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27 Feb 2003 : Column 448—continued
Mr. Heald: I do not know whether the hon. Gentleman has seen the paper that was published very recently by the Pensions Policy Institute, but it shows that the gap between rich and poor is widening.
James Purnell: That point relates only to pensioners, if I am not mistaken. In response to my hon. Friend the Member for Gedling (Vernon Coaker), the hon. Gentleman quoted figures to show that the value of pensions had stayed the same as a proportion of earnings. That is an achievement when compared with the Conservative Government's record. Under that Government, the amount fell, because the pension was tied to inflation. As earnings rise faster than inflation, this Government have managed to restore the overall amount of money that has been put into benefits and pensions. We are increasing it in line with earnings and in line with the overall economy—and we are targeting money at the poorest people. That is a significant improvement on the Conservative Government. Opposition Members may wish to acknowledge that; they may even wish to apologise.
At his party's most recent conference, the hon. Member for Havant said that his party had made some mistakes during its time in power. I wonder whether he thinks that it made some mistakes on benefits. The hon. Member for North-East Hertfordshire may wish to intervene again to clarify the position.
James Purnell: I see that he does not want to.
Will the Minister tell us how today's announcement affects the goal of reducing child poverty by 50 per cent. by 2010? Has he considered the good work done by Holly Sutherland of the National Council for One Parent Families? How far will the announcement take us towards our goal of creating a fairer society—which would be in stark contrast to the record of the Conservative Government?
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Andrew Selous (South-West Bedfordshire): It is sometimes futile to trade statistics across the Chamber, but I want to respond to comments made by the hon. Member for Stalybridge and Hyde (James Purnell). The figures for the number of working-age adults on less than 60 per cent. of the median household income have
remained at about 6.6 million from 1994–95 to 2000–01, so there does not seem to have been much of a shift there.In this uprating order, we have seen an increase in incapacity benefit from £70.95 to £72.15. I do not think that the number of people on incapacity benefit in this country is generally known; neither is it known that the number is steadily increasing. In fact, 2.38 million people are on incapacity benefit. That is a rise of 1.7 per cent. over the past year. Of those, 1,070,000 have been on incapacity benefit for the past five years.
The Select Committee has seen evidence that, in parts of the country with high unemployment, many general practitioners have perhaps been more willing to sign people on for incapacity benefit than has been case in other parts of the country. In their quest to get more people of working age into work, I suggest that the Government consider carefully the points of entry to entitlement for incapacity benefit.
I want to suggest another change to the Secretary of State. Will he consider changing the name of the benefit? Why not "capacity benefit"? "Incapacity" is a negative word that stresses what people cannot do. Changing the name may have the effect of setting the benefit in the light that I know the Government would want.
Mr. Andrew Smith: Does the hon. Gentleman accept that precisely that proposal is being consulted on in the Green Paper on pathways to work?
Andrew Selous: I hope that the proposal will receive a positive response. The present name is negative and unhelpful.
Jobseeker's allowance has increased to £54.65 from £53.95. I share the concern of the hon. Member for Northavon (Mr. Webb), who spoke for the Liberal Democrats, that there has been a less than real-terms increase for those on JSA who are under the age of 24. The JSA increase will no doubt be appreciated by the 207 people in my constituency who are now unemployed but who were not unemployed this time last year. It is worrying that three quarters of that increase in unemployment has come in the last quarter or so.
Disability living allowance has increased to £57.20—another small increase. I am worried by reports that I have had from a number of my constituents that disability living allowance and attendance allowance are being decided on without claimants having the opportunity to go before a doctor. In one very worrying case, the disability allowance of a constituent of mine was quite severely reduced on the authorisation of a GP who not only had not examined the claimant but had never even seen him. That decision has since been overturned. However, the case was worrying, and if increases are to mean anything in the uprating, I would ask the Secretary of State to consider it.
