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Benefits (Poverty Threshold)

7. Mr. Brian Jenkins (Tamworth): What his targets are for reducing the number of households that receive benefits and which are below the poverty threshold. [89706]

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The Parliamentary Under-Secretary of State for Work and Pensions (Malcolm Wicks): On 18 September 2002, we published a new edition of XOpportunity for All", which provides a detailed account of our strategy for tackling poverty and social exclusion as well as the range of indicators and targets against which we measure progress. The report shows that we have achieved a great deal and that our approach is working. We will continue to deliver on that challenge over the years to come.

Mr. Jenkins : I thank my hon. Friend for that answer. We are all aware that work is the only way out of poverty for many and that we are encouraging people in areas where the number of vacancies is greater than the number of jobless to take a role, but what is he doing to protect the vulnerable innocent—the children—who all too often live in households where income falls below that which we deem necessary?

Malcolm Wicks: We all recognise that over, perhaps, the past 30 years, due to economic as well as social and family factors, poverty in this country began to wear a younger face—child poverty increased significantly. Back in 1996–97, one third of children lived in low-income households. I am pleased to say that, compared with 1997, there are about half a million fewer children in low-income households, based on a relative measure. Given the real increase in incomes, and therefore the moving target that we face, that is a real improvement in tackling relative poverty as it affects too many of our children.

Sir Patrick Cormack (South Staffordshire): In the words of the question, what are the Minister's targets? Has he achieved them, or is he going to?

Malcolm Wicks: The Government have a strong ambition to eradicate child poverty—[Interruption.] If the House will listen, we also have a public service agreement to reduce child poverty by a third. So far, we have gone a third of a way in a third of the time towards achieving that target.

David Cairns (Greenock and Inverclyde): Thirty-nine per cent. of people of working age in my constituency are economically inactive, and we have the third poorest average wage rates in the whole of Scotland. Will my hon. Friend therefore consider urging his right hon. Friend the Secretary of State to site one of the six new pilot schemes giving people on incapacity benefit extra help to get into work in my constituency, as that will go some way towards tackling one of the most serious causes of poverty households?

Malcolm Wicks: I am afraid that the decision on the pilots has not yet been made, but I am sure that my colleagues have heard my hon. Friend's genuine concern. We all recognise that incapacity issues are some of the most taxing facing our society, and our recent document shows our determination to tackle those issues effectively.

Hywel Williams (Caernarfon): Work is the best way out of poverty. However, the rate of economic activity in Wales is much lower than in the south-east of

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England—61.3 per cent. in early 2000 for people over 50 compared with 76.8 per cent. in the south-east. Can the Minister assure us that that gap is being closed?

Malcolm Wicks: We are conscious of regional and local variations in unemployment. So far, the success is that some 75 per cent. of people of working age in Britain are in jobs, which puts us more or less at the top of the European league table—only two smaller countries have a slightly better record. We are not complacent, however, and now realise that our understanding of the causes of unemployment has to be more detailed and specific if we are successfully to tackle them and the issues raised by the hon. Gentleman.

Mr. Bill O'Brien (Normanton): My hon. Friend is correct to draw attention to the action taken by his Department to eradicate child poverty. However, will he explain what he intends to do to ensure that the Child Support Agency, which is not collecting maintenance so some families are driven into greater poverty, becomes more efficient and provides maintenance for the 30 per cent. of children who are losing out at present?

Malcolm Wicks: Certainly, I alluded earlier to family changes that have affected Britain and the fact that many of our children are now growing up in one-parent, rather than two-parent families. That is a major contemporary cause of poverty, hence the introduction of the Child Support Agency, whose performance is improving year by year. We have, of course, introduced proposals for reform. When we are in a position to implement them after thoroughly testing the system and after my right hon. Friend the Secretary of State is able come to the House with dates, they will further improve the situation. With a simpler formula, our colleagues in the CSA will be able to spend more time on enforcement, which is a major step in the right direction.

Pensions Funding

8. Mr. John Bercow (Buckingham): If he will make a statement on the Government's policy towards the minimum funding requirement for pensions. [89707]

The Parliamentary Under-Secretary of State for Work and Pensions (Maria Eagle): Our Green Paper on working and saving for retirement sets out proposals for replacing the minimum funding requirement with scheme-specific requirements that will allow schemes to chose investment strategies more appropriate for their own particular circumstances.

Mr. Bercow : I am grateful to the Minister for her helpful reply. Given the widespread and justified concern about companies which, in choosing to wind up their final salary schemes, universally renege on their pensions obligations to their staff, can the hon. Lady tell the House and me whether, under the new arrangements, companies will be better or worse placed than under preceding arrangements to keep their pension promises to their employees?

Maria Eagle: First, I welcome the hon. Gentleman to the Back Benches—the last time that we jousted in the House he was in a different place. Since he moved, I have

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found that I agree with more and more of what he says. For example, I agreed with him the other morning when he said on television that the Tory party's chances of winning the next election are about as great as finding an Eskimo in the desert.

I have a lot of sympathy with what the hon. Gentleman has just said—he is referring more than anything else to the Maersk situation. Certainly, what that company has done is currently lawful, although we would probably both agree that it is pretty disreputable behaviour by any standards. The Green Paper includes proposals to share out scheme assets more fairly on wind-up and to strengthen protection for members of pension schemes caught in such situations. Pension provision will work into the future only if all parties can trust other parties to keep their pension promises. I look forward to hearing my hon. Friend's response, and perhaps that of some of his constituents, to the consultation on the Green Paper.

Mr. Bill Olner (Nuneaton): My hon. Friend will know that the trade union movement has made specific demands for the Government to protect workers' pensions. Far too many companies have got away with pension holidays and are now reneging on final salary payments. It really is time for the Government to get tough on employers who scandalously expose their workers to poverty when they retire.

Maria Eagle: I strongly agree. My hon. Friend will have noted that the Green Paper contains proposals for stiffening the obligations on companies to consult their employees and unions before making unilateral changes to their schemes. Unfortunately, the current minimum funding requirement did not provide the level of security that many thought it might, and that is why there is widespread agreement in the industry and across the field that we are right to be considering changes to the MFR. One of the difficulties is that it has led to short-term decision making and inflexibility. In a time of fluctuating stock markets, to say the least, short-term decisions are not necessarily the best thing for pensions, which are of course a long-term business.

Mr. David Heath (Somerton and Frome): Does the Minister agree that, when one considers the whole spectrum of investments, including pensions, split funds and life insurance, one can see, without wanting to appear too alarmist, that there is a real risk of people losing confidence in all financial instruments. Is it not therefore incumbent on the Government to apply their mind to the problem with rather more urgency than is suggested by a Green Paper process, which may mean that effective remedy is years and years away?

Maria Eagle: We have to strike a balance between responding urgently to daily headlines and situations that change very quickly and bearing in mind the fact that pensions are a long-term business. We will not get the best framework for private pensions saving over the long term if we react daily and make changes that deal only with issues that are in the headlines. We will not ensure that people save enough in private pensions for their retirement if we do not have the right framework in the long run, so the most important thing is, with as much consensus as possible in the House and across the

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industry, among employees and employers, to get the right system in place to provide the protection and balance that will enable people to save appropriately for their retirement.

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