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27 Feb 2003 : Column 444—continued
Mr. Willetts: I entirely agree with the hon. Gentleman about the extra complexity that will be added by the move to tax credits. Will he confirm that, in evidence to the Public Accounts Committee, the chairman of the Board of Inland Revenue said that the computer power needed to deliver the tax credit proposals was eight times that needed for self-assessment, and that the PAC has shown that the simple cost of the IT and administrative expenditure to install the new system is well over £1 billion? That is money that could have gone in benefits delivered by well-established systems. Instead, it is being spent on inventing a parallel system that will leave many of our constituents more confused than they are already.
Mr. Webb: Yes. I am aware of tax accountants who do tax every day, but when faced with a benefit form are bewildered by the entire process. However, we must come clean. We all voted for the Tax Credits Act 2002, so we all supported the principle. We have considerable reservations about its complexity and we may well have to revisit it. In admitting that, we should accept that there is great complexity in all the benefits. For example—
Madam Deputy Speaker (Sylvia Heal): Order. I hope the hon. Gentleman will relate his remarks to the uprating of the benefits.
Mr. Webb: Indeed, Madam Deputy Speaker. I have a specific example involving income support and the rates being introduced this April. A constituent who came to speak to me about another matter had a letter from his local Jobcentre Plus about the rates of income support that he will get in April. I have a question about the order, to which I hope the Minister will respond.
The letter tells my constituent how much income support he will get now, and goes on to inform him that on 1 April he will get £8.40 because a change in child benefit is coming in. On 8 April he will get £11.77 a week because of a change in the money that he receives through other benefits. On 15 April he will get £11.50 a week because of a change to the severe disability allowance that his partner gets. On 29 April he will get £11.27 because there will be a change to the child benefit that his partner receives. That is four changes in a month.
I read the regulations last night, and it appears that not all the changes come in on the same day. Given that income support depends on all the other benefits that people are getting, my constituent will get four different rates of benefit and does not have a clue why. Can the Minister of State explain why the changes are being introduced on different days during April, and how many extra letters have to be sent out to tell people that for a week they will receive a different amount of money? That is symptomatic of the complexity of the whole approach.
Mr. Heald: I do not know whether the hon. Gentleman recalls the draft Child Support (Miscellaneous Amendments) Regulations 2003 that we discussed recently in Committee. Does he agree that if we take account of the knock-on effects of the changes in this order and the complexity of the system on matters such as child support and benefit sanctions, we will end up facing an absolute empire?
Madam Deputy Speaker: Order. Once again, we are going rather wide of the motion.
Mr. Webb: I am grateful, Madam Deputy Speaker. I shall wrap up my remarks, but I hope that I will receive some idea as to why the rates are changing on different dates in April and get some sense that the Government recognise that producing telephone directories of regulations and benefits is not the right approach to take.
The fact that we have not got proper time to debate the motion is the result of a cock-up rather than a conspiracy. I hope that we shall receive an assurance that we will have a chance to raise the wider issues that you, Madam Deputy Speaker, quite properly do not want us to consider now. However, the House should certainly have the time to consider them. Although we were right when we opposed similar regulations a few years ago, we will not oppose the motion today.
2.50 pm
Mr. Tim Boswell (Daventry): I shall be brief so as to leave time for a proper response. I appreciate the narrowness of the terms of this debate but I shall make a few brief points that have not already been well brought out in the earlier contributions.
Can Ministers comment on the position of the increments to the retirement pension for those who have worked beyond their time or whose partners have worked beyond their time? There is a clear steer in the Green Paper that people should be encouraged to work beyond the statutory retirement age. However, as I understand it, there is still a disincentive—or apparent unevenness—in the treatment of the increments from the basic retirement pension because, to be fair to Ministers, they have been more generous with the basic pension. We need to establish the principle that the two elements should operate in parallel in the future.
My second point relates to the disregard of pension income in connection with incapacity benefit. The system has now been in operation for nearly two years and kicks in at £85 a week. I believe that there has, as yet, been no indication of any uprating of that figure. Clearly circumstances and the amounts paid vary over time, and Ministers might like to clarify the position on that.
My third point relates to work. We now have a new structure in which therapeutic work is deemed to have come to an end and there is now permitted work for a finite period. Beneath that, since the Social Security Act 1986 was implemented in 1988, there has always been the understanding that people who, for example, return to work after a period on benefit could work for a limited period and receive pay that would be disregarded. That initially kicked in at £15 a week but it is now £20 a week. If we relate that figure to the minimum wage, it is a morning's work and no more. However, there does not seem to be a change in the permitted level for any period of time and I flag up to the Minister that there is something of a black hole between the operation of that relief and the new permitted work regulations for people working more than 16 hours a week.
