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7.40 pm
Mr. Malcolm Wicks (Croydon, North): The Bill is important and complex. It is an omnibus Bill, and deals with a wide range of items on the social policy agenda. However, one common theme is obvious--the attempt of the social security system to deal with substantial changes in our society. Those changes include aging and the implications for pensions, the approach to death and bereavement, and issues to do with disability, employment, patterns of work, and unemployment.
The modern feature with which Parliament is having to get to grips is family insecurity. There is no dodging the need for the state to get involved in personal relationships at their most raw and bloody. Hon. Members know, from our advice surgeries, the difficulties that have arisen with the Child Support Agency, and we shall see similar difficulties arise out of pension sharing on divorce. The personal has become political, and we have to meet that challenge.
As an aside to the problem of pension sharing on divorce, I think that, sooner or later, the House will have to get to grips with the related phenomenon of cohabitation. A view on marriage that is not balanced by a view on cohabitation means that there is a risk that all sorts of incentives and disincentives will be built into the system. The House needs to be aware of that problem.
With the Bill, we are dealing with very detailed questions. I hope that the House can change the culture of Standing Committees, so that the Executive's proposals can be scrutinised seriously. Under the previous Government, I got very fed up because Conservative Members were unable to say anything about the measures that went through the Standing Committees. The House of Commons must adopt a grown-up approach to scrutiny: we shall need it if we are to get this very important measure right.
As well as detailed scrutiny, we need an overall vision of social security. The Government have a good story to tell about the health service and education, but what is the story that we want to tell the public about social security? Where is the vision, and what are the underlying principles? It is more difficult to spread good news about social security than about other matters, because the minutiae often get in the way of the storyline.
I think that we need to ground our approach to social security in a sense of moral philosophy--not as a theoretical proposition, but as something that can translate easily into a popular message. The problem is to balance matters of citizenship, and of rights and responsibilities, in these modern and complex times. The idea is hardly new: it is one of the oldest in democratic political philosophy, but it is a rich seam. Although people often articulate the idea, the connection is seldom made between the rhetoric about rights and responsibilities and the details of social policy.
I believe that we need to make that connection so that we can explain to people about rights and duties, and build a popular consensus about social security reform. Much of the task is easy. Most people accept that, if they are able to do so, they have a duty to find employment. Also, most people accept that there is a duty to maintain children, even when a family splits up due to divorce or separation.
However, people also have rights with regard to children, such as a right to receive child benefit. When it comes to the care of elderly people--I expect that the royal commission report will be available shortly--we have a moral duty to help our elders when they grow frail, but we also have rights to some social policy partnership. The royal commission will tackle that, and the strategy for carers set out by the Government a week or so ago came at the problem from another angle.
In social security matters, the ethic of duties and rights, and the balance to be struck between them, finds its best expression--historically and probably for the next 50 years--in terms of contributions and benefits, and in the importance of the social insurance principle. We undermine the social insurance principle at our peril--[Hon. Members: "Hear, hear."] Those who have undermined it most agree with me. It is a sight for sore eyes to see them reincarnated as opponents of the means test.
We all hope that the single gateway will turn into an Arc de Triomphe for the Government, who are right to make the connection between social security and employment. It is perfectly reasonable to tell people that they have a right to claim a benefit, but that they should go for an interview, and think about the rest of their lives. That principle was set out by my right hon. Friend the Member for Birkenhead (Mr. Field), and there can be no quarrel with it.
Although we must approach the matter of single parents with sensitivity, the Government must think it through carefully. I do not want to sound macho, but it is nonsense in this modern age that single parents can stay on income support until their youngest child is 16. I put it to the House that, if we were thinking afresh today about that rule, we would not specify an age of 16. We would not be as cruel as the people in Wisconsin, who set a limit
of 12 weeks, but we might adopt the European model, which holds that the time for a parent to start thinking about work is when the child begins school.
There may be many exceptions, but the quid pro quo should be that, for people with children under five--below school age--we should be more generous in terms of the benefits that we give to the youngest children. That would mean that the difficult judgment that many parents face about when to work and when to stay at home to care for children is taken by the person who knows best. Mother knows best, not the state. I want there to be more rigour in our thinking about the obligations and rights of lone parents.
I shall end by expressing two cautions about the Bill, much of which I support. The first has to do with vocabulary. We need to be careful about how we present the Bill to a wider public, and we must be especially sensitive when we present it to the weakest and most powerless people in our society.
In the previous Parliament, the former Secretary of State for Wales, the right hon. Member for Wokingham (Mr. Redwood), was on one occasion to be seen speaking to the inhabitants of a council estate. There is something unedifying in watching powerful male Ministers in suits lecture single mothers and children, who are among the poorest and weakest members of our community. We must be aware of the language that is used. As I argued when I spoke about the balance between rights and duties, it is possible to speak about obligations and entitlements in a sensible and moderate language.
