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2.11 pm

Mrs. Jacqui Lait (Beckenham): I was somewhat puzzled that the House should debate this important matter on the day that we rise for the Christmas recess. It was almost inevitable that the debate would not attract large participation by hon. Members, although it is interesting that it has benefited from the sheer quality of contributions. I want to thank all who have taken part in a debate that has ranged very widely over social security policy. The quality of all contributions has been exceedingly high. I suspect that I am about to reduce the debate to the mundane, but I shall try very hard not to.

The debate began with the Secretary of State making essentially the same speech that he made when he announced the uprating. It really took off and caught fire when my hon. Friend the Member for Havant (Mr. Willetts) challenged the Secretary of State's strategy on social security policy. We could see the interest in the Chamber in what he was saying. I thought that the members of the Government Front Bench also enjoyed it, and I noted that they participated regularly in the discussion.

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I am glad that the hon. Member for Northavon (Mr. Webb) is still with us, and I hope that he manages to stay to the end of the debate. He also contributed in a very thoughtful manner, as did my hon. Friend the Member for Tewkesbury (Mr. Robertson) and the hon. Member for Gedling (Mr. Coaker). Many people have analysed the minimum income guarantee and the problems with take-up. I am sure that all hon. Members would agree that there needs to be more research into how we can ensure that people entitled to benefits get them. I have not been in the House as long as the Secretary of State, but my memory is long enough that I recall the previous Conservative Government trying very hard to encourage people to take up the benefits to which they were entitled.

Although I do not want to reduce the debate to the mundane, one question is hard to avoid. The Government claim to be radical and reforming, so why do the texts of the statutory instruments containing the regulations have to be presented in a way that is completely incomprehensible to outsiders? I hope the measure contained in the Queen's Speech to simplify tax legislation successfully completes its progress through the House, but I hope that similar legislation can be introduced with regard to benefits--at least in respect of simplifying the uprating statement. I shall not read out any examples, as I am sure that all hon. Members know what I mean.

I was glad that the statement contained the Conservative policy that invalid care allowance should be paid to carers over retirement age, and that the Secretary of State should have seen the need for that. As my hon. Friend the Member for Havant said, we agree with a number of elements of the statement and do not plan to vote against it. However, questions remain to be asked, one of which was raised by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood). That is the problem involving frozen pensions for pensioners living abroad.

In fact, I noticed that one of the questions in today's Order Paper dealt with what will happen to the pensions of people who have lived in Australia. I understand that the Minister of State has answered that question and indicated that the benefit entitlement of people who have worked in Australia will be recognised, provided that their work began before April 2001.

However, it would be helpful to know what will happen with regard to people who want to work in Australia after that date. Given the other problems involved with communicating with people and informing them of their entitlements, what plans are there to ensure that people working in Australia after April 2001 will know about their entitlements? In addition, any clue as to what will happen with regard to people in Australia who receive British pensions is conspicuously absent.

The Under-Secretary of State is to reply to the debate, and he and I have crossed swords about capital limits for disabled people. However, I hope that he will comment further on the matter. I understand the situation with regard to capital limits for pensioners, but we still have had no answer about capital limits for disabled people. It would be helpful if the Minister could address that matter, which has been raised a number of times. I warned that I might reduce the debate to the mundane, but some questions have to be asked, and answered.

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No mention has been made of the second order, which deals with the guaranteed minimum pensions increase. It is therefore incumbent on me to raise the matter. The order is fairly standard, and raises by 3 per cent. the guaranteed minimum pension to be paid by occupational pension funds.

The problem this year is that inflation is above 3 per cent--the order quotes a rate of 3.3 per cent. That means that the state will have to pick up the bill for the difference, as required by the legislation governing contracting out. That emphasises that the Government face a problem with their economic policy, as inflation is higher than 3 per cent.

The previous Government introduced the 3 per cent. rule as part of our campaign against inflation. However, the Government's general policy on social security and spending, which means that growth will be higher than the rate of expected economic growth, will add fuel to the inflation flames. I hope that the Under-Secretary will be able to give us some idea of how much he expects the social security budget to be affected by the change in the inflation rate.

The issue of increases in the payments to rest homes, known as preserved rights, has not yet been mentioned. This year the rest home payments will be increased to £225 a week and the figure for nursing homes will be £337 a week. It is generally reckoned that the genuine cost is about £250 and £400 a week respectively, so care home owners are losing out dramatically in the amount of money that they can spend on their residents.

