of economic and social change, not lag behind it; and to have the flexibility to respond to the diversity of people's lives, including the flexible decade of retirement. It must accompany a dynamic economy--it cannot be an alternative to work. It must bind our fractured society and be a force for social cohesion. The welfare state must develop a new balance of rights and responsibilities between the individual and the state. Welfare to work is the way forward, and it is the path that will be taken by Labour in government.

6.7 pm

Sir Terence Higgins (Worthing): For hon. Members who are not standing at the next election, its approach leaves us in the same position as that of the opera singer who is making a final appearance for the 99th time. One makes a final appearance at the Queen's Speech debate, at one's mayor's banquet, at one's association dinner and, now, at the Budget debate. The experience makes me feel rather like Frank Sinatra.

It is normal on these occasions to sing one's most popular song and I want to repeat the point that I made during the debate on the Queen's Speech, which is that I still have grave reservations about the concept of a unified Budget. I have deployed the arguments on previous occasions, but I want to emphasise that there is a real problem in relation to timing.

After the summer recess, we have a brief spillover in which the Queen's Speech debate takes place and then the debate on the Budget. Then we have Christmas, after which Treasury Ministers and officials can go on holiday until the next summer recess. That is not a satisfactory arrangement. If we are not going to move the Budget from this time of the year--I understand that the Chancellor and the Treasury are rather in favour of keeping it at this time--there is at least a strong case for moving the Queen's Speech debate to the spring. I hope that hon. Members on both sides of the House will consider that carefully.

I congratulate the Chancellor on not only what I regard as a prudent Budget that takes due account of the balance between monetary and fiscal policy, but on creating the situation that the economy is in. As he rightly pointed out in his Budget statement:

"The British economy is in its fifth successive year of steady, healthy economic growth, with falling unemployment and low inflation."--[Official Report, 26 November 1996; Vol. 286, c. 154.]

That has been accompanied by the best inflation performance for nearly 50 years and restrained growth of earnings, which is good news for jobs, and the current account is in the best overall trading performance for 10 years. That is a remarkable achievement and it provides a firm basis for further progress.

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