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Mr. Smith: Let me go through those points in order. The hon. Gentleman's point about the timing of the uprating statement is utterly trivial. If he had done even five minutes' research he would have noticed that last year it was made before the PBR and that in many previous years it took place on the same day because of the overlapping content of the two statements.

On the Child Support Agency, if the hon. Gentleman had studied the second quarterly report that we issued, he would have seen that the rate of case clearances of some 40,000 was three times that of the first quarter. Although the performance of the new computer system has been unsatisfactory, it is improving, but clearly needs to improve further. The hon. Gentleman referred to the Select Committee on Work and Pensions, with which we will of course work closely. It is important that it has a full report on what has gone wrong with the new

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system, whose fault it is, what is being done to put it right and when it will be working properly; and I will make it my business to ensure that it gets that report.

The hon. Gentleman mentioned take-up of council tax benefit just a few breaths before he derided the pension credit—yet the pension credit, and our promotion of it, is increasing eligibility to council tax benefit and housing benefit, because some 1.9 million pensioners are either getting more support or getting it for the first time.

The hon. Gentleman said that too many people are on inactive benefits. If the Conservatives really want to help those people, whether they be lone parents on income support or disabled people and those who have suffered ill health on incapacity benefit, they will not do it by abolishing the new deal—they will do it only by extending it. Whatever the hon. Gentleman says about the new deal for disabled people, it has helped 20,000 disabled people into work, thereby transforming lives. We need to build on that help, not abandon it, as the Conservatives would.

The hon. Gentleman queried the link between benefit increases and inflation in the future. To repeat clearly what the Chancellor said, pensions will continue to be uprated with the retail prices index and, during this Parliament, pension credit will be uprated with earnings. The introduction of the new measure for Bank of England inflation-targeting purposes makes no difference to that whatsoever.

The hon. Gentleman asked about the pensions Bill. That is a very important measure to boost occupational pension security, to help people to move more flexibly into retirement and generally to improve provision for people who are planning for their later years. The Bill will be brought before the House as soon as it is ready. The hon. Gentleman would not expect us to do so before it was ready—indeed, I suspect that he would be at the forefront of our critics were we to do so.

I was interested that the hon. Gentleman did not mention—perhaps he has not had time to see it—the important announcement made today by the Inland Revenue in association with my right hon. Friend the Chancellor's statement, whereby we are inviting the National Audit Office independently to scrutinise our assumptions on the 1.4 million cap. This whole package of radical simplifications—rolling eight tax regimes into one and more access to 25 per cent. lump sums—will lead to a terrific reduction in costs. I would have hoped that the hon. Gentleman and his colleagues might welcome that in the interests of building a consensus, but we heard nothing about it.

On pension credit, the hon. Gentleman was, unwisely, tempted to deride my figure of 106,000 extra recipients. Perhaps he had not noticed that that was just for the month of November. Take-up is accelerating and going very well, and I am confident that increasing numbers of pensioners will receive pension credit and that we will beat the 3 million figure that the shadow Secretary of State said that it would take us six or seven years to hit. We will do it much quicker than that.

The hon. Gentleman referred to his party's proposals. The whole country must know by now that his and his right hon. and hon. Friends' sums simply do not add up. Even on their own figures, they would have a £500 million black hole by year four and need £10 billion

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more within 10 years. No wonder the shadow Chancellor had to admit that they face what he called further painful decisions to show how on earth their half-baked policy, which the shadow Secretary of State himself described as wild and uncosted, can be made to appear sustainable. We will take no lectures from them, given their record. With Labour in government, the basic state pension has gone up in real terms by more than £5 for a single pensioner and by more than £8 for a couple—that is more than the Tories chose to put it up by in all their 18 years in office.

Mr. Steve Webb (Northavon) (LD): I thank the Secretary of State for his courtesy in providing a copy of the statement in advance.

Briefly donning my anorak, I thank the Secretary of State for freezing non-dependent deductions for the fourth year running. I welcome that, because growing numbers of young people, particularly those who are poorer, are unable to leave the family home until they are much older, and they are penalised quite harshly through the housing benefit system.

The increase in the child tax credit is welcome, but I wonder whether the Secretary of State could clarify something. He will be aware of the "Give us a fiver, Gordon" campaign that the Child Poverty Action Group and others have been running. That is the amount that they estimate is required to help the Government to achieve their initial target of taking 1 million children out of poverty. Given that the Chancellor has come up with £3.50 instead of £5, can the Secretary of State confirm that he believes that that increase is sufficient to hit the Government's first target on reducing child poverty?

