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Mr. Michael Connarty (Falkirk, East): I have been listening with interest to my hon. Friend, and I have been reading as much as I can on this subject in the past week. I noted that, following the publication of the Crossman paper, it was said that people were willing to pay through the contributory system because they felt that they were storing up something for their family for the future, but they would not want to pay through direct taxation. Clause 53 clearly breaks the link between benefits and the contributions that people make over their lifetime, and is likely to make people wonder whether the contributory system has anything to offer them.

Dr. Jones: My hon. Friend is exactly right. I wish that the Secretary of State and Ministers would consider not only the consultation on the Green Paper, to which I have referred, but the results of their research on public attitudes to the welfare state and the response to reform, which clearly demonstrates that there is considerable public support for the social insurance principle. There is a strong feeling that those who have paid into the national insurance system should be able to gain from it when the need arises, regardless of circumstances.

In that research, members of the public pointed out to the Government that means-testing was not only expensive for the state, but intrusive for individuals. The public regard means-testing as unfair, because the low thresholds might have the effect of arbitrarily excluding people who are in genuine need, but who narrowly fail to qualify. Many pensioners feel that way about the failure of the state pension to keep up with means-tested benefits. They resent the fact that, if they have a small occupational pension, they are deprived of the benefits received by people who have not saved.

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The research showed that the majority of people considered that, if there was to be means-testing, it should take place on the way in, by requiring higher earners to pay higher contributions, instead of on the way out, by limiting payouts to those on low incomes and with low savings.

The research that was carried out for the Department of Social Security acknowledged that some people would like benefits to be targeted on those with a low income and low savings, but the overwhelming majority--69 per cent.--consider that a person's contribution record is more important than their means in determining entitlement to benefits.

The social justice commission also considered disability benefits. Its report says that the requirements for a comprehensive disability income are twofold. First, it should compensate disabled people for the additional expense of being disabled, by offering a tax-free benefit based on up-to-date evidence of living costs, including the additional costs that disabled people must meet. Disability living allowance is such a benefit, although the social justice commission commented on its many inadequacies.

Secondly, as disabled people are much more likely than others to be unemployed or only partially employed, a comprehensive disability income should offer some compensation, in the form of a taxable benefit, for the loss of earnings potential. That is precisely what incapacity benefit was designed to do. It is a taxable benefit, so, rightly, people on a high income are already taxed on it. However, it is designed to reflect the fact that the working years--and often the earnings potential--of people who are disabled are much curtailed.

That is exactly what my hon. Friend the Member for High Peak said that the benefit was about. It is about income maintenance. It is about trying to bring disabled people up to the level of the rest of us. A measure of the success of that policy should be whether disabled people have the same range of income as non-disabled people. I put it to my right hon. and hon. Friends that if we are to end discrimination against disabled people, we should ensure that they have the potential to earn an income similar to that of people who are not disabled but in the same type of job.

I fear that the Government are out of touch with public opinion on the issue. For the sake of saving, ostensibly, £700 million in the long run, they will greatly damage the social insurance principle. They will discourage saving. The advice that the Government are giving those people who might qualify for incapacity benefit, but who are struggling to continue to work and perhaps retraining, is, "Give up work and go on benefit now; because if you do not, you may lose out in future."

I urge my right hon. and hon. Friends to think again. Reform is needed, and there is a great opportunity to achieve consensus on the way forward. Surely that consensus must be based on what is nationally popular, and that is the social insurance principle, whereby there are contributory benefits for people who contribute while in work, encouraging them to save, to be thrifty and to work hard for the future.

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4.45 pm

Miss Anne McIntosh (Vale of York): I congratulate the hon. Member for Birmingham, Selly Oak (Dr. Jones) on a well-constructed and informative speech.

Mr. James Gray (North Wiltshire): It was courageous.

Miss McIntosh: As my hon. Friend says, it was a courageous speech.

I, too, support amendment No. 86 and reject clauses 55 and 56. This is a very sad day for the House, and more particularly for the vulnerable people in society, especially the disabled, whom the welfare state, set up all those years ago by the Beveridge reforms, was most specifically designed to help.

I regret that the allocation of time motion has been carried. I suppose that we should be grateful for the presence this afternoon of the Secretary of State, and benefit from his presence. However, I believe that my constituents will find his comments insulting. On Monday evening, I spoke on two separate occasions: first, on the dismantling of the bereavement allowance and, secondly, on the companies that have set up consultancies in the Vale of York as limited companies, especially in the information technology sector, and had written to ask me to intervene in that debate so that their voice could be heard. I know that they will especially resent allegations of a filibuster on Monday evening, coming from a Secretary of State who, for the greater part of the evening, was not even in the Chamber.

The words of the hon. Member for Selly Oak especially struck a chord with me on two counts. The changes to the entitlement to incapacity benefit will penalise those who have saved, and they will constitute an attack on the contributory principle.

As I said on Monday evening--I shall develop this theme in relation to incapacity benefit--I believe that the Government's proposals are an attack on the Beveridge system. They mark a step towards the dismantling of that system, which was set up precisely to help the most vulnerable in society.

