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Mr. Willetts: I entirely agree with the hon. Gentleman's concerns. Does he agree that although we have been told that the new system is seamless, unemployed families will find themselves dealing with two different agencies and trying to receive money from two completely different sources? It is absurd to regard the transition as simplifying the system for adults who will continue to receive benefits or for children who will need help from the Inland Revenue or tax credits.
Mr. Webb: I sympathise with that point, because I have tried to help constituents to sort out their child tax credits. The system has been running for nine or 10 months only, and my constituents raise concerns such as "My partner changed hours in July" and "I did some overtime in October". Such reporting and record keeping will be part of daily life for families across the land. Again, I am worried that the Inland Revenue is not geared up to act quickly. For all the failings of the benefit system, it was pretty good at responding quickly
to emergencies. The Revenue must adopt that culture, and it must adopt it quickly. I am seriously concerned about the matter. Although it will by and large be the Treasury's problem after April, I hope that the DWP is throwing its weight around behind the scenes because I fear the worst. I am not scaremongering because last year we saw what can happen when the system goes wrong. The people affected last year had some income, but the folk whom we are discussing are wholly dependent on this money, so I hope that lessons have been learned.Secondly, the hon. Members for Havant and for Newport, West (Paul Flynn) touched on the national insurance fund, and I want to pursue the issue of the report on the regulations. Appendix 7 compares the out-turn for 2003–04 with the estimate made one year ago. The hon. Member for Havant raised the issue of administration costs, which I want to pursue. One year ago, it was forecast that it would cost about £1 billion to administer the national insurance system, but the out-turn is £1.75 billion. In one year, the estimated cost of administration has gone up by £750 million, and a footnote lists two sources for that increase.
There has been a to-ing and fro-ing of funds between the national insurance system and the rest of the DWP. How can one work out how much it costs the DWP to administer its bit of the national insurance system? One must stick one's finger in the air and pick a figure, so the grey area surrounding that figure and the possible end of year adjustments is understandable.
The second reason is interesting:
- "a one-off payment was made to the Welfare Modernisation Fund."
The DWP cannot get rid of the blessed money because it does not want to put it into national insurance benefits, but it can have £750 million for departmental running costs, which is a clever trick if one can pull it off. Once again, the House's scrutiny of the expenditure of such vast sums of money is pathetic, and I take as much responsibility for that as anyone else. I hope that the Minister will tell us more about the £750,000 in his winding-up speech because it is not small change—one could build the dome for such a sum. What is the scrutiny process? I hesitate to say that £750 million has been pilfered from the national insurance fund, but there has been sleight of hand at the very least.
Thirdly, I shall discuss take-up. The benefits are great for people who get them, but they are less great for those who do not. We have heard that council tax benefit is the least well taken-up means-tested benefit—I used to make that kind of comment at dinner parties just to keep the conversation going, but now it is received wisdom. More than 1 million pensioners are not claiming their council tax benefit.
The hon. Member for Bournemouth, West (Sir John Butterfill), who chairs the all-party group on occupational pensions, is no longer in his place, but he
pointed out a particular issue for owner-occupiers in an earlier intervention. Three quarters of the pensioners who do not take up their council tax benefit are owner-occupiers. Because they have reached the age to draw their pensions—perhaps they draw a bit of company pension as well—they are not used to claiming benefits and do not think that it has anything to do with them.We are now seeing the political consequences of people not claiming the council tax benefit to which they are entitled. More than 1 million pensioners find it so hard to pay their council tax that the system puts something in place to support them, but they do not receive the help. The political point is that pensioners who claim their council tax benefit once are insulated from any future increase in council tax, which is slightly odd. In other words, the system works out what people can afford to chip in regardless of actual council tax—for example, the system might say that someone can contribute £5 a week regardless of increases in council tax. If council tax goes on rising at a far greater rate than inflation, all those people will be insulated. There is a huge political reward for the Government if they can get such people on council tax benefit.
Every year I ask the Government why they do not use the income information that they already collect? Hundreds of thousands of pensioners supply the Government with every single bit of information that the Government need to work out council tax benefit because they are claiming pension credit or housing benefit. That does not apply to owner-occupiers, but it still includes more than 333,000 people. Every year, I am told that there is a pilot, scheme or advertising campaign. We heard about another advertising campaign this afternoon—whoopee! The Government have not addressed the structural problem for seven years. I know that there have been pilots, but I simply cannot understand why the Government are not just doing it. What is the problem? Will the Minister tell us why the Government do not regard a claim for pension credit as a claim for council tax benefit? Why do they not regard a claim for housing benefit as a claim for council tax benefit? If they did so, at least 333,000 pensioners would get the money to which they are entitled. The matter is not difficult and I do not understand the problem.
