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Mr. Phil Hope (Corby): The hon. Gentleman talks about the pensions review, but does he not agree that, in cutting value added tax on fuel, eliminating the gas levy and announcing increases for winter fuel of £20 to all pensioner households and £50 for those on income support, we have done more for pensioners in the past six months than the Conservatives did in 18 years?
Mr. Duncan Smith: The hon. Gentleman is doing very well, is he not? He rose to take a position on pensions, but he talked about a giveaway in the green Budget, which was more about protecting the position of those on the Government Front Bench than anything else. It was cobbled together quickly to get them out of a hole because they are getting nowhere over all their so-called reform processes.
The hon. Gentleman should try answering the question: when will they go for the Prime Minister's position of full pension and welfare reform? There has not been a word so far about where all that is. Perhaps the hon. Gentleman would like to answer that question. When will that be? There is no answer, is there? So it goes on. I can understand the frustration of the Minister for Welfare Reform as he perceives the process being delayed; after all, he has written about it. As I said, he wrote all that on pensions alone.
The delay goes back to the emergency Budget that the Chancellor produced for, it now appears, no reason at all. He went further than he said and not merely on the windfall tax. He set about pensions. Let us put on one side for a moment the Chancellor's attack on pensions, which will cost those who need to invest in their pensions billions of pounds and lose them a lot of money.
With the abolition of advance corporation tax dividend tax credit, the right hon. Gentleman devalued the national insurance rebate. Having made those changes, far from leaving the state earnings-related pension scheme as an option for those who wished to remain in it, as the Labour
manifesto said--a rather vague commitment--he has gone a stage further and has enhanced the option of SERPS, increasing the number of people opting in. That is happening now and research by Scottish Life clearly shows that,
The Minister for Welfare Reform is also fairly unequivocal about SERPS, as the Secretary of State knows. The Minister said:
The Minister for Welfare Reform (Mr. Frank Field)
indicated assent.
Mr. Duncan Smith:
I see that the right hon. Gentleman is nodding, so we have established that. In that case, what was the purpose of the review by the Under-Secretary of State, and if the Prime Minister thought in October that the Green Paper would be issued shortly, why do we have to wait until the new year to receive it? Nothing has happened. Three months after that promise, we will still be waiting.
The Secretary of State, who may or may not be listening, has said remarkably little about pensions in the past few months, either in the House or outside. Pensions reform is being pushed into the blue yonder. It is too difficult to rectify, and there are too many hard choices to make, so the Government prefer to slide it out into the future and leave only the minimum change that can be made. So it goes on.
Caroline Flint (Don Valley):
How many people suffered the abuse of pensions mis-selling under the previous Government? The hon. Gentleman is outlining duties; what duty and responsibility did the Tory Government have to prevent that?
Mr. Duncan Smith:
The hon. Lady asks a serious question. The issue of pensions mis-selling is being dealt
That is a serious matter, but why do Labour Members never mention the fact that, as a result of all the changes that the Conservative party made before the general election, about £750 billion--more than in the whole of the rest of Europe put together--is now invested in private pensions here? They never mention that success. How do they intend to persuade members of the public to invest in pensions if they never talk about the success of private pensions, which were driven forward by the Conservative party over the years against perpetual opposition from Labour?
The process with welfare reform appears to be similar. We have a series of proposals that need to be implemented quickly, so that the changes can be bedded down and we can have proper discussion to make sure that there are no problems. All through the summer, no one would answer the important questions: when and whether there would be a Green Paper on welfare reform, and who would produce it.
Throughout the summer, a series of leaks and counter- briefings in the press took the debate beyond the House, but still we have no answers. The Financial Times reported that someone in the Treasury, who is apparently close to the Minister for Welfare Reform, said:
Is the Chancellor's welfare review--it is run by Martin Taylor and has nothing to do with the Department of Social Security--which is supposed to be considering merging tax and benefits, taking priority? Does the Chancellor not like what the Minister for Welfare Reform has written progressively over the years? In his green Budget, the Chancellor continued to refer to the Minister's proposals, even though it appears that they are being rapidly watered down and now focus solely on making family credit payable through pay-as-you-earn rather than through the benefits system.
