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Dr. George Turner (North-West Norfolk): The hon. Gentleman attacks the Government's proposals on means-testing. Is he committing his party to removing that arrangement if it ever gets the opportunity? If he is attacking means-testing, how is that consistent with his other attack on Labour for being profligate in government?
Mr. Duncan Smith: The Secretary of State said that it is a question of balance. I think that the Government have got the balance wrong. In answer to the hon. Gentleman--[Interruption.] Unlike the Secretary of State, I shall attempt to answer questions. The hon. Gentleman asked what we would do in government. If he is making up his mind about whether to vote Conservative or Labour at the next election, he will have to wait to find out. We will tell him clearly what we will do, and he can make his own decision. Most of these provisions will get through, but I believe that they will have a detrimental effect, so we shall have to make what changes are necessary to ensure that people do not suffer more than they have to.
Let us consider the gateway interviews, and the requirement for certain categories of benefit recipients to be available for interview. The Government have
launched this policy six or seven times, and it was the only element of the Bill used in the attack on the "something for nothing" culture in the Daily Mail. I was intrigued that the Secretary of State showed no trace of irony while he announced that he was planning to extend the concept of the jobseeker's allowance, which Labour Members so heavily attacked when in opposition. His hon. Friend the Under-Secretary of State, the hon. Member for Wallasey (Angela Eagle), said during the debates in 1995:
The Government Front-Bench team, who sit there now, trooped through the Lobby and voted against the jobseeker's allowance, which they now laud as the key to their changes. That is absurd. However, my colleagues and I are always prepared to welcome what appears to be a sinner who repenteth. Like many people who first saw the proposals in the Green Paper, we wondered how tough the Government were and whether they would see this through properly.
The Bill confirms that the Government think that it is good to talk, but where is the action? Of course, those who receive benefit have obligations, and if they are able to work, they should seek work. The Government should take the necessary measures to assist them. However, the Government have other obligations that they do not seem keen to ante up to. Most importantly, they must ensure that the cost of employing people falls rather than rises, and that costs on business are kept low, otherwise the necessary jobs will not be created and bringing people in for interview will achieve nothing but frustration and extra costs.
This is a Government whose right hand does not know what the left hand is doing. The Treasury and the Department of Trade and Industry are busy imposing extra burdens on industry. In a previous speech, I estimated that they have risen by approximately £40 billion since the Government came into office. On top of that, the Department of Social Security, through devices such as the working families tax credit, will increase spending on social security by some £37 billion over the next three years. Like everything else, that will bear directly on individuals through their tax burden, and ultimately make employing them even more expensive.
The Government also started the new deal for lone parents, which will cost £200 million over this Parliament. Frankly, it has failed. Approximately 6 per cent. of lone parents take work, and a very high proportion of them fall out of work within six months. I notice that the Government now refuse to publish the figures for the number of lone parents falling out of work because they are so bad. The Government should cancel the programme, but they continue with it.
While continuing with that programme, they talk about obligating lone parents to come in for an interview. Surely they should accept the fact that the original programme has failed. They should save the extra money that they were to spend on that programme, and put it into the gateway--the great idea lauded by the Secretary of State. The Government's stated policy is to do one thing, but they intend to do another. It is absurd.
The Government seem unsure about what they intend to achieve. At no point have we had any targets for savings to be made through welfare to work or the gateway. Bearing in mind the fact that there are about 1 million lone parents on income support, how many new jobs does the Secretary of State think will be created? I shall give way to the Secretary of State if he wants to intervene on that point, but it appears that he does not.
The Government have yet to say how they will spend the money required to interview all those who are eligible. The gateway may become a bottleneck. We see the spending, but we do not see the saving. The Secretary of State has an opportunity to clarify the situation. There will be up-front costs to interview all those people to whom he referred--he said that will happen within three to four days, which is quite a commitment--so he must spend the money required to ensure that they can all be interviewed in that time. The cost will be considerable.
On the basis of what we have learnt from the lone-parent interviews under the new deal, the costs just for lone parents could rise to £100 million. I assume that the Government will ante up to that. I saw the Secretary of State nodding, so I assume that that is the case. [Interruption.] He is now shaking his head, because he realises what the cost will be, but he was nodding when I referred to his commitment.
In the Bill, the Government start to wobble. The gateway is interesting, because the Government use fairly tough language, which worries a number of Labour Members. Clause 47(6) is interesting, however, because it leaves local authorities and even individuals providing services with wide discretionary powers to decide whether a person need not attend the interview.
