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27 Feb 2003 : Column 439—continued
Annabelle Ewing (Perth): The hon. Gentleman was talking about the Labour Government's successes in dealing with pensioner poverty. How does that square with the fact that in Scotland one in four pensioners are still living in poverty, after nearly six years of a Labour Government?
Vernon Coaker: I was pointing to the fact we have made the decision to shift a significant amount of resources to the poorest group of pensioners through the pensioner premium in income support, which was an unpopular decision opposed by many in the House. However, we rode out that opposition because we wanted to introduce the change. Other measures have also been introduced, including the winter fuel payment. The Government have tried to address problems, but take-up is still an issue. When I talk to pensioners in my constituency, they are still confused about their entitlement and the forms to be filled in. We must continue to try to find ways of dealing with that, perhaps through the Pension Service.
Mr. Heald: I do not know whether the hon. Gentleman has seen the Pensions Policy Institute paper that was published recently, but it shows that the income of pensioners as a percentage of national earnings is exactly the same now as it was in 1997. In fact, the gap between rich and poor has widened.
Vernon Coaker: I have not read that document, but if the hon. Gentleman talks to pensioners or looks at what
is taking place, he will see that significant additional resources are going to poorer pensioners through the pensioner premium in income support. I supported that policy decision when the Government made it, and I still do.As I said earlier, I support very much the Government's welfare to work programme, and I believe we should all do so. The best way out of poverty is for people to be supported into work. The Government have introduced a number of successful measures to deal with that. They have targeted improvements on various benefits. The Secretary of State mentioned child benefit, in which there have been incredible increases, especially in respect of the first child, making a significant difference. My right hon. Friend also talked about changes to the disability premium—we all support those welcome improvements.
Flicking through the Social Security Benefits Up-rating Order 2003, one can see that it applies to hundreds of different benefits. A heart-rending, soul-searching parliamentary debate about whether some of those benefits are set at an appropriate level is long overdue. Some of the people I see are dependent on benefits and cannot work, for whatever reason. Sometimes I wonder how they can exist on the money that they receive. That is not so much a criticism as a plea for reflection. Can we pay benefits at a level that does not encourage people to stay on benefit, support a welfare- to-work policy, pursue an anti-poverty agenda, and command public support so that we are not criticised for making benefits too generous? The House and the country need to consider the serious question of whether the poverty line in our benefits system is appropriate. Are we being generous in our definition of poverty? Recently, the journalist Polly Toynbee lived on benefits. She could be ridiculed, as she knew that she would come off benefits and go back to her own world, but her experiences do provide an insight into poverty. She was moved by how little people who depend solely on benefits receive to support themselves. The House ought to have a debate on what is an appropriate poverty line in this country in the 21st century.
Finally, whatever the benefit, huge numbers of people come to our surgeries because they have difficulty finding their way through the forms and claiming their entitlement. Whatever system is set up, that is bound to be the case. It is therefore incumbent on us to ask ourselves whether the system is as good or simple as it could be, and what is the way forward. I welcome the Secretary of State's speech, which included good things about the disability premium. I congratulate the Government on that, but ask my right hon. Friend to take on board some of my remarks to see whether further improvements could be made, especially to take-up, which would help us to make our benefits system better still.
2.36 pm
Mr. Steve Webb (Northavon): It is always good to follow the hon. Member for Gedling (Vernon Coaker), whose contributions are thoughtful and gratifyingly critical of the Government—in a supportive sort of way.
It is hard not to reflect on the fact that, in debating the order and tax credits, we are debating expenditure of £100 billion in 90 minutes, which is about £1 billion a minute. I appreciate that the circumstances in which that time limit was set are beyond our control, but will the Secretary of State make representations through the usual channels to find an alternative occasion, perhaps in Westminster Hall, so that we can have the debate that we might otherwise have had here? There are many wider issues that it is not in order to raise in relation to the motion. However, they do need to be addressed, and there is not an obvious forum in which to do so. I hope that the Minister for Pensions will provide an assurance that he will seek such a debate.
