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Mr. Webb: It is a privilege to follow the hon. Member for Kingswood (Mr. Berry), who has a reputation for fighting on behalf of disabled people. Tonight, he is doing the same again and deserves to be listened to. On a recent BBC radio programme, he and I were bracketed together by the Secretary of State as "the forces of conservatism", which is news to both of us. I will not lavish any further praise on the hon. Gentleman lest I undermine his position.

The hon. Member for Havant (Mr. Willetts) discussed the history of the attempt to means-test incapacity benefit and rightly pointed out that it was considered and rejected by the previous Secretary of State, the right hon. Member for Hitchin and Harpenden (Mr. Lilley). Given what happened yesterday, the hon. Gentleman coyly failed to mention which person tried to foist on the previous Secretary of State the means-testing of incapacity benefit: one M. X. Portillo.

In the circumstances, perhaps the hon. Member for Havant does not want to remind the House that Mr. Portillo, who hopes to re-enter the House shortly, tried to persuade the right hon. Member for Hitchin and Harpenden to means-test incapacity benefit. All I can say is that the Secretary of State is doing what Michael Portillo wanted to do and the right hon. Member for Hitchin and Harpenden dared not do. It is a sad day when the Labour party has to deliver Michael Portillo's agenda.

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We have discussed the marginal tax rates under the means test. The hon. Member for Kingswood was right. We clarified the position with the Library yesterday. It rang the Department of Social Security, which said that the 50 per cent. rate will apply to gross occupational pension income. If I am wrong, I will be happy to be interrupted by the Secretary of State. That 50 per cent. is on top of the income tax rate of 23 per cent., so, for every pound above the threshold, whatever it should be, someone who has saved through an occupational pension will lose 73p.

The Secretary of State told us that the taper of 50 per cent. was low for the benefits system--the Department of Social Security could be much nastier in means-testing. It set one of 50 per cent. or more on the working families tax credit and 60 per cent. on housing benefit. It is set one of 73 per cent. for people who save through company pensions--[Interruption.] The Minister of State says that the taper could be 100. Yes--if the price is right, and the Department really puts its mind to it--it could be 100.

5 pm

Does the hon. Gentleman, who has responsibility for pensions, really think that a 73 per cent. taper gives people an incentive to make more occupational savings? If he were in his 50s--

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): He is.

Mr. Webb: I was not going to speculate on that. However, given that he is in his 50s, if he anticipated that early retirement might at some point be forced on him--who knows--does he think that, faced with a 73 per cent. marginal rate, it would be sensible for him to put extra money into an occupation pension? Clearly, it would not be sensible to contribute more, as the marginal rate is undoubtedly a disincentive to save.

Modernisation has been the Secretary of State's principal defence of the policy, which the Government say is designed to reform the welfare state and bring it up to date. What is the central tenet of that reform, as we march confidently into the new millennium? It is means testing. The Secretary of State has discovered a new strategy for a new millennium, to build a new welfare state, founded on a bright new vision for dealing with today's realities. That vision and that strategy is means testing. How can means testing be modernisation?

I thought that one of Labour's proudest boasts was about the post-war Labour Government and their role in establishing the welfare state, of which contributory social insurance was an integral part. There is no doubt that the Secretary of State is playing an instrumental role in dismantling the welfare state.

Mr. Brazier: I am listening very carefully to the hon. Gentleman's speech. Every time a Conservative Member makes a point on the principle of means testing, we hear, "That's what you did", but receive no coherent answer about the Government's policy. It will be very interesting to see whether the hon. Gentlemen receives a proper answer from the Government to his excellent question.

Mr. Webb: I should be most grateful for an answer to the question. Although the Government could easily point

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out that the Tories doubled means testing--which is true, but regrettable--what is the Secretary of State's answer to my question? In a modern welfare state, why is it desirable to force more people on to the means test by limiting the contribution rules, means-testing occupational pensions and phasing out severe disablement allowance? How can that be the face of a modern welfare state? Is that the shape of things to come? We hear no answer.