I am aware of the guidelines that have been published. Paragraphs (a), (b) and (c) give guidance--rather simple guidance--on who should and should not be involved. Paragraph (a), to which the Secretary of State referred, allows someone to disapply the requirement. The example involving the exemption of pensioners was so specific that we have been led to believe that there is some other reason why the Government did not include it in the Bill. Why does the Secretary of State not spend a bit more time working that out? Why does he not specify exactly who should be exempted? If he does not, pensioners will begin to worry about whether they are included--a question that the Secretary of State has left to the discretion of local authorities and individual agencies.
Paragraph (b) allows for the waiving of the regulations for the terminally ill and those who have already attended interviews. That is fraught with complications; but, in my view, paragraph (c) creates the biggest problem of all, because it gives the widest scope for the deferring of an interview. All Labour Members would do well to read it. The example given is likely to affect many people, both those who are genuinely sick and those who may seek to use it as an excuse.
Many people with disabilities are taking serious medication, and would, it seems, qualify almost perpetually. Such people will be left wondering, because the Bill does not make it clear whether they will be called for an interview or the requirement will be waived. The situation will be patchy: the law will be applied differently in different areas, because there will be different views
about which group should be called in. There really is a problem for the Secretary of State. The vagueness of the drafting will lead to further difficulties, and the Secretary of State has left himself open to the requirement for sweeping legislation later. The genuinely ill will worry, and others who learn about the system may say, "Well, there is a way around this." They may observe the way in which others are treated, decide to behave accordingly and make their excuses.
There is, however, another problem. Officials will be under pressure, and will not have the appropriate resources. The Secretary of State has not committed himself to spending the necessary money: he said that he was not prepared to spend it if it was as much as I suggested. Let us therefore assume--for it is just about possible: Governments have found themselves in difficulties before--that, in the absence of the appropriate resources, officials will be under pressure. Staffing numbers alone will be a problem, but the officials will be under further pressure because, according to the Secretary of State, people will have to be interviewed within three to four days.
Officials will be under pressure to ensure that people are interviewed, and they will have to deal with a backlog. Of course they will be tempted to look at the categories in the guidelines and say, "I can get rid of a few of these people." That is a huge hole in the legislation; the Secretary of State knows that, and I wonder why he has left it there.
Moreover, given that the Secretary of State has specified three to four days for those categories--the sick, the disabled and pensioners--he expects those who must make the decision to do so in that time. That will lead to yet more complications. Officials will be under further pressure, and the fact that the guidelines criss-cross will cause extra difficulties.
The more we look at the proposals, the more we see classic new Labour. It is window dressing for the sake of good headlines; behind it, all is confusion and extra cost with no savings at the end.
The Secretary of State spent some time talking about pensions. The long-awaited reform will create even more problems than it seeks to solve. The Government's attack on pensioners--their abolition of advance corporation tax dividend credit, which meant taxing pensioners £5 billion a year--has created the worst environment for many years. There has been the attack on pensioners, and there have been attacks on savings: there has been a series of stealth taxes.
Under the present Government, someone aged 35 with a starting salary of £10,000, rising to £32,000 over 30 years--that allows for about a 4 per cent. increase per annum--will find that his income on retirement is reduced by between 11 and 15 per cent., as a direct result of the Government's new tax. Instead of retiring on a pension of some £14,700, that person will retire on, at best, a pension of £12,500. Those figures are from the National Association of Pension Funds, and they provide a startling illustration of the Government's failure and the attack that they have made on pensioners and savings. This is a classic example of the way in which the Government have failed pensioners.
What have the Government done in the Bill to put the position right? In fact, they have made the position worse. Occupational pension schemes are already in difficulty as
a result of the Government's changes, and those difficulties will now increase. Clause 1 makes it clear that stakeholder pensions will be alternatives to occupational and personal pension schemes: people will have to choose between them. No one can have an occupational or personal pension, and also be a stakeholder. Clause 3(7) adds to the administrative nightmare: it will force companies to set up two separate arrangements, one for new entrants to stakeholder schemes and the other for existing occupational pensioners. There will be extra costs and extra complications.
Clause 1--along with the abolition of ACT dividend credit, and the change in national insurance rebates for contracted-out money purchase schemes, contracted-out salary-related schemes and personal pensions--will put huge pressure on employers to close their company schemes. Eventually, they will simply offer stakeholder schemes, which could ultimately lead to smaller retirement pensions for many people.
The Government are on record as saying, in their Green Paper,
"There is an authoritarian behavioural requirement of jobseekers".--[Official Report, 10 January 1995; Vol. 252, c. 109.]
The hon. Lady chirrups, but does she think that she is an authoritarian figure now, because that is the logic of extending the concept?
"Occupational pension schemes are the great welfare success story of this country."
The Green Paper--published by the Secretary of State--continues:
"They are provided voluntarily by employers and many millions of people benefit from them now and will continue to benefit."
How hollow those words are. As ever, rhetoric and reality are detached, and the public out there who are trying to save will suffer. This is a badge of shame that the Government will wear until the next general election.
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