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Ms Karen Buck (Regent's Park and Kensington, North) (Lab): It is difficult to over-state the significance for lone parents and couples in London of the suggested regional wage top-up. I shall be interested to see the details of the proposal, but a number of colleagues and I have been campaigning for such a measure for many years, in recognition of the much higher costs of child care and housing in London and of the fact that we have much lower lone parent participation in the labour market and much higher incidence of child poverty here than in any other region.

Will my right hon. Friend tell us how that provision will be delivered? Will it be via a premium on the tax credit? Will it increase the entitlement to the child care tax credit? Will lone parents in London be expected to have been out of work for a year to qualify for the premium, as couples will be? Will the premium in London stop after a year, and, if so, how do the Government intend to deal with the risk of parents who have settled a child in child care as a consequence of the premium improving their access to employment finding themselves unable to sustain that child care place?

Mr. Smith: I thank my hon. Friend for her welcome for the proposal. Like her, I think that it is difficult to over-state its importance across London, where lone parents and other unemployed parents face particularly high child care and transport costs, especially when

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housing benefit is withdrawn when they enter work. That is why we have introduced the measure, and we believe that it will make a real difference.

I can confirm that it is intended for people who have been out of work for a year. The work search premium is also being introduced in a number of areas, which will give people £20 a week for actively seeking work, as well as the additional help with child care that I mentioned. If they get a job, they will then get the £40 for a year. We have found with previous programmes that, after a year, people have often made the transition into a job and progressed in their work. The premium helps them to meet their initial costs, they have a new social network and outlook and tend to stay in work. Obviously, we shall monitor the provision closely. I shall let my hon. Friend have a note on the details of the calculation and its administration.

Mr. John Redwood (Wokingham) (Con): Like all hon. Members, I hope that my private interests in pensions will keep me above means-tested benefits in my old age and away from financial worry. Can the Secretary of State explain to my constituents, whose pension funds have been gravely damaged by the £5 billion smash and grab raid each year by the Chancellor, why it makes sense to damage their pensions, often to the point where schemes are closed or benefits cut, only to give less money back to them in the form of means-tested benefits? Is that not an outrageous mugging of our pensioners? Would it not have been better to have left more tax relief in the funds so that those pensioners, like us, could look forward to less worry in old age?

Mr. Smith: I cannot resist pointing out that the right hon. Gentleman was a member of the Government who oversaw the most calamitous mis-selling of pensions as well as fraudulent abuse of the occupational pension system, which did much to undermine confidence in that system. On pension credit, the Conservatives go on about means-testing, but the truth is that this is a million miles away from the humiliating, intrusive weekly means test of old. What worries them is that we are getting more money to the pensioners who need it most, while at the same time acting to address occupational pension insecurity through the proposed pension protection fund, measures for simplification, measures to take out cost, the development of informed choice, better financial numeracy and all the other measures that form such an important part of our strategy.

On dividend tax relief, I would take more notice of Conservative Members if their party were committed to its reintroduction. It is not, so this is all crocodile tears.

Jim Knight (South Dorset) (Lab): If, before the 1997 general election, the Labour party had campaigned and pledged to increase employment by 1.5 million and virtually to obliterate youth unemployment, it would have been dismissed as dishonest and unbelievable. The Government's achievement in bringing down unemployment and putting more people in work through the new deal, which both Opposition parties voted against and which the main Opposition party says it would abolish, is an extraordinary tribute to my right hon. Friend the Secretary of State and his Department. However, has he considered a new deal for seaside communities, where seasonal unemployment is a

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particular issue? We need assistance to ensure not only that work pays, as my right hon. Friend says, but that it pays for 12 months a year.

Mr. Smith: I thank my hon. Friend for his praise for the new deal and its achievements. He is right, of course, that nothing could do more damage, setting back the hopes of those who would be assisted by those programmes, than the Conservative party getting the opportunity to end them. The idea that the Conservatives might save money from that to pay for pensions, or indeed to pay for anything else, is ridiculous when we take account of the fact that in cost-benefit terms the programmes are saving us money. The new deal for lone parents, as I mentioned, has been shown by research to save £40 million a year for the Exchequer. As well as the untold human damage that the Conservatives would inflict on many of the most vulnerable members of our community, they would face higher costs from abolishing the new deal, rather than saving money.

I listened closely to what my hon. Friend said about the need for action in seaside towns. My right hon. Friend the Chancellor referred to the document entitled, "Full Employment in Every Region", which we published today. If my hon. Friend studies it, he will see in its extensive analysis some interesting observations on the particular position of the labour market in seaside towns. Of course, action teams, local worklessness pilots and other intensive local programmes complement the new deal; many of them are appropriate to and applied in seaside towns. However, I will continue to listen to him and other colleagues from all parts of the House who represent seaside towns to consider what further needs to be done.

Hywel Williams (Caernarfon) (PC): On behalf of my party, may I also thank the Secretary of State for sight of his statement? He is a busy man, but I wonder whether he has looked at the New Policy Institute report on poverty and social exclusion. If he has, he will have noticed the statement:

as well as young adult unemployment and concentrations of poverty. Poverty clusters around children in families without work. I wonder how such child poverty will be addressed by the 1.8 per cent. increase, following the Rossi index. To enlighten the House, for a young unemployed person who is under 25, that means a rise from £43.25 to £44.05—the princely sum of 80p.

How will such child poverty be addressed by the lack of any reference, so far as I can see, to the continuing disgrace of the social fund, which nobody seems to mention these days? Just in case the Secretary of State is tempted to refer to getting people into work, I refer to the New Policy Institute report:

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between 1999 and 2002. Therefore, we have an increase in the proportion of people working but in poverty. As a matter of interest for Conservative Members, although I do not know whether they read these reports—

Madam Deputy Speaker (Sylvia Heal): Order. The hon. Gentleman has had more than enough time to put his thoughts to the Secretary of State.

Mr. Smith: The hon. Gentleman has made quite a lot of points, so I shall try to do them justice. The new deals of all kinds have been working well in Wales. It is another interesting feature of the analysis that we have published today that throughout the UK unemployment has fallen furthest where it was highest. That shows an evening out of opportunity, which is welcome, notwithstanding the concentrations of unemployment and other deprivation, which, as he points out, can occur in particular communities.

One of the pathways to work pilots, to which I have referred, is working in Bridgend and in the south Wales valleys, where there is a concentration of people who receive incapacity benefit. It is early days yet, but the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Liverpool, Garston (Maria Eagle), who is the Minister with responsibility for disabled people, and I make it our business closely to monitor the performance of those programmes. The early signs are very encouraging.

On the general point made by the hon. Gentleman about the increase in benefits, I point out that one of the great advantages of the Government's child tax credit approach is that there is seamless support for children, whether or not their parents are in work, so people out of work will benefit from that increase, just as people in work will. As I was telling the hon. Member for Northavon (Mr. Webb), who speaks for the Liberal party, that will be a big factor in helping us to hit our targets to reduce child poverty in Wales, as elsewhere.

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