I emphasise the fact that the piecemeal reform that the Government are undertaking will not bring the social security bill down. The savings will be pitiful. On the severe disablement allowance, savings in the first year will be only £10 million. Over the whole period of the Parliament, they will rise to only £80 million. On incapacity benefit, savings in the first year will be only £70 million, rising after 10 years to only £700 million. In support of what the hon. Member for Selly Oak said, could the Government not have come before us with a comprehensive reform, or at least the start of one, rather than the piecemeal reform that they have presented to us this evening?

Changing the entitlement to incapacity benefit is simply another extension of the Government's means-testing agenda. Instead of encouraging people to save, they will penalise the very people who are doing so.

I particularly want to associate myself with the remarks of the hon. Member for Kingswood (Mr. Berry), who said that the measure is a breach of contract. For that reason, I simply cannot support clauses 55 and 56. I support amendment No. 86. The Government have no right to breach the contract between the state and the individuals

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who have paid their contributions over a number of years. On the grounds that the changes to the entitlement to incapacity benefit will penalise those who have saved and are an attack on the contributory principle, I support amendment No. 86.

Dr. George Turner (North-West Norfolk): While I agree with much of what is being said by those on both sides of the argument, I find that Labour Members have run into a conflict of principles. As was pointed out from the Conservative Benches early in the debate, a conflict of principles is one of the real difficulties of being in government rather than in opposition. I am pleased that there has at least been a good element of listening by those on both sides of the argument during the debate on how we should resolve our conflict of principles.

When the Government are under attack, Back Benchers taking my position--I shall vote with the Government tonight--find that it has a built-in difficulty: if we do not speak as well as vote, it is because we are assumed to be secretly opposed to the Government and not willing to stand our ground; if we speak in support of the Government, we are assumed to be currying favour with the Whips Office. We are damned either way.

During 20 years in local government, I learned that people need to face up to the issues. Those Members who were here in opposition for many years benefited from the fact that every penny could be spent not once or twice, but in every debate. The Liberal Democrats have shown me that for the past two years. The problem with being in government is that we can spend money only once and I believe that that is the core of the difficulty faced by my right hon. and hon. Friends this afternoon.

I do not like means-tested benefits, but I have regularly supported them and so have other hon. Members who are opposing them today. Faced with the problems of the pensioners in my constituency, I have had to accept that, until our economy permits us to do more for all pensioners, we have to offer a minimum income guarantee to pensioners. We have had to say that we will try to identify those most in need and help them.

I do not like means-tested benefits, but as a practical politician who is trying to help Ministers to make difficult decisions, I have to say that if I were to pick a group for which I would relax that principle, it would be the pensioners in my constituency. My difficulty with my hon. Friends who have so ably put the case for those who have been incapacitated--those of my constituents to whom that has happened are often late on in their lives, perhaps over 55--is that, if I am honest, that group would not be my priority.

I understand the case being made for that group, and I understand the case for its being the next to which we look to give largesse, but I have to say that, as many of my hon. Friends have recognised in the debate, the Government have addressed some more pressing needs and areas where Exchequer help is urgently needed to tackle the real problems of major disability, among the young in particular.

My hon. Friend the Member for Colne Valley(Kali Mountford) rightly talked about cherry-picking and I believe that Back Benchers must assess where they stand on a Bill, as they do on our manifesto. Who on earth could agree with everything in his party's manifesto? It is not human nature to do so, and I certainly did not do so, but

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I accepted the manifesto as a package. I accept that, in the democratic process, we arrive at a conclusion and, to be broad brush, I accept that other people's opinions have sometimes outweighed my individual preferences.

In government, we do not have the ability to be always on the side of the angels. As an agnostic, I do not believe in angels. From my experience in local government, I know that people decide to modernise. Their group agrees with them, they look at new issues to be addressed in government, they identify the growth areas and then agree and vote on them. They then ask, "How will we fund those areas? How shall we address these new priorities?" Only people in opposition can oppose every single means by which people address the big problem.

The problem of local government remains that it is always easy to address new need, but difficult to address the base budget. It is difficult for people who fought for needs to be addressed in the society of a decade ago to accept that those needs may no longer be the priority of the day. I believe that the Government have set about tackling that.

Some difficult decisions will have to be made, but I believe that, ultimately, we owe it to the people whom we represent to make those decisions. If there is one group of people who can tell me about the need for welfare reform, it is a group whom our party has traditionally represented--people on council estates. As part of my constituency work, I regularly visit the homes of those who are too disabled to come to my surgeries. Those are the people whom I want to help--but my goodness, there are "experts" on those estates who specify those whose need for state benefits is, in their view, less than meritorious.

The Conservatives were in government for 18 years because, all too often, Labour supporters did not believe that we were fit to govern. I feel that facing up to some of the difficult decisions that we must make in government gives us the best opportunity that we shall ever have to benefit those whom we seek to represent--to benefit them in the long term--through the improvements in the economy that we are delivering.

The package in the Bill is one that I, along with other hon. Members, can support with honour.

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