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Miss Kirkbride: I am somewhat perplexed by what the Minister has just said. If he claims that we are filching an idea from his own Chancellor, why does he condemn what we propose?
Mr. Denham: Because of the timing, and the way in which the Conservative party has sought to bring the changes forward, which, as I have said, is imprudent and reckless.
Mr. Denham: I shall deal with that point in a moment.
The main arguments made for the amendments by the Opposition in another place were nothing to do with the substance of the measures introduced by the Government in the Bill, so one can only assume that the Opposition agree with the measures themselves, but are reluctant to say so.
The main arguments were not even to do with the substance of the changes that the Opposition sought to make. Instead, they revolved around the fact that the Chancellor had announced his intention to raise the lower earnings limit as part of future reforms, but that the Government had not included the change in the Bill. The Opposition argued that their amendments were necessary to give the House the opportunity to debate the Chancellor's intentions. Those arguments make no sense. I suspect that, in part, they were put forward by the Conservative party to deflect attention from the damage that would be caused by the ill-thought-out changes that they sought to make.
Mr. Letwin:
If the Minister thinks that people would have found it helpful for the Chancellor to talk about changes that he intended to make in the future, why did the Chancellor not say that he intended to make those changes in the future?
Mr. Denham:
The Chancellor clearly indicated that he intended to make the changes in the future, and I will come to that point again in due course.
In developing his Budget proposals, the Chancellor felt that now was not the time to implement the change. That is clearly for him to decide. He must judge when financial circumstances are right for a measure with such significant revenue implications. As he explained, he would not implement the change until accompanying measures were in place to ensure that people did not lose access to contributory benefits as a result.
It is not, and never has been, the Government's intention to make that change to the lower earnings limit in April 1999. The Chancellor never said that it was. That is why the Government did not introduce the measure in the Bill.
Mr. Iain Duncan Smith (Chingford and Woodford Green):
Is the Minister now saying that the Hansard record of his right hon. Friend's Budget speech is incorrect?
Mr. Denham:
I do not really appreciate the point that the hon. Gentleman is trying to make. I do not believe that there is anything in the Hansard record or elsewhere that suggests that the Government intended to make the change to the lower earnings limit in April 1999.
Mr. Geoffrey Clifton-Brown (Cotswold)
rose--
Mr. Denham:
I shall listen to what the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) has to say--
Mr. Clifton-Brown:
On that very point.
Mr. Denham:
I must make some progress. I shall listen to what the hon. Member for Chingford and Woodford Green has to say, but it is clear that it is not and never has been the Government's intention to make the change to the lower earnings limit in April 1999. That is why the measure is not in the Bill.
Secondly, the House debated the Chancellor's Budget for a week. It has had ample opportunity to discuss every measure included in the Chancellor's announcement. The House and the other place will have ample opportunity to debate the alignment of the lower earnings limit with the single person's tax allowance, and the accompanying changes to benefit rules, when the Government bring forward the necessary primary legislation. That will be the time to debate the issues--when the Government have put forward detailed proposals on all aspects of them, and we have the proper legislation in front of us--not now, on the back of the Opposition's ill-considered amendments.
Mr. Clifton-Brown:
Perhaps the Minister will clarify what the Chancellor said in his Budget speech, which was:
The Opposition have nothing of substance to say about the measures, and they will fail to make any serious case about the wording of the Chancellor's statement. It is perfectly clear that "further" means at a more advanced point of time, and I am sure that the changes will be brought forward at a more advanced point of time--but it will be at the right time. I hope that, now that I have dealt with that matter, Opposition Members will not seek to waste the time of the House any further.
Mr. Desmond Swayne (New Forest, West)
rose--
Mr. Denham:
I suspect that this may be on the same point, in which case I should not take a further intervention--but I shall risk it.
Mr. Swayne:
Is not all this the consequence of the fact that the Chancellor's statement bore so little resemblance to the Red Book that underpinned it, and of the Chancellor's habit of hyping up everything that he has to say and offering jam tomorrow? Did that not give people legitimate expectations that what he said meant jam today?