Time is short and the Minister for Pensions is keen to start the wind-up speech. However, I want to question the Secretary of State's claim that the basic state pension will remain as the cornerstone of our pension's policy. If the minimum income guarantee continues to be uprated by earnings while the basic state pension is uprated only according to prices, over a long period the basic state pension will wither away as a fundamental component of people's retirement income.
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Paul Flynn (Newport, West): I am grateful for the chance to contribute to this annual get-together of social security buffs. We are small in number and we talk a language that nobody on the outside seems to understand. Certainly, no journalists understand or appreciate it. After all, today's announcement affects only about 20 million people.
I repeat what I said in an earlier intervention and congratulate the Government on their splendid record in this field—especially in the area of the state pension. I also point out the shameful record of the Conservative party. My hon. Friend the Member for Hastings and Rye (Mr. Foster) gave a striking example of that.
A school in my constituency has the splendid motto "Nid da lle gellir gwell"—which means that there is no good that cannot be improved on. In a helpful and constructive way, I want to suggest to the Secretary of State for Work and Pensions and the Minister for Pensions that they can do even better.
It would not be right to allow this debate to go by without some reference to the earnings link. We owe that to the traditions of the House. I believe that I am the only MP in the Chamber who has to declare a financial interest in the basic state pension, of which I am a grateful recipient and have been for the past three years. As we know, the increase this year is above the level of prices; prices went up by 1.7 per cent. and the pension will go up by 2.5 per cent. That is fine. It shows up the meanness of the previous Administration, who for 17 years increased it by a lower level, which meant that there were salami cuts throughout that period. It is right that we should proclaim the achievements of this Government.
To take up a point that was made from the Opposition Front-Bench spokesman, the relative value of the pension is important. Pensioners want an assurance that they will not lose out relative to the rest of society. All those who campaign for pensioners seek such an assurance but, sadly, no party in the country is offering it at the moment. In spite of the large increases, it was a mistake that we did not go for the attractive and understandable policy of restoring the earnings link. I was disappointed to receive an answer from the Minister for Pensions on 24 July 2002 which revealed that the pension was a smaller proportion of average earnings at that time than at the time of the Labour Government's first uprating in April 1998. Although we have achieved a great deal, the tendency is to head for further reductions, because of the success of the Labour Government's economy. This is a generous policy, but it will end in reductions.
Can we afford it? The Government Actuary said last year that the surplus above the contingency fund in the national insurance fund was £18.4 billion, and we are told that that will rise to £20.2 billion in a year's time. This is the unneeded surplus, over and above all the money that is there to account for any unexpected increases in unemployment and so on. Then there is the £2 billion a year that is taken out of the national insurance fund to compensate employers for the green taxes. It might be quite reasonable to give them that compensation, but why on earth should it come out of the national insurance fund, which is made up of money paid in by working people to ensure that they have
benefits in their retirement? I therefore make the plea—not exactly for the first time in this House—that we should consider restoring the earnings link.3.11 pm
Mr. Oliver Heald (North-East Hertfordshire): I was surprised when the hon. Member for Newport, West (Paul Flynn) said that he had been receiving his state retirement pension for three years. He obviously keeps very fit through his constant surveillance of the Government on pensions issues. He used to tax me about those matters, but I see that he is now taxing his hon. Friend the Minister.
We have had an interesting debate that, although short, has concentrated on the key issue relating to the uprating statement: what it means for people in practice. We have had a lot of discussions about means-testing and take-up. It is easy for a Government to rely, as this Government so often do, on the effect of means-tested benefits to make them appear more generous than perhaps they really are. The gap between rich and poor has widened since 1997, and the amount that pensioners in the bottom fifth of the population are receiving has remained the same. The complacency that we heard in the Secretary of State's opening speech is misplaced.
We also have to look back at what the Labour party used to say about this, and judge it against its words. The Chancellor wrote a document called, "Getting Welfare to Work" in 1996, in which he stated:
- "Means-tested benefits are claimed by over 3.5 million people over the state retirement age—a third of all pensioners. Six hundred thousand do not receive income support to which they are entitled . . . and are amongst the poorest people in Britain."
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