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Mr. Willetts: My hon. Friend is an expert, and has contributed useful information about the reforms in Mexico. He is quite right.

Attending a conference on this subject, I was struck by the radicalism of the Chinese Government's proposals. A former general in the Red Army, who is now roughly the equivalent of the Minister of State--[Laughter.] He

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spoke of the desirability of encouraging more funded pension saving in China, so that people would be less dependent on pay-as-you-go systems. My hon. Friend is right: this is an international trend.

Mr. Robertson: China, of course, boasts two systems. There is a political system, in which people say what they really think should happen, and an economic system, in which people have come to realise what must happen. Anyway, I am delighted to learn that the Chinese are also showing us the way forward.

We have developing countries and Communist countries, and here we are lagging behind, in the hope that if we are elected on 3 May--or, hopefully, earlier--we are given a chance to offer people the prospect of a more prosperous retirement.

I have spoken for longer than I intended, but I want to mention one or two other issues that concern me. The first is that of disability living allowance claims. I am sure that all hon. Members can cite cases of constituents' being done down, but I believe that in many cases people are making justifiable claims. Not only are those claims being turned down; when they go to appeal, the process is stretched out. In the case of my constituent Mr. Orrey, papers were lost and the case goes on and on. My constituent has not been given the correct treatment, or the money that is due to him. I urge the Government to look closely at what is happening, especially at the appeal stage.

We heard a little about how certain benefits would be paid to people of the same age, whether they were male or female. Will the Minister tell us his intentions in regard to widows' benefit?

As I said, I have spoken for rather longer than I intended. Let me echo what others have said, and also wish Members on both sides of the House a happy festive season.

1.59 pm

Mr. Archy Kirkwood (Roxburgh and Berwickshire): I am very pleased to be able to speak in this debate. I start by immediately acknowledging the important and valuable role played by the hon. Member for Tewkesbury (Mr. Robertson) on the Select Committee on Social Security. He works assiduously in Committee and his experience is highly valuable to us. We look forward to his contribution continuing for a long time to come.

I should like to make just a couple of comments which are additional to those that have already been made. I agree with the hon. Member for Gedling (Mr. Coaker) and other hon. Members that this debate--academic seminar or not--has been very good. I concur with much of what has been said and do not have to repeat points that have already been made.

The tone of the debate, however, has not fully reflected a fact pointed out by my hon. Friend the Member for Northavon (Mr. Webb)--that, for a variety of reasons, many families and domestic households in the United Kingdom are forced to live below income support levels. However good today's uprating statement may be--I have seen many such statements, and this one is better by a margin than most--we must not forget that some households struggle, sometimes for a long time, on incomes that are below the income support levels set by the Government.

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The House will have to return to that issue. The Social Security Committee is examining the social fund partly to begin to address precisely that issue, and I hope that we will be able to make some constructive suggestions.

I am concerned also about the debt levels that I hear about in my constituency casework. None of the official statistics--as good as they may be; although, historically, as my hon. Friend the Member for Northavon said, they have been out of date--record debt levels. I am increasingly concerned about the role of loan sharks and the extent to which they are able to charge ludicrously high, usurious rates of interest to provide cash to enable some households below income support level to get by from week to week. We should bear that issue in mind.

We should remember the context in which the uprating statement--which, as I said, is generous--is being made. I concur with my hon. Friend the Member for Northavon that the increases--particularly the 5 per cent. increase in the retirement pension and widows' bereavement benefit--are extremely welcome. However, table 4 of the Government Actuary's report on the uprating orders--Command Paper 4933, at page 8--which deals with the balance in the national insurance fund at the end of successive financial years, shows that, at 31 March 2000, the percentage of benefit payments in the previous financial year was 31.1 per cent. It predicts that, for 2001, the percentage balance in the national insurance fund would be 39.1 per cent; and that, for 2002, it would be 41.1 per cent.

As we all know, the Government Actuary's recommended fallback, minimum residual working balance is 16 per cent. Therefore, the national insurance fund has working balances that considerably exceed the Government Actuary's recommendation. He forecasts considerable surpluses in those years. He predicts that, for 2000-01, it will be £3,981 million. Therefore, although the Government's November announcement on disability benefits--which the Secretary of State mentioned at the beginning of the debate, and increased expenditure by £200 million--was generous and is very welcome, it should be put in the context of the available sums.

The academics, by whom I am surrounded, will no doubt say, "The Government have already announced plans to spend some of that surplus." I agree that we have to have stability in the national insurance fund, and I am not saying that we should be profligate. Indeed, in our report on the contributory principle, the Social Security Committee made some suggestions about how we could constructively spend some of that money and stay within the general stability targets. Nevertheless, I hope that hon. Members will bear in mind that the position of the national insurance fund is currently quite healthy. We should bear that fact very much in mind.