In view of the problems with the family tax credit, can the Secretary of State confirm that 0.5 million families who are entitled to it are not receiving that credit and will therefore not get the money that the Chancellor announced? Given the computer shambles that still exists in the tax credit system, is he confident that even those who have made a claim will get that money seamlessly and painlessly?

For some reason, the Secretary of State did not mention the fact that the Chancellor has frozen the thresholds at which tax credits start to taper away. Can he confirm that that is the case?

The Secretary of State said that there will be compulsory action plans for all lone parents. What does that mean? For a lone parent who has just had their first child, presumably the only necessary action plan is to try to get some sleep. What are the Government going to require of all lone parents? What will one of those action plans look like? Will it say, "Take child to park, change nappies"? How will lone parents benefit? We heard nothing other than that oblique reference.

The Secretary of State mentioned the 1.4 million pension cap. In another place, my noble Friend Lord Oakeshott pointed out that that has a very different effect from that which the Chancellor claimed. I welcome the right hon. Gentleman's reference to allowing the National Audit Office to decide who is right—I think that we know who is right—but I am slightly confused by the Government's position. I have skimmed the Inland Revenue document. It appears to suggest that the solution will be all or nothing and that,

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if the NAO disagrees with the effect of the 1.4 million cap, it will be dropped. What is the status of that issue? I am slightly hazy as to where we are on the matter. Is it all or nothing? Could there be a different figure? Could the system work in a different way?

On the pension credit, will the Secretary of State confirm that today's figure of 2.4 million individual pensioners receiving it is less than half the number of people entitled to do so? While claims can be backdated to this October, will he confirm that anyone who has not been reached by next October—that could easily be 1 million or more people—will lose out permanently because the backdating will stop and they will not be able to get more than a year's pension credit from next October? Will he confirm that those people will lose out for ever?

The one aspect of the right hon. Gentleman's statement that we do not welcome is that of the local housing allowance scheme and its extension to the social rented sector. The idea of the scheme is that people should have shopping incentives and be able to pick and choose between different sorts of rented accommodation. Does the right hon. Gentleman accept that, for my constituents, the idea of a choice between different units of social rented accommodation is a joke, and that there is a massive shortage of such accommodation? The idea of a scheme based on shopping incentives is frankly insulting.

Mr. Smith: I thank the hon. Gentleman for his welcome for our decision on the non-dependent deductions, on the increase in the child tax credit and for our reference to the National Audit Office for independent scrutiny of the taxation of pensions and the cap. He asked about the thresholds for the credits. They are as set out in the documentation. We believe that that is the right thing to do this year, in the context of carrying forward the child tax credit framework as a whole.

The hon. Gentleman asked what the compulsory action plan would involve. Clearly, it will have to be tailored to the circumstances, needs and potential of the lone parent who is having the work focus interview. If they have very young children, for example, it will be important to encourage them in relation to how they work with them in terms of nurturing and development. It would be appropriate, for example, to encourage them to avail themselves of the support of the sure start programme, or for those with older children to liaise with the children's centres.

It would be appropriate for lone parents to take a long-term view of their own personal development and of how they see themselves supporting their child. When visiting the programmes in local communities, I have been struck by the fact that, if we can get lone parents and other young parents to work with their children on nurturing and development, it is not only the children who benefit—all the evidence shows that children progress better and are less likely to live a life of poverty if they have that kind of support—but the parents as well.

There should be more emphasis on training for lone parents with older children, on what they can do to get themselves job ready and on finding out what jobs they will be able to get into. The additional support that we

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announced today—free child care for the week before people start a job and the availability of child care for lone parents looking for a job—should all help to ease what can otherwise be a difficult transition. We have done well to get more than half of lone parents into work, but when we compare the rate of employment among lone parents in this country with the typical rate in the rest of Europe, we still have some way to go. All the evidence shows that, in most cases, lone parents would like to avail themselves of the opportunities being offered because their living standards and their children's prospects would improve.

The hon. Gentleman asked about the take-up of pension credit, and whether I was confident that we would hit our target. I am confident of the progress that we are making. As I was saying to the hon. Member for Eastbourne (Mr. Waterson), it is encouraging to see the take-up rate accelerating and to see the application process working so smoothly. In our constituencies, each of us now has thousands of pensioners who are benefiting from the pension credit. Alongside my announcement today, I am publishing a constituency breakdown, so that all hon. Members will be able to see how people are benefiting in their constituencies.

The hon. Gentleman asked about the progress that is being made on child poverty, and whether we believed that the increases announced today would be sufficient to enable us to hit our target of reducing child poverty by a quarter by 2004–05, which is the first milestone that we have to reach. There are details of that in the pre-Budget report documentation, but the short answer to his question is yes, these are challenging targets, but it is right that they should be and we are confident that we shall progress to hitting them using the measures that we have announced.

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