The hon. Member for Kingswood raised the issue of means-testing the retirement pension. We all heard the Prime Minister say that he would not means-test the retirement pension, and I entirely welcome that assurance. However, once the principle has been breached, his successors, and those of the Secretary of State, willbe able to tell the House, "We already means-test contributory benefits". All the arguments that the Secretary of State has used on incapacity benefit will be true in spades when applied to the retirement pension.

Angela Eagle: What about the jobseeker's allowance?

Mr. Webb: I am not sure why the Minister raises that, but assume that she does so because that was an example of the previous Government weakening the contributory principle. I expect that she opposed that change. Now, however, Ministers are engaged in a further undermining of the contributory principle.

I am sure that, in this Parliament, the Government will not means-test the retirement pension.

Dr. Lynne Jones: I might be able to enlighten the hon. Gentleman on that point. In 1987, in a debate on the Social Security Act 1988, my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs, in opposing the means-testing of contributory unemployment benefits, said that those affected had

"shown thrift and foresight in providing for themselves"--[Official Report, 2 November 1987; Vol. 121, c. 671.]

and that he opposed the means-testing of unemployment benefit.

Mr. Webb: I am grateful to the hon. Lady for drawing the House's attention to a previous comment by a leading member of the Government. The comment was true then, and it is true now.

My concern is not that the Government will means-test the retirement pension in this Parliament--we have the Prime Minister's assurance on that. However, what might happen in 10 or 15 years? The Minister of State has said that people retiring on the retirement pension will be living in penury. It is difficult enough to justify the current level of the retirement pension, but, after 10 or 15 years of price indexation, it will have fallen so far below the poverty line that there will be huge political pressure to put more money into it. At that point, a future Government may well say, "We will put money into the retirement pension, but do not want to do so for people with occupational pensions of £30,000 a year."

If we give in to the principle today, we shall be laying the future open to means-testing the retirement pension.

The Secretary of State has defended his attack on disabled people who have occupational pensions or dodgy contribution records by referring to the good things that

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the Government are doing for some other disabled people. More times than I care to remember he has mentioned the disabled persons tax credit, which was an afterthought of Government policy. Disability working allowance--its predecessor--went to just 16,000 people. The bright, shiny new disabled persons tax credit, which is the Government's in-work strategy for disabled people, will go to an extra 6,000. If anyone wants to intervene and correct me on that, I shall be happy to give way.

Mr. Levitt: The hon. Gentleman will be aware that there are 2 million disabled people in employment and a further 1 million who are not in employment but would like to be. It is certain that a significant proportion will qualify for the disabled persons tax credit--far more than for the DWA.

Mr. Webb: The Government's projections for spending on the tax credit assume 22,000 recipients. Even if the figure were 30,000 or 50,000, what is that compared with the 1 million whom the Government say want to work and cannot? It is a drop in the ocean--a fig leaf to cover the huge cuts that the Government are making for people who are unfit to work.

The spurious argument about the situation being a form of hidden unemployment has been raised yet again. If there are people on incapacity benefit who should not be, why not stop them claiming it in the first place rather than introducing measures that affect not just those who should not be claiming, but those who have every right to claim?

There is a fundamental principle of universality involved. When someone turns up at an NHS hospital, we do not tell them to go away because they are well off or have BUPA cover. Everyone is in the system. They have paid their taxes and their contributions, so they have a right to treatment on the NHS. That principle underlies social insurance. People make contributions during their working life and when they need help it is there for them. The rules do not change at the end of the game. The Government cannot say afterwards that someone is not entitled because they have made extra provision for themselves. Either provision is universal or it is not.

The Government say that they do not accept universality. They are moving towards mass means testing. If it was wrong of the Tories to double means testing, why is it right for the Government to extend it further?

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