I shall not make some important points that I might otherwise have made. Comments by Members on both sides of the House about the move to automated credit transfer are important, and I should like to see a campaign of civil disobedience by pensioners up and down the land, and the ceremonial burning of letters from the Pension Service saying that they cannot receive their money in the way in which they used to receive it until there are cast-iron assurances about the post office network that, frankly, I do not believe will ever be forthcoming.
I shall not repeat my intervention on the Secretary of State about the level of the contributory jobseeker's allowance, but I hope that when the Minister responds he will explain why that benefit has been cut in real terms. As the hon. Member for Caernarfon (Hywel Williams) mentioned, it is a woefully small increase to a woefully small benefit. Perhaps the Minister can explain why people on contributory jobseeker's allowance who have paid contributions will experience a real-terms cut in April.
There are three topics that I would have liked to deal with at greater length, but I shall now merely headline them. First, we have previously visited the 25p age addition in the orders. I thank the Minister and the Secretary of State because, unlike the previous Secretary of State, they are willing to engage in the argument about whether age additions are a better strategy than means-testing. The previous Secretary of State simply did not engage in that argument, but written answers that I have recently received from the Minister have set out the Department's line, which was previously given only in the Lords, where these things are debated properly. I thank the Minister for editorialising his recent written answer to me, explaining the facts of the case and why I am wrong. That is a step in the right direction.
On the strategy of age additions, instead of the 25p in the orders, it should be a worthwhile sum. The Government line is that older pensioners may be poorer on average, but there is a big dispersion of incomes among older pensioners, which is clearly true. They take the top and the bottom of the distribution as evidence, and say that there is a big gap between those two numbers, but that is only saying that there are some relatively rich old pensioners, which I do not dispute. The Government do not report in their written answers to me the shape of the whole distribution. At the top, there is a minority of well-off pensioners, but most of the distribution is quite low, with a sharp increase at the end. Therefore, although some of the money does not go to those who need it most, much of the money goes to those who miss out under the Government strategy.
Neither strategy is perfect. Under our strategy, which I think is also the Conservative strategy and that of the right hon. Member for Birkenhead (Mr. Field), we pay some money to the rich very elderly, but most of it goes to the relatively poor very elderly. Under the Government strategy, all the money goes to those who claim it who are by definition poor, but they miss out on a lot of very poor people, who do not get it at all.
The matter is not as clear cut as the Government like to pretend it is. Given that with the pension credit the presumption is 2.9 million recipient households out of 4.1 million entitled households—Government figures, not mine—that is a million who will not get a penny under the Government strategy, and probably two thirds of them would get all the money under the age addition strategy. I hope that the Government, particularly when they review wider pensions issues, will reflect on the 25p figure in the order and whether the reliance on means-testing can be reduced through an age addition strategy. I have never said that there is no place for means-testing; it is a question of balance.
Mr. Andrew Smith: In the interests of open debate on distributional issues, which the hon. Gentleman says he welcomes, does he accept that the cost of his strategy is not only that some older rich pensioners get money that they arguably do not need so much, but that younger poorer pensioners do not get money that they do need?
Mr. Webb: I accept that. However, the younger poorer pensioners below the income support line are typically not very far below the income support line, whereas the old poor pensioners who fail to claim their minimum income guarantee are typically a good deal further below the line. The recently retired generally tend to be better off. I accept that there are pros and cons to each strategy, but the distinctions are not nearly as clear cut as the Government like to pretend.
As an example, a recent written answer to me from the Minister of State stated that the pension credit was going ahead, but had the Government decided at the start of the year to put the whole net cost of the pension credit on the pension for the over-75s, the pension for the over-75s would have been £19 a week bigger. That was the sum cited in the Minister's written answer to me of 25 February. That is close to the MIG, so the question is whether, had we not followed that strategy, for the same expenditure we could have got everybody over 75 clear of the MIG, with vast gains in take-up and in administrative saving. I hope that the Government will keep an open mind on the issue.