I should like to underscore the importance of dealing with a situation that is emerging as a result of the Government's attempts, quite rightly, to increase take-up of the minimum income guarantee. My hon. Friend the Member for Northavon was absolutely right that we cannot allow the matter to rest if the number of those who refuse to respond to the Government's blandishments to get in touch remains so high. However, I do not think that the Minister was saying that we should let the matter rest, and I agree that there is disagreement on how the figures should be interpreted.

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I agree with my hon. Friend the Member for Northavon also that we should be considering ways of discovering and testing--even if, initially, it is only through a pilot project, and working locally with citizens advice bureaux, local authorities and others--why there is such a poor take-up rate for the minimum income guarantee. The Government's policy is focusing very much on developing means-tested benefits. If they are serious about using such benefits, they should realise that, as useful as it has been, simply mounting a one-off take-up campaign is not enough. It would be complacent of Ministers to think that everything is all right and that they need to do nothing else. I hope that Ministers can be persuaded to re-examine the issue and introduce further measures. I would be happy to try to encourage local activity, and I am sure that all hon. Members would like to increase uptake of the minimum income guarantee.

I confirm the point made by the hon. Member for Tewkesbury that the Social Security Committee will be watching very carefully how uptake and the matter of the pension credit unfold. If we do not get better uptake levels, and if the pension credit does not deliver as Ministers and the rest of us hope that it will, I for one would be very willing to return to the idea of relating the uprating to earnings. It is a live issue to which we propose to return.

If we have means testing, there should be an attempt to adopt a light touch--which is a phrase that appealed to me and was used by Professor Jane Millar when she gave evidence to the Social Security Committee on the integrated child credit inquiry. The Government should attempt to develop the concept of means testing with a light touch. Some of the changes in capital limits are a move in the right direction but need to go further.

I am grateful that the non-dependent deductions for housing benefit have not been uprated from April 2001. However, although that is very welcome, the Government could have been expected to go further. Indeed, some of us anticipated that they would go further. The Committee recommended that the higher deduction rates should be abolished completely and that the number of rates should be reduced, as that would not only create simplification but increase the available sums. The Government must consider that to be unfinished business. If they do not, people will be rightly disappointed. Additionally, housing benefit is now the biggest block to work incentives embedded in the social security system. The Government's document was a bit disappointing by not pursuing further reform of housing benefit tapers and disregards. I hope that Ministers will return to the issue.

I have a technical question to which the Minister could reply in writing. I am puzzled about the future of contributory additions for children. As hon. Members know, the additions are paid to children of widows, retirement pensioners and those who are on the long-term rate and the higher short-term rate of incapacity benefit, and recipients of invalid care allowance. The additions have not been uprated for years.

There seems to be no justification for reducing the real value of those children's allowances, which are part of the contributory benefits system. They have not been mentioned in any of the Government's plans to integrate the "streams of income" for children that the tax and benefit systems provide. I should like to know the future of the additions. If I cannot have an answer today, a letter would be very welcome.

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There is still a question about the future of child benefit, and some assurances from Ministers that child benefit will continue to be fully uprated in future would not go amiss. There are some misgivings among pressure groups and the academic community about that matter.

My penultimate point--bringing me back to where I started--is that it would be very valuable and useful if Ministers could aspire to provide modest, but adequate minimum income levels. Other European countries have developed systems that help people to measure the progress of Governments in a way that some other performance indicators do not. I hope that that concept will be studied by Ministers.

Finally, the one element missing from the debate so far has been the vexed question of frozen pensions for overseas pensioners. I know that the matter has been raised before, but this is the appropriate debate in which to raise it again. I still receive regular and heart-rending letters about the unfairness of the system.

I admit that it is not so much a poverty issue. The people who write to me and bombard me with terabytes of e-mail information are not necessarily poor. What irks them, especially given the positive balances in the national insurance fund, is that nothing is being done.

The Minister may say that rectifying the problem all at once would cost a lot of money, and that would be especially true if payment were to be backdated. I am not calling for that, but something has to be said on behalf of that dwindling group of pensioners. There is a comfortable surplus in the national insurance fund, and some gesture to them is needed.

The Social Security Committee has recently undertaken study visits to Canada and to Australia, and both have been very instructive. We were given a very clear idea of the damage done to the relationship between Britain and those very valuable members of the Commonwealth. That damage should not be overstated, but it should not be underestimated either. It stems from the fact that Britain is walking away from the problem and refusing to pay any attention to the legitimate claims of people who have some entitlement to consideration in this uprating statement, especially given the positive balance in the national insurance fund.

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