The system is fiendishly complicated and is becoming more so with every passing year. Any hon. Member who understands the child tax credit and working tax credit systems deserves enormous credit. The people who need the system most are not being helped because it is so complicated and they do not make claims. The transition from one scheme to another could leave far too many people in the lurch. The benefits may be all very well for those who receive them, but far too many people fail to receive them.
2.49 pm
Mr. Clive Soley (Ealing, Acton and Shepherd's Bush) (Lab): I wish to make two brief points and one slightly longer one. First, I agree with my hon. Friend the Member for Newport, West (Paul Flynn), who made the point in an intervention that the definition of poverty needs to be refined. It is absurd that an increase in the number of millionaires leads to an increase in the percentage of people in poverty without anybody getting any worse off. That is a statistical problem that needs to be addressed.
My second point is addressed to the hon. Member for Havant (Mr. Willetts). The sentiment was expressed more eloquently in this House many years ago, but we do not need to look in a crystal ball to see what the Tory party would do: we need only look in the history books. Of course, the Tories cut the link with earnings for pensioners, and thus did more to keep pensioners in poverty than any other party in the 20th century. That is not anything to be proud of.
My third point concerns the fear of poverty and the presentation of it in the press, and it is related to the intervention I made earlier about the lady who was allegedly about to go to prison because she could not afford to pay the council tax. I thought that that story was wrong as soon as I saw it, because the press claimed that she received only £312 a month in pension. I do not know who her MP is and I make no criticism, because we can all let things slip by, but my immediate reaction was that if she had been my constituent I would have tried to find out why she was receiving so little when she would be entitled to at least £400 a month, if not more. In any event, she should probably not pay the council tax or should receive a significant rebate, unless she had substantial savings.
Editors and sub-editors should know, given that many junior reporters will know, that someone on such a low income would normally get benefits. In other words, someone should have recognised that the story was seriously wrong. The hon. Member for Havant appeared to misunderstand me—and if he consults Hansard, he will see why—when he suggested that I was criticising the lady involved. In fact, in some ways, I made her point for her. She objected to the use of her council tax to fund a part of the European Union regional government structure. I make no criticism either of the United Kingdom Independence party or of Max Clifford. All three co-operated on a legitimate campaigning point, although the lady was unwise to say that she would go to prison for the cause.
I do, however, strongly object to the press using the story to present the lady as being in poverty, and that is related to my wider point about the fear of poverty among pensioners. One result of the story was that people sent cheques to the local authority to pay the lady's council tax bill—I do not know what the local authority will do with the cheques that were paid anonymously—but she was trying to make a political point. She said that she was prepared to go to jail because she objected to one aspect—or perhaps the whole—of the European Union, but she was not making a point about poverty.
I remember that in 1997, when this Government were elected, some pensioners—especially women who had not paid any contributions during their working life—received only some £60 a week. That quickly went up to more than £90 a week and then to more than £100 a week, but—as ever with means-tested benefits—the problem was getting the message over. Some people did not receive the full amount and it was necessary to draw their entitlement to their attention. That is why I think the newspapers could have made a good story out of the lady's example. They could have said, "Look: pensioners who are getting only this amount need to put in a claim, either for council tax rebate or exemption, or for the increased pension that they are owed." The newspapers did not do that, and that was unfair of them.
Paul Dacre, the editor of the Daily Mail, who was very keen on the story, awarded himself £80 million a couple of years ago and presumably does not have to worry too much about paying the council tax. He will probably also accept his state pension in the normal way. I would have been more impressed if he had used his power, knowledge, position and influence to draw to the attention of pensioners their entitlement to those allowances. That would have been a good story and one that the papers could have been proud of.
Pensioners are not a timid group as a whole, but there are some timid people among them. However, the fear of the means test is no longer the main issue. It has a terrible reputation from the period of mass unemployment in the 1930s, but it no longer holds the same terrors. I do not claim that it is easy or has no problems associated with it, because it has, but I have noticed that pensioners who are entitled to council tax rebates or exemptions do not claim them. They assume that they have to pay the council tax whatever their income. The headlines in the press said that the lady in question had to pay or go to jail, so it is not surprising that some pensioners are fooled into believing that if they do not pay they will go to jail. It is irresponsible of the press to use such stories to scare people. We should have no illusions about it: that is what they are trying to do. I do not mind the press making political points, but they should not use vulnerable people to do so.
My ministerial colleagues are doing a good job on pension and benefit issues, but we must get over to people—the hon. Member for Northavon (Mr. Webb) also made this point—the fact that council tax exemptions and benefits are available. It is important to get that across to pensioners, because they are most affected by it. The newspapers could help in doing that. If they had used the story last week to get the message over, there would be many people feeling more comfortable and being slightly better off as a result. Instead, a person who set out on a road out of principle has had it turned into something else and, at the same time, others will have been made fearful about the dangers of going to prison if they do not pay their council tax.
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