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Mr. Denham: It is perfectly clear from all our policy documents that we will retain SERPS as an option for those who wish to remain in it.
Sir Norman Fowler: Does that apply to new entrants to SERPS?
Mr. Denham: Answer the question.
Sir Norman Fowler: Everyone will maintain SERPS for those who are already in it. No one would go back on the obligation. I am asking what future policy will be.
Mr. Denham: We will retain SERPS for those who wish to be members of it.
Sir Norman Fowler: I take that as an undertaking that SERPS will go on for ever more for those who wish to be in it. That can be the only interpretation of what the hon. Gentleman has said. Labour is therefore setting out not one, not two, but three state schemes: the basic pension scheme--which even Labour would not touch--SERPS and a funded state scheme. Labour Members are getting into the most hopeless muddle on pensions, so I shall allow them to try to reconcile those differences.
I want to take up the point made by my hon. Friend the Member for Teignbridge (Mr. Nicholls), about which I hope there might be some agreement across the House. I say to my right hon. Friend the Secretary of State that I hope that we will take the opportunity to move forward on the second-tier scheme. I hope that we will change our policy in very much the way that I set out in the middle 1980s. I think that we have been given the green light for change and can honestly say that the teething troubles of personal pensions are over, that the system works and that the regulations are in place. I very much hope that we can therefore do the decent and sensible thing and get rid of the remnants of SERPS.
I also hope, as my hon. Friend the Member for Teignbridge said, that we can find a way of getting extra resources to people who are perhaps in their eighties or
even older and, through no fault of their own, since there was no occupational pension scheme for them to join, are living on the basic state pension. The system that I have set out in the past and advocate again is one of pension credit, which is very much like family credit and would add to the basic pension. It would obviously not apply to everybody. If someone has a perfectly adequate occupational pension, they will not be affected, but if they have not, they could receive extra income. It would apply to people who have not had the benefit of the occupational pension reforms that I hope are now a matter of common agreement across the Chamber. That is my specific plea to my right hon. Friend.
The general point that I want to make is more political. The Government have won the argument on pensions. I do not think that there is any doubt about that. When one listens to Opposition Members, one realises that we have won the argument. Indeed, I think that we have won the argument on social security generally. With the exception of the hon. Member for Islington, North (Mr. Corbyn)--who I think disagrees more with his own Front Benchers than he does with the Government--most people accept that family credit, for example, is a sensible, good way in which to get help to low-income families in work. It has helped substantially and, as the person who introduced it, I am delighted at the take-up.
I find the Opposition's stance on child benefit extraordinary. To withdraw child benefit from 16 to 18-year-olds is one of the most eccentric, silly and counter-productive policies that I have heard of in a very long time. If it goes ahead, I suspect that we would be the only country in the western world where no provision at all is made for that group of children and their parents either through the tax system or the social security system. I cannot imagine that that is precisely what Labour wants to propose, but it will undoubtedly be the impact and the effect of such a policy.
As child benefit took the place of a tax allowance, it would be extraordinary if it were abolished and nothing were put in its place. I do not understand the policy; I find it extraordinary. Surely it is a matter of common consent that the extra expense of children, which lies at the foundation of child benefit, does not suddenly end when children reach the age of 16. Indeed, one could argue pretty strongly that the expense of children rises radically between the ages of 16 and 18. I hope that we hear a defence of that policy. I may not have been listening closely enough to the hon. Member for Peckham, but I did not think that she did the argument justice. In fact, I am not sure that she dealt with it at all.
Mr. Roger Berry (Kingswood):
I agree entirely with the last comment of the right hon. Member for Sutton Coldfield (Sir N. Fowler).
The Government have not explained why, as this Conservative Administration comes to an end, spending on poverty and unemployment is much greater than it was when it came into office. There are two possible reasons. One is that the Government might have been extremely generous with benefits, increasing unemployment benefit, increasing pensions in real terms and increasing other benefits. The only other possible explanation is that poverty and unemployment are greater than when the Government came into office.
I am glad that the hon. Member for Havant (Mr. Willetts) has come back to the Chamber. He described eloquently the Government's strategy to reduce unemployment benefit relative to average earnings. There was a clear Government policy that there would be no real increase in unemployment benefit. In relation to average earnings, the income of those dependent on unemployment-related benefits is worth a lot less in relation to average earnings than 20 years ago--about 50 per cent. less.