The clash between the Minister for Welfare Reform's views on the ending of means testing and the Chancellor's view that means testing is necessary through the tax system may explain some of the problems.
There is also the thorny point of what the Secretary of State thinks of the Chancellor's proposals. After all, she has long said that she does not like the idea of benefits being paid through the wallet rather than through the purse. There was a big debate, and she always argued that benefits should be paid to the person at home. Then again, if the Chancellor requires the change she will no doubt change her mind and implement it. That seems to be the process, and it is what we have come to expect.
Mrs. Helen Brinton (Peterborough):
I remind the hon. Gentleman of his celebrated comments in a pamphlet in 1993, when he suggested that disability living allowance should be means-tested. Does he write in one tone and talk in another?
Mr. Duncan Smith:
If the hon. Lady were to check the intervention list from her Whips Office, she might
I posed a series of questions of the Secretary of State when she first announced in the Budget debate how she intended to operate some of her proposals, such as the new deal for lone parents. The right hon. Lady stuck with single-minded determination to that new deal; that is what she has spoken most about and has issued most press releases about. It seems to be the main drive behind most of what she has said and done.
Assuming that the pilot programmes were meant to inform us whether the policy on the new deal for lone parents is working, I said from the beginning that the right hon. Lady would need to institute proper control groups inside the pilot programmes to measure the effectiveness of each pilot. Most of those comments were obviously ignored.
As I and my team went around the pilot centres during the summer, it became absolutely clear that, with the absence of control groups, it would be impossible to measure why people got jobs and whether that was because of the new deal. We are now told that some time in September the Department of Social Security partially changed its mind about control groups. It did so retrospectively--that was never mentioned in the original plan, and the right hon. Lady never answered that question. The Department now needs to tell us how those control groups will work. I gather that it is even trying to backdate the information from those so-called pilot areas.
When the control groups were set up, there was a flurry of press releases--long before any real success or failure could possibly be measured. Of particular interest was the Secretary of State's press release of 23 September, just two months after the programme began, which spoke glowingly about how successful it was. The other important press release was that issued on 23 October, when the Secretary of State readvertised her programme as a huge success, after just three months.
The time came to analyse those figures, and we found that when the Secretary of State announced that they were a huge success she was talking about a 20 per cent. success rate. She failed to tell us that 433 people taking jobs out of the 8,600 to whom letters were sent is equivalent to a 5 per cent. response rate. She has never yet once explained how she can make a success out of 5 per cent., when so many people have not even bothered to respond to those letters.
"Based on somebody earning £15,000 a year, remaining out of SERPS could cost them the equivalent of £360 a year in retirement income. And for higher earners it could be far more."
So people are opting back in. On the margins, there is no purpose in staying out as the rebate has been so devalued.
"A failure to close SERPS will mean substantial tax bills for future generations."
I agree, as I am sure does the Secretary of State. I am also intrigued by how the Minister views his colleagues, given that he said at some point:
"Anyone persuaded SERPS had a future ought to be made a ward of court".
On 29 October, given all the confusion, the Prime Minister had clearly lost track of who was running what. My right hon. Friend the Member for South-West Surrey (Mrs. Bottomley) asked straightforwardly at Prime Minister's Question Time whether the Minister for Welfare Reform had his support for thinking the unthinkable and proposing pension improvements. The Prime Minister expressed himself in complete confidence with the Minister for Welfare Reform's duties--an interesting choice of words--but went on to say that the Minister would be producing a Green Paper shortly. We are talking about pensions, let us remember. Are we to assume that the Minister will also be carrying out a separate review of pensions? Perhaps he could let me know.
"His package now seems insufficiently new Labour."
The summer was dominated by a war of words, with briefing and counter-briefing between the Secretary of State and the Minister for Welfare Reform. There was no progress until finally, at the end of the summer, she was forced to agree to his producing a Green Paper; but not, apparently, until early in the new year.
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