A final anomaly relates to the achievement of both Houses and Ministers in relation to the pension credit. Hospital downrating rules were amended to 13 weeks instead of the much shorter period that was in force previously and that will remove much of the sting of the operation of those rules in relation to pension credit. However, I ask Ministers to reflect on some of the associated benefits that have not been so amended. In particular, I think of the attendance allowance for older people that kicks in to affect the benefits available to those who care for them.
As I understand it, the attendance allowance is still withdrawn after four weeks in hospital. Therefore, although someone's pension credit is not deducted for a reasonable period when someone is in hospital—in fact, that person is likely to have left hospital—the last thing that he or she might think about is the attendance allowance. I flag up to Ministers a more general concern that results from the fact I have come across cases in my constituency work of the Department attempting to reclaim benefits that have been overpaid to people who are not fraudsters. Their behaviour may have been inadvertent or they may have been unwell, and problems might arise from that. I hope that Ministers will consider that issue, because the cost would be quite small in relation to the circumstances that I have mentioned. They could make a difference to smoothing the problem out.
In the spirit of getting on with the debate, I shall make only one further point that relates to the delivery of the benefits. It does not matter how much they are uprated if they are not functionally available to the people who need them. Points have been raised about the operation of the post office card account and about the take-up of benefits. I agree with those points, but I add one of my own that was touched on slightly in the remarks of the hon. Member for Northavon (Mr. Webb). There needs to be a functional network of post offices in which benefits can be delivered. That applies even if that involves the use of basic bank accounts and more so if it involves the use of post office card accounts.
A written answer that I received the other day suggested that 12 million payments are still made at post offices every week. One of the problems is that that number of payments proceeds in parallel with—and in certain cases is preceded by—the closure of urban post offices.
Madam Deputy Speaker: Order. I hope that the hon. Gentleman will not continue for too long on that point.
Mr. Boswell: He will not, indeed, Madam Deputy Speaker. He is making the point that it does not matter how good the benefits are if, for example, my constituents in Tamar square in Daventry, who handed me a petition the other day, find that the post office from which they were going to collect their benefit is no longer open and that the post office to which they are now assigned has queues of an hour at the time of its greatest use.
2.56 pm
James Purnell (Stalybridge and Hyde): I shall make a few very brief points. The first relates to an issue that was considered in the Committee considering the State Pension Credit Act 2002. It involves the incomes disregard for the pension credit. I very much welcome the upratings that have been announced today, but we are trying to encourage older people to work at least until the age of 65 and perhaps beyond. Income starts to get clawed back if they earn only £5 to £10, and that figure may be too low. Have Ministers considered the position in Denmark? As I understand it, it is starting to disregard all income for those aged over its pension age. I can imagine that the expenditure implications may be high for this country, but is it not worth considering whether the disregard should be higher so that people can work beyond the age of 65 without losing too much of their pension credit?
The hon. Member for Daventry (Mr. Boswell) referred to home responsibilities protection, so will my right hon. Friend the Minister for Pensions consider a discussion that we had in Standing Committee last year? Perhaps he could reply today or in writing and tell me whether today's statement will deal with the fact that people who care for foster children do not receive home responsibilities protection because they do not receive child benefit. As a consequence, they do not receive credits towards their basic state pension. That leaves them without the security in old age that they require. I know that Ministers said last year that they would consider that point, but several people in my constituency have raised the issue with me. I have spoken recently to foster carers in my constituency and they told me that they did not realise that that would be the consequence of their caring for foster children. That might act as a genuine disincentive, so will my right hon. Friend say something about that today or in future weeks?
I also want to return briefly to the speech of the hon. Member for Havant (Mr. Willetts). He said that he did not recognise the figures that I had quoted. I have written to him to say that those figures are from the Office for National Statistics. I first saw them in Nick Timmins' biography of the welfare state. I wonder which figures the hon. Gentleman does not recognise. Does he agree with the Office for National Statistics, because most people would agree that it is a fairly reliable source of information even though he has a good record of exposing some of its inaccuracies? However, on this issue, it is a fairly reliable source, so does he not recognise the figures in the publication on households on below average income or those of the ONS? Does he think that the figures are wrong? I would be interested to hear him apply his forensic skill to the figures to learn whether they are correct.
Means-testing underlies the Government's uprating announcement. The hon. Member for Havant and his colleague, the hon. Member for North-East Hertfordshire (Mr. Heald), spoke about the problems of means-testing. Means-testing is a way of targeting the benefits that the Government give out. If we do not target benefits, the current distribution of income will remain as it is. Under the Government of whom the hon. Member for Havant was a member and served so well from 1979 to 1992, the income of the poorest 20 per cent. fell by 30 times, in relative terms, the income of the top 20 per cent. According to the latest publication, under this Government, the income of the bottom 20 per cent. is rising at the same rate as that of the top 20 per cent. In today's economy, rewards for skills and education are growing exponentially.
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