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10 Apr 2003 : Column 457—continued
James Purnell (Stalybridge and Hyde): Surely what matters to pensioners is whether or not they are better off, not whether or not they are means-tested. Does the hon. Gentleman accept that the number of pensioners in relative poverty after housing costs has fallen by 50 per cent. since 1997? That contrasts with the record of the Thatcher Government for whom he worked—a record of which he said he was proud. Under that Government, the income of the absolute number of people in poverty, or the bottom 10 per cent., fell by 20 per cent. in absolute terms. They were worse off by 20 per cent. Is he proud of that record, as he said earlier?
Mr. Willetts: The point that I was making is that a lot of the figures on poverty assume take-up that simply does not exist. Even according to the Chancellor's targets, 1 million pensioners will not be claiming the benefits in 2006.
I am also trying to address an issue that I believe the Secretary of State for Work and Pensions recognises, as he has referred to it in the past. I am trying to invite those on the Government Front Bench to consider not only the figures for today, but the impact on behaviour for the future. The question is what the scope of means-testing says to people who are considering whether to save. I do not claim that that is an original point or a distinctively Conservative one, but it seems a very powerful point that the sort of static model that we just heard advanced does not recognise.
For the benefit of Ministers, I should like to give a quote not from a Tory, but from Ernest Bevin. The Secretary of State has previously heard me cite the quotation, which appears in Alan Bullock's biography. The remarks were made when Ernest Bevin came to his executive council of the Transport and General Workers Union in 1937 after he had painstakingly worked to try to set up a funded pension scheme for the sheet metal workers of south Wales. Much to his disappointment, the members of his union voted against having an occupational pension. Bevin reported to his executive council:
- "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."
Funded pension saving has declined and dependence on means-tested benefits has increased. That is the Government's record on pensions. It is a disaster for our country.
Ms Karen Buck (Regent's Park and Kensington, North): Is not it the case that before the proposal for the pension credit, there was no value in people saving if modest savings took them just above the level of income support? The pension credit will provide an incentive to save. That is its value.
Mr. Willetts: But there are other, better methods of alleviating poverty among pensioners that do not have the same effect on savings. When the pension credit was considered in the House, we tabled a reasoned amendment, which the right hon. Member for Birkenhead (Mr. Field) and the Liberal Democrats supported, that would have provided for the money to go towards a higher pension for older pensioners. It would have targeted poverty without the need for so much means-testing. It would not have had the same effect on incentives to save as the spread of means-testing.
Mr. Paul Goodman (Wycombe): Would my hon. Friend like to comment on the following words:
- "The pension credit unquestionably adds further complexity to an already Byzantine system of retirement provision, which is causing confusion for pensioners, pension providers and those saving for their old age."?
Mr. Willetts: I am grateful for that intervention. The report reflects a widespread anxiety that has been expressed by not only Conservative Members but the National Association of Pension Funds Ltd, the Institute for Public Policy Research—the Government's favourite left-wing think-tank—and Age Concern about the spread of means-testing. They demand that the Government at least consider reforming the benefits system as part of tackling the pension crisis.
James Purnell: Will the hon. Gentleman give way?
Mr. Willetts: I have given way to the hon. Gentleman once and I want to make progress.
Instead of considering reforming the benefits system, the Secretary of State for Work and Pensions produced a Green Paper that completely ignored the state's role in creating the mess in which people find themselves. It ignored the problem of absurdly complicated benefits. Someone said that the Green Paper was so green that cows could graze on it. It is therefore not too late for the Secretary of State to present proposals for a simpler, better benefit regime for pensioners.
Let us consider another old favourite about which we heard more yesterday: crackdowns on the unemployed. No Budget or autumn statement by the Chancellor is
complete without a crackdown on the work shy. Every year since 1997, the right hon. Gentleman has gone for the headlines. In July 1997, a headline read, "Labour to be tough on workshy". After the March 1998 Budget, we read: "Puritan Brown goes to war on workshy". "Brown declares war on workshy" stated a newspaper after the 1999 autumn statement. In 2000, The Sun stated, "Blitz to hit workshy". The Chancellor is good at spin. In March 2001, he got "Workfare system facing the jobless" into The Daily Telegraph. Well done! In November 2002, after the autumn statement, The Times reported, "Brown gets tougher on hardcore unemployed".I always watch with interest for the spin about how tough the Chancellor will be on the unemployed. Every year, a little like the man who clears up the mess after the procession has passed, I table a few parliamentary questions to ascertain what is actually happening. Of course, what happens is always different from the spin. Let me give three examples of the gap between the Chancellor's rhetoric and reality.
First, let us consider lone parents. I shall cite the latest figures on workless, lone-parent households. A welcome and steady welcome decline occurred for several years. It began when my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) was Chancellor and continued after 1997. Workless, lone-parent households declined to a low point of 680,000 in autumn 2000. The Chancellor subsequently launched his new deal for lone parents. Since then, the trend has reversed and the figures are now increasing. According to the latest statistics, for autumn 2002, there are 707,000 workless, lone-parent households.
The Secretary of State for Work and Pensions (Mr. Andrew Smith): What has happened to the proportion of lone parents in work since Labour has been in government?
Mr. Willetts: The total number of lone parents in work has increased. Since 1997, the percentage of lone parents in work has risen. However, the downward trend was reversed in 2000 and the position has subsequently deteriorated.
A similar analysis applies to disabled people. Labour has been talking tough but failing to deliver. Those on incapacity benefit decreased steadily since we introduced the benefit in 1995 until 2000. Since then, the figure has risen. Now, more people are on incapacity benefit than when Labour took office in May 1997. The number is increasing, partly because of so-called reforms that the Government introduced, claiming that they would reduce it. However, people are staying on incapacity benefit for longer because they believe that if they begin to work but subsequently have to go back on incapacity benefit, its terms would be different. They do not want to run that risk. That is a classic example of the perverse effects of ill-thought-out policies. More people are on incapacity benefit now than before the Government introduced their so-called reforms.
Mr. John Bercow (Buckingham): My hon. Friend's comments reflect a pervasive cynicism about the chasm between the Government's words and their actions. Does he know that, only last month, I asked the Under-Secretary of State for Work and Pensions, the hon.
Member for Croydon, North (Malcolm Wicks) on how many occasions jobseeker's allowance had been withdrawn from individuals who had thrice refused reasonable job offers? The Under-Secretary got into a frightful rage but was unable to give a figure.
Mr. Willetts: My hon. Friend is right. When one asks for the number of people who have been given a mobile phone to help them find a job, or have lost their driving licences because they have not complied with the Child Support Agency, or have been sent to prison or fined because they have refused two job offers, the Government either do not have the figures or they are pathetically small. The Government have large headlines and small results. That is the story of all their welfare-to-work policies.
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