| Previous Section | Index | Home Page |
Mr. Jeremy Corbyn (Islington, North): I am pleased that the Social Security Committee is examining the role of national insurance, but, while it is doing that, could it not examine the employment patterns that are emerging in this country? Very few people remain with a single employer for long and many women change employers frequently and often do not build up an occupational pension, a stakeholder pension or even sufficient national insurance contributions. The pensioners who retire today are, in some ways, the best-off that there have ever been, whereas some people in their 30s and 40s will, in 20 years time, be among the worst-off that there have ever been.
Mr. Kirkwood: That is a fair point. Indeed, earlier, the Secretary of State said that changing work patterns, part-time work and stints of employment sometimes make it more difficult to build up a contributions record. It is not as easy now as it used to be. However, the Select Committee will consider all these issues and will try to come up with ideas on how to modernise the contributory system.
Mr. Pond: I thank the hon. Gentleman for giving way, especially as I had to nip out for a couple of moments to make a telephone call. When I came back, I heard him make a point about the direction of Government policy, which he believes is almost wholly in the direction of means-testing. However, I ask him to consider other universal benefits as well as the £100 winter payment. For example, there has been the biggest-ever increase in child benefit, which is one of the most important universal benefits, and the state second pension will contract people in as though they were earning £9,000 a year. In many other areas, people are being contracted in to the national insurance system. Surely that suggests that the jury is out on whether the Government are moving in the direction of means-testing or universality.
Mr. Kirkwood: The jury is out; I shall settle for that. The Select Committee will soon journey to Australia to study these issues. The Australian system has gone almost exclusively in the direction of means-testing, and I hope that our examination of the system there will inform our report. I hope that hon. Members will consider it seriously when it is published. This debate should be considered in the longer-term context of what is happening to the national insurance system.
My other slight worry--again, the Select Committee has done some work on this--is about the wholesale introduction of tax credits. In many ways, there are positive aspects to them, but witnesses to the Select Committee inquiry expounded on the problems that they entail. They told us about problems such as whether money should be paid into the wallet or the purse and
they referred to the increased potential for fraud and collusion and to the difficulties of administration. The full extent of the difficulties will become apparent only from this April, when employers start paying the working families tax credit, and the hon. Member for Havant (Mr. Willetts) was right to raise some questions about that. I share his doubts.
The working families tax credit is only the start. We already know that there will be an earnings credit, an integrated child credit and I believe that we shall ultimately have some form of housing benefit tax credit. A whole panoply of reform and change is taking place, and I do not suggest that it is all bad. However, we must be careful that we understand where it will all lead.
The general economic context is important to the debate. I recognise that much interdepartmental working has taking place since the election, and that is positive. The Government's emphasis on trying to encourage work is absolutely right, although I have quibbles about some details. The policy is working well, but that may have something to do with the economic cycle. If there is a downturn, it will be interesting to see whether--I hope it will--the policy continues to work and to be successful. However, the Government are right to focus heavily on trying to encourage people into work and to make work pay. We are all aware of what they have done in that regard.
However, I want to add one important qualification. The adage is "Security for those who can't", and the Government have a long way to go before they persuade me that they are providing that security. I do not want to make too much of this point, but the emphasis that the Government have rightly put on getting people into work risks stigmatising those who can never work. There are many reasons why people cannot ever work, and they include chronic sickness and their geographical location. The labour market in Garscadden in downtown Glasgow is very different from that in Northampton or Reading. Welfare to work may operate well and supply-side measures may train people to become better qualified to compete in the labour market. However, if the labour market has collapsed, it is wrong to stigmatise those who cannot find work and suggest that they are not pulling their weight. We must be careful about that.
If people who cannot take advantage of the world of work have to rely on the core level of income support benefits, the level of those benefits needs to be seriously considered. In that regard, my indefatigable noble Friend Earl Russell managed to obtain written answers to questions asked in the other place. They looked at income support as expressed as a percentage of average earnings for a variety of income groups. The figures will not be a surprise to the Minister or to the rest of the House, but they reinforce a point about the core level of benefits in relation to average earnings and about what people are expected to live on.
A single person aged 18 to 24 is expected to live on 10.15 per cent. of average earnings. Another example is a single parent with one child under 11 who is expected to survive on 21.78 per cent. of average earnings. The highest figure is in the example of a couple with two children aged 13 and 16--expensive teenagers--who are expected to live on 37.76 per cent. of average earnings.
It is perfectly reasonable to expect people who are in transition to go through a period when they live on a third of average earnings, even if they have expensive
teenagers. However, the figures for households with below-average earnings show that some families with children have been living at those benefit levels for seven years. Some 11 per cent. of families are in that position. Significant numbers of families are living for long periods at that level of income disadvantage compared with average earnings.
What is income support for? If it is only to be a bridge to a better benefit, such as welfare to work, that is fine. One can survive on income support for six months or perhaps a year, but then the washing machine or another substantial item of household machinery goes wrong and has to be replaced. A downward spiral then begins, as the Acheson report and the earlier Black report demonstrated when they discussed the problem of levels of benefit leading to a bad diet and poor health and housing. I worry that the current core rates of income support for the long-term unemployed client group are inadequate, and we should carefully consider that matter.
Mr. Webb:
My hon. Friend made an important point about the poverty of people who are on benefits for a long period. He will know that the old supplementary benefit system had a higher long-term rate. Does he accept that there is a problem in increasing people's benefits when they have stayed on benefits long enough to qualify for the higher rate? Does he have an answer to that paradox?
Mr. Kirkwood:
No. That is an enormous problem. If people get more money after they have been on benefits for five years, they may be tied more tightly into the benefits system. I am certainly not saying that any of this is easy.
My hon. Friend made a sensible suggestion about introducing a special pensioner index. We should also consider more carefully the work done by the family budget unit. We should think about what a minimum income should be, because income support levels do not reflect the needs of a family. The family budget unit has used its own resources to do extremely valuable work and it has tried to work out what a modest but adequate income would be. I support that work, and I hope that the Government will study it.
None of the official statistics properly reflect the level of indebtedness of many of the households that I come across. It is all very well to specify income levels on which people are expected to support themselves, but we must recognise that many people have store cards and credit cards and some regrettably are even in debt to loan sharks. Even with an average income, they would struggle to get through the next two or three years. They cope by working from week to week, on a cash basis, and by robbing Peter to pay Paul. To do that year in, year out is debilitating and causes immense stress. That is the principal reason for the high level of family break-up in this country, which is worse than that in other European nations. Not enough is being done to deal with that problem.
I turn now to the promotion of entitlement to benefits. I wonder what it would cost to impose a duty on the Benefits Agency to maximise people's entitlement to benefit. I recognise that the administration is under a lot of pressure and that it has a big budget and an amazing task to do and that the staff do a very professional job in delivering benefits. However, claimants would be more
confident that they were dealing with people who were on their side if they knew that agency staff had a duty not merely to respond to questions about entitlement to a particular benefit, such as severe disablement allowance, but to point out potential entitlement to housing benefit or council tax benefit, if that were obvious to them.
The Benefits Agency should have a statutory duty to use its best endeavours to ask questions of all claimants and to maximise their benefits. At the moment, that does not happen. I do not know what additional administrative costs would be involved, but if the agency were told to do that, it would have to do it. The House should seriously consider that proposal.
| Next Section
| Index | Home Page |