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10.17 pm
The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): I congratulate my hon. Friend the Member for Dumbarton (Mr. McFall) on his success in obtaining tonight's debate and on his choice of subject. As his serious contribution to this on-going debate showed, indebtedness and poverty are extremely important issues. When my right hon. Friend the Chancellor said today that we wanted all our citizens to share in the growing prosperity of the nation, he was definitely addressing many people who are in the situation that my hon. Friend described so vividly.
My hon. Friend discussed in detail the shameful legacy of the previous Government, who created a divided society in which many were left behind to face a lifetime of poverty with little opportunity to escape. Worse, the previous Tory Government claimed that the poor would always be with us. When Conservative Members discuss such issues across the Floor of the House, it is clear that they still believe that. They take the view that Governments cannot make a difference--and the legacy that we inherited was that one household in five including adults of working age was workless.
As my hon. Friend pointed out, there was a huge growth in the number of children living and growing up in poverty, despite a 90 per cent. real terms increase in
social security expenditure. The bills of economic failure had to be paid, and everything was left to the market, which forced everyone, including the elderly, the weak and the disadvantaged, to fend for themselves. In turn, that weakened or removed the safety net, which was so full of holes that people fell through it.As my hon. Friend eloquently set out, the results of the careless indifference of that approach to society are stunted life chances, loss of opportunity, waste of talent and lives made narrower and undoubtedly shorter. As he indicated, the Labour Government reject that counsel of despair and believe that Governments can make a difference. I welcome my hon. Friend's acknowledgement of the work that the Government have done so far to tackle poverty and the lack of opportunity and fairness in our society, which we inherited.
I agree that that is a huge and challenging agenda, and much work remains to be done. The Prime Minister has set us the tough target of eradicating child poverty in 20 years. By the end of this Parliament, we will be on course to have lifted 1.2 million children out of poverty, which is a good beginning. My hon. Friend mentioned "Opportunity for all", the Government's annual publication of their anti-poverty report, which charts our progress against a wide range of indicators, including levels of income, length of time on benefit, widening educational opportunities, access to health services, child care and other issues. As my hon. Friend said, poverty is multi-faceted and the cure for it is not simple. However, as he pointed out, the cure relies on a multi-dimensional cross-departmental approach, which we are putting in place. I am not claiming that it is perfect yet, but we are working on it. I certainly welcome my hon. Friend's contribution to the debate tonight.
The latest report highlighted the progress made in the three short years in which we have been in power and the two years for which we have published "Opportunity for all". The number of lone parents on income support has fallen by more than 100,000 since May 1997, and the proportion of children in workless households fell to 15.8 per cent. in spring 2000, which is down from 17.9 per cent. in spring 1997. That means that 250,000 fewer children are living in workless households and 300,000 fewer children are in families who claim out-of-work benefits. That is a start, and we are getting somewhere.
The number of children whose parents have been claiming benefit for more than two years has fallen by nearly 200,000 since 1997. Educational standards, which represent the way out of some of these difficulties, are already improving, and the proportion achieving the expected numeracy standard at age 11 is up from 62 per cent. in 1997 to 72 per cent. in 2000. In literacy, 63 per cent. achieved the standard in 1997--a figure that rose to 75 per cent. in 2000. The number of permanent exclusions from school has gone down dramatically.
That is a start, and demonstrates that Government action can make a difference and, indeed, has done so. The national minimum wage has helped 1.5 million people, and there has been a 26 per cent. real terms increase in child benefit in three years. Even before today's very welcome announcements by the Chancellor, all families with children were better off by £850 a year on average as a result of changes in the social security system and the tax system. Working families tax credit is
a key aim, and will make a real difference to many people who now have a real prospect of work for the first time in many years.My hon. Friend vividly described the problems of indebtedness, and many of us recognised those problems from our constituency case loads. We have seen shady people who give out family allowance books to mothers and collect them back after they have come out of the post office and handed their money over. We know what goes on. Problems of indebtedness and financial exclusion exacerbate the problems that are faced by the poorest in our society.
My hon. Friend discussed the role of credit unions and the social fund in providing some answers, and raised the important issue of extortionate lending. We know from our own research that low income families are as likely to use credit as high income families, but use it for necessities rather than luxuries, and get a much worse deal than those who borrow higher up the income scale. We want to tackle those problems. My hon. Friend mentioned the 44 recommendations of the 14th report of the social exclusion unit policy action team, to which we shall shortly be responding in detail.
I have considerable sympathy with what my hon. Friend said about extortionate lenders, and I recognise many of the tactics that he described. Loan sharks are a curse. This matter has been taken up by my right hon. and hon. Friends at the Department of Trade and Industry, and I shall pass on my hon. Friend's comments to them, as they follow up the recent debt summit. They are examining how to update the Consumer Credit Act 1974 to limit the power of extortionate lenders, and deciding on their future policy.
My hon. Friend is right to stress the importance of credit unions. As providers of low-cost credit to people on low incomes or with a poor credit history, they have the potential to make a significant contribution to the fight against financial exclusion. The movement as a whole needs to grow. Credit unions serving deprived communities must be central to that growth, and we are taking steps to support their development.
By 2002, we want to extend the maximum loan repayment periods allowed, give credit unions greater flexibility on disposal of repossessed collateral, remove
the maximum membership limit, and ensure that members receive protection as depositors similar to that received by users of other lending institutions. When a credit union works well it is fantastic, but if it is dodgy it can create enormous problems. We must ensure that with the growth of credit unions comes an assurance that they are above board and that money put into them is safe.My hon. Friend mentioned the changes to the social fund. We have already introduced changes, which have been widely welcomed, to the way in which the budgeting loan system works. Independent research has shown that the change to the budgeting loan scheme has made it easier to use, quicker, more easily understandable and less intrusive for applicants.
Other changes to the social fund in the past three years have included two increases in the amount of money allocated to the grants budget since 1997. Those were the first increases since 1994. There has been a 15 per cent. increase in expenditure on budgeting loans, which is up to nearly £400 million, with a 9 per cent. increase in the number of successful applicants, and only a 5 per cent. increase in the number of refusals. We should contrast that with the Tories' plans to decimate the fund by taking £90 million out of it to pay for their spurious pension proposals, which will hit women, children and people with disabilities, who are the main users of the social fund, far harder than anyone else in society. As my hon. Friend said, they would hit the poorest and most vulnerable harder. It is a cruel policy.
I am not saying that the social fund is perfect. I should like to send my warm wishes to the Debt on our Doorstep campaign, whose representatives I met at the recent party conference. We had a long discussion about some of the issues that my hon. Friend has raised. He is right to say that we need a cross-departmental approach. I promise that I will consider the suggestions that he made and will pass them on to the relevant Departments. I assure him that poverty and its alleviation will remain at the top of our priorities. I welcome his interest in the issue, and the fact that we have been able to have this short but important debate.
- Adjourned accordingly at twenty-eight minutes past Ten o'clock.
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