This is not weak stuff. Sometimes, there is a need for rigour: the reform of the Child Support Agency, for example, has meant that most fathers now--at long last--pay maintenance. However, we also need a sense of compassion when we deal with many of our fellow citizens. I hope that, as well the rigour that will be needed, the milk of human kindness will run through the Bill.
My second caution is also important, and it has to do with social administration. A key test is our need to be sensitive and professional in the administration of much of the Bill. If we are not careful, we may feel pessimistic about the experience of the Child Support Agency or the benefit integrity project. The best of policies fall down if their administration is not right.
Mrs. Jacqui Lait (Beckenham):
It is always stimulating to follow the hon. Member for Croydon, North (Mr. Wicks), who clearly thinks deeply about social policy and usually comes up with interesting ideas. If I am lucky enough to sit on the Committee, I hope that he will be able to join us, although I suspect that that would do little for his blood pressure because he would not be able to speak as he wished.
The hon. Gentleman said that a theme ran through the Bill. I agree that there is one, but that theme was the one identified by the Secretary of State. Throughout the Bill runs a discouragement of saving and an increase in means-testing. Those two things run hand in hand, and either the Government are prepared to accept their implications or, as has happened time after time, they have failed to think them through.
If people stop saving because they will be better off on benefits, wealth creation will suffer. People will become more dependent on the state, and taxes--direct or by stealth--would have to increase. Given our demographic structure--I need not run through statistics that we all know--those increased taxes would fall on fewer and fewer working people.
We must ensure that people who can save do save for their retirement. The Bill will put them off because people on a lower or medium income will see no reason to save. If the minimum income guarantee, housing benefit and council tax benefit are combined, someone on an average wage--the national average is about £19,000 a year--would have to retire with a pension fund of £100,000 to achieve the same income. Someone on an average wage would need to save roughly £1,400 a year to manage that.
That money represents the family holiday. Should a family forgo the annual holiday? Should they forgo a new car, saved for over several years? Should they save the money so that they can end up with an income precisely the same as the income that they would receive from the state? I cannot see people making that illogical economic decision. They will decide to live on the state, and that will, dare I say it, be even easier when they receive a national insurance rebate under the Bill's proposed system.
As my hon. Friend the Member for Ryedale (Mr. Greenway) said, we must not only consider what people would save in a pension fund, but warn them that, under the current annuity system, they will not get the income that they expect. Annuities are giving rotten returns. The Government are reforming pensions in the Bill, and they should have included annuities in that reform.
If, as is foreseeable, we are about to enter a period of high growth but falling prices, incomes will fall, and annuities for people on pensions will be yet further reduced. Meanwhile, income from investments will be doing very well. We shall produce a generation of people embittered by the fact that they have not been able to maximise their income in retirement because the Government failed to take the opportunity to reform annuity law. We should ensure that people have options so that they may choose how best to ensure an income in retirement. We should ask whether maintaining the rigid rules about annuities is the best way forward for everyone.
The proposals on widow's benefit and incapacity benefits also militate against saving, encouraging people to go on to means-tested benefits. I sponsored a ten-minute rule Bill proposed by the late Judith Chaplin--then the hon. Member for Newbury--which called for equal pensions for widowers, so I have no problem with equality. As the work market develops, I believe that more and more women will build their own entitlements because they will always be in work. We must ask whether a widow's benefit is necessary in the long run.
I accept the Government's argument on that point, but their proposals will militate against saving for retirement among both widows and widowers.
I would like to know how the Bill affects the working families tax credit and widowed parents who return to work. Will they keep their widowed parents allowance as well as WFTC and their income? Or will they lose the allowance? That might create a poverty trap, but it could equally be seen as a waste of the state's money.
The Government have missed another opportunity--the chance to return unfunded Government pension schemes such as those for teachers. The schemes are good for teachers, although they would probably do better in the private sector. However, because they are unfunded, they are paid out of current income. That is not the best way in which to provide for teachers in the long run, and other pension schemes within the Government's ambit should also have been reconsidered. Perhaps we may see some Government amendments along those lines.
The Bill is vague on pension splitting. I hope that our debates in Committee will allow us to change the system of scrutiny from negative resolution of statutory instruments to the affirmative procedure. That would allow important and detailed rules and regulations to be debated in the House.
There is increasing complexity as benefits move towards greater means-testing, and greater administration costs are associated with that. There is also a further weakening of the contributory principle. The Royal National Institute for the Blind has pointed out some of the problems, and the Secretary of State has amended one proposal accordingly.
Let me turn to the personal capability assessment. I want to be sure about how some cases from my constituency will be covered by the proposals. For example, how will mental illness be assessed? A constituent of mine--a paranoid psychotic--is being refused benefit. How will his case be assessed under the new arrangements?
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