The Government's NHS winter strategy depends on ensuring that people are taken out of hospitals and put into care homes to stop the trolley waits. However, rest homes and nursing homes are closing at an increasing rate--15,000 beds have gone this year--and because property prices are going up, more and more people are able to sell their homes and get out of the market, thereby reducing the number of beds available. This uprating does not, in any way, shape or form address the Government's political problem; indeed, it will exacerbate the crisis that will almost inevitably hit the NHS, come the new year.

Finally, I turn to the unwarranted increase in the national insurance upper earnings limit of £2,080 a year. This is yet another of the Government's stealth taxes. It has hardly ever been mentioned; it has been slid out quietly so that no one knows that they will be hit by an increased tax. Like the withdrawal from the pension funds and like the fuel duty taxes, it adds up to a huge impost on the basic pay of every individual. The way in which the Government have slid out this increase is reprehensible.

We have spoken at great length about the pension credit and we will be examining its effect very carefully. However, when people have forgotten that the benefits and the pensions interacted at 100 per cent. level, they will in due course see this as a tax rate of 40 per cent.

As we have said, we will not be voting against the order. It is a Christmas present for the Government, and I wish everyone a happy festive season.

2.22 pm

The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley): I, too, would like to enter the spirit of things. I wish you and your family a

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happy Christmas, Madam Deputy Speaker. I also wish all Members in the Chamber and their families a happy Christmas, and relatively good fortune to some in the new year.

Right hon. and hon. Members on both sides of the House have entered the Christmas spirit by coming up with extremely generous spending proposals. It is important to reconcile spending proposals with the overall budgetary policies that the parties follow. The proposals from the official Opposition for increased expenditure do not square with their policy to reduce public expenditure by £16 billion. That would make Christmas a rather mean and threadbare affair, especially when we consider the social policies introduced by the Government.

The hon. Member for Havant (Mr. Willetts) was the first to create the atmosphere of a seminar which I think made for a good debate. Some real issues of social policy were discussed. He made the criticism that the Government do not have a coherent, overarching social policy. I believe that we do. Our policy focuses clearly on poverty reduction. We have stressed the importance of work. We have modernised and changed fiscal and social security policy to pursue those aims, with remarkably good results. This year we will be spending £4 billion less on unemployment benefits, which creates the space and opportunity to improve benefits for others whose age or circumstances mean that they cannot work.

I ask the hon. Gentleman to reflect on what it was like when his party was in government. During those 18 years, the number of workless households--families with people of working age who did not work--doubled, as did the number of children growing up in poverty. Was that as a result of the Conservative Government's clear and overarching social policy or was it a failure of their social policy?

Let me say to the hon. Member for Beckenham (Mrs. Lait) that the regulations debated in Committee a few weeks ago which increased the capital limits in relation to a minimum income guarantee for pensioners from £3,000 and £8,000 to £6,000 and £12,000 have been widely welcomed by pensioners. The regulations were also welcomed by Liberal Democrat Members on the Committee and, indeed, by the hon. Lady herself. We are introducing these improvements to the capital limits--which were frozen for a decade under the Conservatives--as a staging post towards the introduction of a pension credit, which will provide a real incentive to people to work hard and save hard during their working life.

We are not applying those changes in relation to people on working-age benefits because the considerations are different. If the hon. Lady had listened to the debate in Committee, she would know that; as it is, she can read the record. We have been successful in pursuing policies to ensure that work pays--to create incentives so that people of working age who can work do work. That is why there is a difference between the two age groups.

The hon. Lady spoke about the invalid care allowance. She flatters herself if she believes that the Conservative party's representations on the invalid care allowance led the Government to increase the age at which people can apply for the benefits. She flatters herself if she thinks that carers believe that the Conservative party is genuinely interested in providing more support for older carers. Let me remind her that the invalid care allowance was

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introduced by the previous Labour Government in 1976. The Conservative party was in power between 1979 and 1997. If they had wanted to extend the allowance to people applying over the age of 65, they had 18 years in which to do so, and they did not. Within three years of our coming into power, we did it. We did it because we thought that it was right, and I presume that the Conservatives did not do it because they thought that it was wrong.

The hon. Member for Northavon (Mr. Webb) spoke about the winter fuel payment. It has been increased to £200 for this year because the Government wish, in the period leading up to the introduction of a pension credit to do more for pensioners on modest incomes. We are this year doubling the value of the winter fuel allowance to £200. Next year we are increasing the basic state pension by considerably more than inflation--by £5 and £8--to provide more for people who are just above the minimum income guarantee level.

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