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Mr. Corbyn: I am pleased that the Select Committee will consider housing benefit. Will it look beyond the question of fraud and benefit tapers to the benefit's overall costs, including administrative costs, particularly in inner urban areas, where rents are sky high because of deregulation under the previous Government?
Mr. Kirkwood: I confess that, coming from a relatively rural area, I was staggered to learn from some Labour members of the Select Committee about problems in areas such as the hon. Gentleman's constituency and about rent levels. One could acquire a modest estate in Roxburghshire for some of the rents being paid for single room flats here in London.
Mr. Corbyn: Give me the address.
Mr. Kirkwood: If anyone is interested, I will provide contracts for estate agents after the debate.
Housing benefit is a problem that needs to be addressed seriously, and I hope that the Select Committee report will make a positive contribution to that.
Prompted by the earlier intervention of my hon. Friend the Member for Northavon (Mr. Webb), I remind the House in passing that the old supplementary benefit system used to contain an element to take into account water and sewerage charges. I do not know whether this is true for the rest of the country, but some of the increases in water charges in Scotland are swingeing, and there is no accommodation for that or for the costs of increased sewerage charges in the current income support system. We need to look into that.
I am also coming to the conclusion that the council tax property bandings militate against the poor much more than they used to do. A recent report from the New Policy Institute starkly demonstrated that the incidence of council
tax benefit was prejudicing people on very low incomes in modest accommodation. We need to consider that problem.
I shall not dwell on capital limits because my hon. Friend and others have referred to them. It is high time that the Government dealt with those limits, which penalise saving. They were last revised in 1988, so change is a long time coming. Earnings limits also cause me concern because they penalise work. I shall give the Minister two examples, which are always cropping up in my constituency surgery. The first is the therapeutic earnings limit for severe disablement allowance and incapacity benefit, which is now set at £58. That is too low if one believes that it is important to try to encourage people into work. That earnings limit could be increased modestly, but regularly. The same is true of the situation facing carers. The earnings limit for invalid care allowance is £50--below the lower earnings limit for the national insurance system. Surely increase to such earnings limits should be addressed in these orders.
The parental leave proposal will have an important social impact. The orders do not directly address the issue, but the Select Committee reported on it. Before the inquiry, I was very sceptical about making such leave paid, but there is overwhelming evidence that the Government's proposal is likely to be useless and irrelevant without some form of payment. Payment would help enormously, bind family groups and assist in meeting some of the Government's other perfectly proper social targets. I hope that that will be considered urgently.
Although I am intrinsically against rejecting orders such as these, I support my hon. Friend the Member for Northavon. If I were Secretary of State--we are all playing Social Security Secretary in this debate--I could not in all conscience simply valorise these pension increases. I would double them because pensioners were led to expect a return for the national insurance contributions that they made. The Minister gave me a bit of criticism for being a little superficial about the £16 billion, but it is a lot of money. If we cannot increase pension upratings by more than 1.1 per cent. against the background of a massive £16.6 billion surplus, when will we ever give such increases a little consideration?
Such consideration could have been justified by the argument that it is necessary to discharge the duty and liability that was undertaken under the national insurance scheme. My hon. Friend is absolutely right and, if he divides the House, I shall--very unusually on this subject--be happy to follow him into the Lobby. These are wholly exceptional circumstances. It is impossible successfully to argue in front of a group of retired people that a 75p increase is right in the circumstances. The House should respond in the way in which my hon. Friend suggests.
I should like to say a word about overseas pensioners. I know that the Minister of State receives the same e-mails as I do from Canada, Australia and other exotic places. When the Select Committee visits Australia, I have no doubt that we shall spend much of our time dodging pensioners whose pensions have not been uprated for many years.
I am not advocating immediately finding the £400 million or £500 million that it would cost to put things right. However, it is contrary to natural justice to
leave such pensioners languishing without any uprating consideration. Something should be done--even if we give them only a small amount this year. I am arguing not for gesture politics but for a recognition of an honourable commitment that pensioners look to us to fulfil. I am disappointed that hon. Members who usually take an interest in these debates are not present this evening to continue to support that case.
I am not saying that we are short of reform or that the Government are not doing anything but, as well as the delay to which my hon. Friend the Member for Northavon referred, there is piecemeal approach to social security policy, especially for those who cannot reasonably be expected to work. I want the Government seriously to consider that. I welcome public service agreements and all the other performance indicators that the Government have set out at length, because they will be helpful in trying to measure performance.
I am generally IT-friendly, but even I am worried about the impact of ineffective computer systems on the delivery of benefit mechanisms. I do not need to tell the Minister that. The Child Support Agency computer system and NIRS2 are causing problems, and the working families tax credit might cause some computer problems as well. If implemented properly, computerisation can help, but much more work needs to be done.
