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27 Feb 2003 : Column 433—continued
Mr. Smith: I welcome my hon. Friend's remarks, and I am very pleased to hear that our measures are making a difference to poorer pensioners in his constituency, as they are across the country.
I shall try to speed up my remarks because I am aware that the debate is more truncated than some hon. Members would wish and that a number of hon. Members want to take part.
In addition to the extra spending that I have already announced, we will go further. From this October, the pension credit will not only guarantee a minimum income but reward those with modest savings and occupational pension incomes, providing, we estimate, an average gain of about £400 a year for half the pensioner households in Britain. Thanks to all our reforms, pensioner households will be more than £1,150 a year better off as a result, and the poorest third of pensioners will have gained £1,500 a year in real terms.
Andrew Selous (South-West Bedfordshire): Although the Secretary of State has just said that take-up is supposed to be better with the Pension Service, is he not concerned by the predictions from his Department that the take-up of pension credit is expected to be only 67 per cent.?
Mr. Smith: I have said already that I am concerned that the take-up of the help to which people are entitled should be as high as possible. The figure to which the hon. Gentleman refers is not a prediction; it is an operating assumption. We have to plan the expenditure using an assumption. However, if he is asking whether I am aiming for that target, the answer is that I am not—I want to ensure that take-up is as high as possible.
I shall write to all right hon. and hon. Members next month to set out our plans to ensure that people take up the pension credit to which they are entitled. We will automatically transfer current MIG recipients on to the pension credit, establish a freephone number for applications and launch an information campaign. For the first time, people will be able to make claims over the phone without having to fill in complicated forms—that will be done for them. The forms will be sent to them, and all they need to do is sign them—so we are simplifying the process.
Those measures, combined with the state second pension, which will benefit some 18 million people, will help all pensioners. We are making a real difference to the living standards of all pensioners, but those measures will help the poorest pensioners most of all.
Hywel Williams (Caernarfon): I am slightly concerned that the Secretary of State seems to have jumped several generations, from talking about poverty among children to pensioners. Does he intend to address the income support available to younger people—those under 25—who are very clearly in poverty? I note from the table provided that the increase will be a whole 55p
this year. Does he suggest that they perhaps buy a weekday copy of The Guardian with that money, as that is all they could manage to do with it?
Mr. Smith: I would not attempt to prescribe what people should spend their benefits on. I take the point that the hon. Gentleman makes about people's needs. As I said, the amounts are being uprated in the proper way and, as he will be aware, the Government have made a big drive to give more help to disabled people. We have advanced their rights in an unprecedented way by creating the Disability Rights Commission. Moreover, we have not only improved benefits in the way that I have already outlined but launched pilot schemes that will help would-be recipients of incapacity benefit to stay in work or move into jobs. We should never forget that up to 1 million disabled people say that they want to work, and too many barriers are in the way of that at the moment. This Government want to remove those barriers and enable disabled people to work, while at the same time providing security for those who are unable to work.
In drawing my remarks to a close, it is evident that the measures that I have described will benefit a large number of children, parents and pensioners. They carry forward our reform of the welfare state and our mission to tackle all forms of poverty. Through policy reform, getting record numbers into jobs and tackling fraud, we are able to target extra resources on children and pensioners who need help most. This order helps us to build a Britain that fulfils potential, opens up opportunity and tackles poverty, and I commend it to the House.
2.10 pm
Mr. David Willetts (Havant): We will not oppose the order, and we will certainly not make the mistake famously made by the Liberal Democrats a couple of years ago of trying to vote against any increase in benefits. That was almost as much of a cock-up as the one that we have had today, which means that we cannot have this debate on the scale for which Members on both sides of the House would have wished. Sadly, the uprating debate has shrunk from a full day to three hours. It is a great pity that we have only an hour and a half on this order. I appreciate that that was an accident, but I hope that we will revert to the old arrangements in future.
As we now have less time than we had hoped, I will have to set aside my extensive indictment of the Government's record on social security, powerful and compelling though the evidence was. I am sure that it will be recycled on another occasion. Instead, I shall make some brief remarks.
First, this is a melancholy occasion, as this uprating order marks the disappearance of a range of benefits from the responsibility of the Department for Work and Pensions as they become tax credits to be run by the Treasury. We understand that Whitehall's arrangements are always being changed, but this change may result in a poorer quality of policy making and decision making. In so far as there is accumulated expertise anywhere in Whitehall on the needs of poor people and how to run their benefits, it lies within the old Department of Social Security, which is now the DWP. I am surprised that
Labour Members do not appear to agree with that, as it seems clear to me that the Inland Revenue rightly focuses on extracting income tax from the better-off. The idea that the Inland Revenue should send out giro cheques to millions of people, which will start in April, seems absurd.We are told that the new arrangements will be seamless, but the reality is that an unemployed family will receive a child tax credit from the Inland Revenue to cover the costs of their children, while separately receiving from the DWP an unemployment benefit payment for the adult. That seems a far clumsier system than the one that it replaces. I hope that the two different Departments will co-ordinate their approach to one family, but it is a significant risk. As one Blairite adviser observed to me, the Chancellor of the Exchequer may not believe in contestability when it comes to health or education, but he certainly does when it comes to benefit systems, as we will now have two. I hope that the two systems can work successfully.
In the background to today's uprating is yet more means-testing. The benefits that we are uprating include further extensions of means-tested benefits as a proportion of the total social security budget. Rather than quote to the Secretary of State yet again the notorious commitment by the Chancellor to the Labour party conference 10 years ago to end the means test, I might go back further to an episode described in Alan Bullock's biography of Ernest Bevin, in which Bevin tried to persuade the tinplate workers of south Wales—[Interruption.] I knew that the Minister for Pensions would be interested when I mentioned Ernest Bevin. He tried to persuade those tinplate workers to join an occupational pension. He negotiated it with the employers, but his members rejected it. Bevin went to his council of the T&G in 1937 and said the following:
- "I think it is a tragedy for south Wales, but it appears that a large number of the men take the view that if they become party to a superannuation they are merely saving the Unemployment Assistance Board expenditure. When a large community develops a relief complex of this character it is not good for democracy."
James Purnell (Stalybridge and Hyde): As the hon. Gentleman is taking us on a trip down memory lane, will he confirm that he was an adviser on social security policy through almost the whole of the Thatcher Government? Does he therefore regret that they froze child benefit and froze pensions in real terms, and that the income of the bottom 10 per cent. of people fell in absolute terms—not in relative terms—by about 20 per cent.?
Mr. Willetts: We always have this exchange. I do not recognise the figure of a 20 per cent. fall in the real incomes of the poorest part of the population. I simply do not accept that.
What I want to talk about is what this Government are doing in uprating benefits. The problem of means-testing is not just its effects on behaviour but the problems of take-up to which reference has been made.
It is a great disappointment that we still have no take-up figures for income-related benefits for any year later than 1999–2000. They should have been published at the latest by last September, when we were suddenly told that they could not be released until research had been concluded on how to
- "better identify people who are eligible for income-related benefits, especially pensioners." —[Official Report, 15 October 2002; Vol. 390, c. 645W.]
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