To argue that the amendments were needed to give the House a chance to debate the issue is puzzling in the extreme. We have had such an opportunity, and we shall have further opportunities.
Let me turn to the impact that the Opposition's proposals would have in the absence of amendments (a) and (b) to Lords amendment No. 64. It is especially necessary for me to do so as the House may divide on the matter.
There is no doubt that, in terms of work incentives, the increase in the lower earnings limit would have very beneficial effects. It would increase take-home pay by up to £1.70 a week for every person who pays national insurance contributions. It would also further align the national insurance system with the tax system, thereby adding to the policies that the Government have already introduced to reduce burdens on business.
In those respects, of course, we favour the measure. We would. After all, as I have said, it is the Government's own policy. Unlike the Opposition, however, the Chancellor recognises that those effects are only part of the story. The change would mean that, in the absence of any other changes, up to 1 million people earning between
£64 and £81 a week would cease to have access to certain contributory benefits. They would no longer get jobseeker's allowance if they became unemployed. They would no longer get statutory maternity pay if they became pregnant and many of them would no longer build up rights to a state pension for when they retire.
That is, in part, why the Chancellor is not introducing this measure in April 1999. He made it clear that those low-paid workers would be protected against benefit losses. It will take time to bring forward and implement proposals on how that should be done, but it must be done.
Mr. Letwin:
The Minister's case would have much more force if the Chancellor had made the changes that he intended to make in the Finance Bill. By introducing them in the Social Security Bill, did he not give the Minister the chance to make precisely those consequential changes about whose absence the Minister is complaining?
Mr. Denham:
The hon. Gentleman misses the point. It takes time to prepare the sort of changes that can alter policy while protecting the benefit rights of people on low pay. Those changes cannot simply be willed overnight: they must be prepared carefully. It will take time to introduce and implement those proposals, but that must be done. It would not be right to introduce measures that have not had proper consideration and preparation.
The proposals from the Conservative party blithely ignore all those issues. They make no attempt to protect low-paid workers against benefit losses or to help the millions of others whose future SERPS and contracted-out pensions would be cut as a result. That is not this Government's idea of modernising the system, and I am sure that the millions of losers would share our view.
There is another gaping hole in the substance of the Opposition's proposals. Raising the lower earnings limit to the level of the single person's tax allowance would reduce contributions revenue by approaching £1.5 billion a year from next April. A change with revenue implications of that magnitude can clearly be introduced only when financial circumstances permit. In his Budget considerations, the Chancellor decided that the time would not be right in April 1999. That is for him to judge.
In introducing the measures into the Bill, the Opposition have taken no account of those crucial considerations. They are pushing for a change to be made outside of Budget deliberations, without offering any proposals on how the Government should deal with the revenue shortfall that would result. Their amendments give us no clues, and that is imprudence in the extreme.
The changes proposed by the Opposition drive a sledgehammer through the Government's carefully considered plans for restructuring the national insurance system. The Conservatives have taken a good idea and turned it into a bad one. They would take up to a million people out of the reach of certain contributory benefits, and they would reduce national insurance revenue by approaching £1.5 billion, with no indication of how the hole should be filled. The changes are
irresponsible and imprudent. I therefore urge the House to reverse the changes made in the other place by agreeing to amendments (a) and (b) to amendment No.64.
The Government's package of proposals has been widely welcomed. It will help to make work pay. If the new structure was in place today, were every employee paying national insurance would pay £1.28 a week less. Our proposals will also encourage employers to create jobs for people moving from welfare into work, and they will simplify the administration of the scheme for business. The overall effect will be to improve work incentives and make it more attractive to employ those moving from welfare into work.
"Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings.--[Official Report, 17 March 1998; Vol. 308, c. 1106.]
Mr. Denham:
I hope that this will prove the opportunity to ensure that we do not waste a considerable time on a discussion of the interpretation of those words. The "Shorter Oxford English Dictionary" defines "further" as meaning at a more advanced point of time, and I am certain that at a more advanced point of time we shall bring forward the changes mentioned by the Chancellor in his Budget statement. I hope that the time of the House will not be wasted on the debate on the issue in another place, which, if I may say so, was not the finest debate I have read.
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