Mr. Tony McWalter (Hemel Hempstead):
I shall evaluate the orders from the perspective of those of my constituents who have a very strong sense that a major injustice has been visited on them, considering the extent to which it is fair of them to think that and what can be done about it. Their sense of injustice is, of course, partly because of the 75p uprating. Many have also contributed to an occupational pension and saved all their lives, but feel that they are getting precious little in return. One might add some stuff about long-term care and worries about how savings and occupational pensions will not protect pensioners in that difficult area.
I differ significantly from the Liberal Democrats' stance on the 75p increase, although I was tempted by one idea that came out in debate across the Floor of the House. Pensioners seem worried not so much about the precise amount of the increase but that it represents an erosion of their living standard. Even if there were a pensioner index and that produced a 78p uprating, pensioners might not be satisfied with it, but they would not have such a sense of erosion--however small. Their perception is that they have contributed to the fund throughout their working lives but year on year it entitles them to--however little--less.
The Government should seriously take on board such structural matters in the orders, although I realise that structural matters cannot be part of this debate. A separate pensioner index could address the sense of injustice, but it might lead some time down the road to upratings of less than the rate of inflation. I therefore agree with what eventually emerged in Liberal Democrat policy on
the hoof: we should take the greater of the two figures and allow pensioners to share in the country's improving wealth, but not if it led to an alarming rate that might generate inflation.
From talking to my pensioner constituents, I have found that some would be perfectly happy with an increase of, say, £16--a nice big figure--even though it might result in inflation raging at the levels sometimes witnessed under the Conservative party in the late 1980s. The Government, in fact, are keeping inflation down for pensioners; they are maintaining the erstwhile purchasing value of pensioners' savings. We cannot have it both ways. We cannot lament the low increase and suggest a much bigger one without considering the inflationary consequences and the threat of derailment of a well-managed economy, from which pensioners benefit. That is important. If a marginal change in structure were accepted by the Government for future orders, we could tackle the feeling of anger on the part of some pensioners that the system leads to the unjustifiable lowering of their standard of living in some years.
However, the Government have not left the matter in limbo. They have targeted the poorest pensioners by including the minimum income guarantee. We all know the difficulties involved in getting people to claim that. They feel reluctant to do so, and the barriers in the way of claiming it are substantial. The Government are committed to lowering those barriers and making it much easier for people to claim the minimum income guarantee.
That could have been done more easily if the increase were a nice round figure. It is much more difficult to publicise a sum consisting of some pounds and some odd pence than a round sum such as 80 quid. Everyone can understand that. A simple headline figure, slightly larger than the Government propose, would assist publicity. People would focus on the £80, rather than on the 75p. That would get over the idea that a single pensioner cannot be expected to live on the new pension level of £67.50.
A marginal change in the minimum income guarantee to a round figure that was easily publicised would help us all. We have all tried to get across to people what that figure is, how much difference it could make to their lives and what improvement it could provide.
When dealing with some of the other anomalies in the system, my hon. Friend the Member for Gedling (Mr. Coaker), who is no longer with us, mentioned three categories of pensioners--rich, in the middle or poor. That is not a sufficiently fine-grained distinction. I would divide them into four quartiles.
Pensioners in the third and fourth quartiles have under-average earnings. It is important to deal with not only the poorest--those in the fourth quartile--but those with under-average earnings, who may have ploughed a great deal of energy and effort into trying to build up an occupational pension and savings, in the third quartile, where much of the feeling of injustice resides.
That is where a huge number of anomalies in the current system exist. As we increase the minimum income guarantee--rightly--by more than the level of earnings and by more than the level of headline inflation, we nudge ever closer to the incomes of people who have put by all their lives and are now above income support levels, but have standards of living below income support levels.
If, under the new figures, the income of those pensioners is £80, they cannot claim income support, so in my patch, for example, they cannot claim a Dacorum travel card for cheaper travel on the buses, and various other benefits that follow from being on income support. The sense of injustice may be heightened, unless we take more specific account of those on modest occupational pensions.
We have also heard about the threshold for savings. I know that that is under review. It must be addressed, as it compounds the sense that pensioners are being treated unjustly. From the Opposition Benches we heard a spectacular figure for the amount of savings needed to generate income support. A reasonable figure for savings is about £12,000, which would provide a top-up to the basic pension. The interest on £12,000 would take the income a little above income support level--not the £49,000 suggested from the Opposition Front Bench.
That figure was arrived at by compounding all income support, not just income support for pensioners. That would produce an average of £60 a week, but it is not relevant to the present debate.
We must recognise pensioners' sense of injustice and belief that they are not being treated fairly. In some ways, that sense of injustice is erroneously directed. If the increase is low, it is because we have kept inflation low and we have tried to allow pensioners to benefit from a well-managed economy. However, many other aspects of the system need change, such as the threshold and the provision for capital allowances.
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