I note in passing that the justification given by the hon. Member for Havant was that that policy would encourage people to go to work. The Government's policy for tackling unemployment was to cut benefits. I intervened on the hon. Gentleman to ask whether he could name a year--just one year--since 1979 when unemployment, according to the Government's claimant count, had been lower than the figure that they inherited. I was surprised that the hon. Gentleman, who has been referred to as Mr. Two Brains by his close friends, could not think of one. It is possible that he does not realise that the reason that he could not think of a year is that there has not been a year since 1979 in which recorded unemployment has been lower than the level inherited by the Conservatives.
The Government have fiddled the definition 30-odd times. On all but one occasion, the change has reduced the figure. However, in not one year since 1979 has unemployment been lower than the level inherited. In most years, it has been between 2 million and 3 million--two or three times the level inherited from the last Labour Government. The staggering incompetence of the early 1980s that put unemployment up to 3 million for five years and the equally staggering incompetence in the early 1990s that again got unemployment back to 3 million merely confirm my point.
Mr. Burt:
The hon. Gentleman tossed out a challenge to my hon. Friend the Member for Havant (Mr. Willetts) during his speech. Perhaps I could toss out a challenge to him: can he name one Labour Government that left office with unemployment lower than when they came to power?
Mr. Berry:
As the Minister well knows, when the last Labour Government left office, unemployment was falling. My constituents in Kingswood would find it astonishing that Conservative Members are so complacent
Mr. Bernard Jenkin:
Will the hon. Gentleman give way?
Mr. Berry:
I should like to progress, if I may.
The hon. Member for Havant has confirmed that it was Government policy to ensure that unemployment-related benefits fell way behind average earnings. The fact that that did not bring unemployment down suggests the obvious conclusion that some people are caught in the poverty trap with the highest effective marginal rate of tax in the country. If they were to take up employment and lost benefits, they would pay an effective marginal rate of tax of more than 100 per cent. Those are the high marginal rate taxpayers whom I am worried about. For most people, it is absurd and insulting to suggest, after the massive cuts in unemployment benefit in relation to average earnings, that unemployment has increased dramatically because people have had no incentive to work. They are not in jobs because the jobs have not been there.
We all know that the Government can hardly claim to have been generous on pensions. I enjoy reading books occasionally. I hope that other hon. Members are reading a book called "Sleaze". That interesting book gives an account of how much somebody spent to stay at the Paris Ritz for five days. That sum accords roughly with what pensioners living on the state pension receive in a year. State pensions are not particularly generous when compared with what some people are quite happy to spend--whoever picks up the bill--at the Paris Ritz. The Government have broken the pensions link with earnings and cut the value of the state earnings-related pension scheme.
Will the Government be leaving office spending more on poverty and unemployment because of improved benefits? Self-evidently, that is not the case. The bill is higher because poverty and unemployment are more widespread. We could spend all evening considering definitions of poverty. I have no intention of doing that. It is incontrovertible that inequality and relative poverty have increased dramatically under the Government.
Commentators commonly use the number of households living on an income after housing of less than half average income as an indicator. The proportion of the population in that position has trebled to one in four. We can quibble about whether that is a sensible definition of poverty, but there are probably not many hon. Members who live in that position. Few Conservative Members have probably ever been in that position. The fact that the number of people suffering from relative deprivation on that scale has trebled under the Conservatives should leave the Government far from complacent, as they have been this afternoon. The number of people dependent on means-tested benefits has doubled to one in six, and one pensioner in three are dependent on means-tested benefits.
My criticism of the comments of the hon. Member for Havant relate not only to issues that I have already covered. Unemployment has increased dramatically
despite serious cuts in unemployment-related benefits. The hon. Gentleman argued that, as unemployment benefit is only a small proportion--about 10 per cent.--of the social security budget, reducing unemployment is not a significant way of saving money. He forgot to mention that unemployed people not only receive unemployment-related benefits, but pay less tax. Because they are poorer, they pay less income tax and less indirect tax.
The Treasury has confirmed time and again that the cost to the taxpayer of each unemployed person is about £10,000. Given that unemployment has been between 2 million and 3 million for most of the time under the Tories, we are talking about an annual cost to the Exchequer of between £20 billion and £30 billion. That is not peanuts--it is a substantial economic cost.
The problem is not just that such levels of unemployment cause enormous personal hardship, enormous social divisions, ill health, crime and all the rest, but that they generate a huge burden for the Treasury. For the hon. Member for Havant to imply that part of the problem with the social security budget and paying for decent benefits is not related to unemployment is absurd. That bill of between £20 billion to £30 billion each year is the reason why Labour Members believe that bringing down unemployment is a prerequisite for tackling the high level of social security spending. Any policy that significantly reduces unemployment will also bring savings for the taxpayer.
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