As a final observation on the age addition issue, I note that the same Government who say that targeting by age is a bad idea because there are some rich old people have chosen to make TV licences free to all the over-75s. When the Chancellor announced that measure in his Budget speech, he justified it by saying that on average older pensioners are poorer. The Government cannot have it both ways, although they may try; there must be some consistency in their reasoning.
The second issue is the increase of £1.95 a week in the retirement pension, for which the regulations provide. That is £1.95 a week for people on full pensions. I draw to the attention of the Secretary of State women who do not get £1.95 a week increase—they do not get £1.95 a
week pension, because of the operation of the married women's stamp. I have invited the Secretary of State—I hope that he will respond to me shortly, though probably not today—to have an independent look at the position of those women who do not get the £1.95 under the regulations.I want to put on record the way in which our thinking about the matter has moved on. In the past we have said that those women signed up for the system, but we dispute whether all of them knew what they were doing and whether they had proper information. The Government's line—or some parts of the Government's line—is, yes, the women knew what they were doing and it was all crystal clear, whereas Lord Rooker, when he was a pensions Minister, said that none of the information would have passed the plain English test. There has been some admission in the past that there was a problem.
I still believe that there was a problem, but we will never resolve it because the events took place a long time ago. Our argument now emphasises the fact that there was not a one-off decision by those women. It was an ongoing decision for the whole of their lives to remain on the married women's stamp. What might have been a correct decision when they made it may have become a wrong decision when the half-tests were scrapped, which the Secretary of State knows all about, the homes responsibilities protection was introduced, and the national insurance for the low paid was restructured. All those measures changed the balance of advantage of being on the reduced stamp as opposed to being on the full stamp.
The issue that we have not explored properly, which an independent inquiry could investigate with no prejudice and no obligation, is whether women knew about that, whether they had information, and whether they lost out through not being told about the changes. It ceases to be an argument about what happened in the 1960s and becomes an argument about whether women were told about the changes in the system that affected their choices and now affect the benefits that they draw when they retire.
The issue is not just a Lib-Dem whinge. We have tabled early-day motion 131 and the majority of signatories are Labour MPs—76 Labour Members have signed the motion. It is regrettable that the Conservatives have put a block on their Members signing, but 13 free-thinkers on the Conservative Back Benches have done so anyway. I hope that the Secretary of State will reflect on the matter. I stress that apart from 1 million stamps, virtually no public expenditure would be involved, so he would not be making a public expenditure commitment. It is a matter that unites hon. Members across the House.
I do not say that I have an angry woman in every constituency, but something approaching that. [Interruption.] Yes, we are working on it. There are members of our campaign organisation in more than 400 constituencies, and they have met hon. Members. Many hon. Members in all parts of the House have signed the early-day motion. Let us not make it a party matter. I welcome the support from all parts of the House. Let us have an independent look at the issue. I hope that the Secretary of State will respond positively.
The final issue is the complexity of the system, which has been touched on. I am a regular subscriber to the Child Poverty Action Group's handbook on welfare benefits, which runs to 1,300 pages. I received a rather worrying letter recently, inviting me to buy next year's edition, which will include the tax credits, and informing me that it will include an extra 300 or 500 pages—I do not remember which. The letter assured me that the handbook would not take up any extra space on my bookshelf because it would be printed on Bible paper. In other words, the system is so complicated that next year another 300 or 500 pages will be added to the guide to help people through it, and the guide is only a summary—it does not go into the law in any detail.
When the hon. Member for Gedling (Vernon Coaker) commented on the complexity of the system, I expected him to say that radical simplification is needed. I agree that we need to consider what would be adequate, but surely we are going down the wrong track.
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