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Mr. Andrew Smith: I apologise for missing the first part of the hon. Gentleman's speech. I was called out of the Chamber. Does he accept that the rate of flow on to disability benefits has fallen by a quarter since the Government came to power? The total number of people on benefits has continued to rise, but it has done so at a diminishing rate because of the length of time for which people stay on those benefits. That is why our pathway to work proposals to help people out of inactivity and into work are so important.
Mr. Webb: It is always gratifying when the second derivative is raised in the House. When that happens, I feel that calculus was worth it after all. The Secretary of State is right in saying that the rate of inflow has slowed, but it is a question not of when people go on to benefits, but of how long they stay on them; the outflow rate is critical. I realise that the Government have a programme to tackle the difficulty of getting some of these folk off benefits, but successive Governments have experienced the problem of folk flowing on to incapacity benefit and its predecessors and then getting stuck. The Government are overselling what has happened, especially in the case of young people for whom sickness is less of an issue.
Mr. Willetts: As the hon. Gentleman knows, the Secretary of State's figures were misleading. The average time on incapacity benefit has increased since the so-called reform involving the introduction of means-testing for new claims. People are reluctant to go off the benefit, because they fear that if they start claiming it again, they will be means-tested. The Secretary of State mentioned the linking rules, but those must be applied for in advance, and many people do not do so.
Mr. Webb: The hon. Gentleman is right in every particular, although I seem to recall that he was very influential when means-testing was applied to what was then invalidity benefit, when company pensions were offset against invalidity pensions, so he is not entirely blameless on that front.
Mr. Willetts: I was trying to help the hon. Gentleman.
Mr. Webb: Yes, and that is all the thanks the hon. Gentleman gets.
The hon. Gentleman was entirely right when he spoke about the savings in staff numbers at the DWP that were supposed to have been made through technology. Excuse me, as my children say, but where are these efficient computer systems? Are they in the Child Support Agency, where even Ministers are beginning to despair of the system ever working?
Mr. Watson: Will the hon. Gentleman give way?
Mr. Webb: I have already given way twice to the hon. Gentleman.
Are the efficient computer systems in the tax credit system, which was a complete shambles at the outset? I have not seen a single efficient computer system in the Department, yet the cost of tens of thousands of workers has supposedly been saved. Our principal concern is the welfare of those receiving benefits and pensions. They are entitled to an efficient service. If the Secretary of State plans staff cuts on the basis of efficient computers that do not exist, our constituents will suffer in terms of their pensions, benefits and tax credits.
Mark Tami (Alyn and Deeside) (Lab): Is the hon. Gentleman really telling us that he would cut the numbers by far more?
Mr. Webb: No. We are saying that we do not support cuts unless it can be demonstrated that efficiency has been delivered to our constituents. We do not support the idea of cutting staff when IT systems are not producing a more efficient service.
Our proposals for reform of tax and pension credit would reduce the need for bureaucracy. If we provided a better state pension and reduced dependence on means-testing, the administrative burden would be smaller. We propose to cut administration and bureaucracy, but we will make no hypothetical assumptions that computer systems will be improved.
Rob Marris: The hon. Gentleman implied that the number of DWP staff—97,000—had risen by 30 per cent. in three years. Since the Department has existed for only three years, perhaps he could clarify that. As for computerisation—my right hon. Friend the Secretary of State will correct me if I am wrong—I believe that the Department has 36 computerisation projects on the go, as well as those established since 1997. The hon. Gentleman mentioned two or three that have undoubtedly had problems—I speak as a member of the IT Sub-Committee of the Select Committee on Work and Pensions—but many DWP computer systems are working well. I suggest that the hon. Gentleman has not heard about those simply because they are working well.
Mr. Webb: As the hon. Gentleman is knowledgeable about these matters, I am sure he will agree that the computer projects that affect the vast majority of our constituents are the tax credit computer, which affects every family in the land, and the pension credit computer, which will probably affect every pensioner in the land if the Chancellor has his way and which affects half of them already. The Child Support Agency computer affects 1 million parents with care, and probably a further million. These are substantial computer systems, all of which have a track record of being a shambles. The national insurance recording system, which applies to every man, woman and child as well as several million dead people, is a shambles too. I am delighted to learn that another 30 systems may be working, but I think that the record is bad enough as it stands.
The hon. Gentleman asked about my statistics relating to staff numbers. According to table 6 of the DWP report, headed "Staff numbers 1997–98 to 2005–06", which includes whole-time equivalents, the figure for 1997–98 is 97,000 and the one for the current
year is 130,000. [Interruption.] Those figures are in the Department's own report. I do not know where the Department got the numbers from if they did not exist.As the hon. Member for Havant observed, one thing that was mentioned only briefly in the Budget statement—we should probably be grateful that it was mentioned at all—was the Government's U-turn in deciding that paying the working families tax credit through the pay packet was a mistake. One of the first Bills whose progress through the House I followed was the one that introduced that credit in 1998 or thereabouts. The only difference between working families tax credit and family credit is payment through the pay packet. When we opposed that, we were patted on the head and told that we did not understand that people needed to learn a lesson. As the hon. Member for Havant says, that is a metaphysical argument. It was suggested that people were capable of understanding that work pays only if the money was in their pay packets. First child tax credit was taken out of the pay packet because the Government accepted our argument that mothers were the best recipients of benefit for their children. Then the Government finally accepted the "burden on business" argument that leaving the fag-end of tax credit in the pay packet—often £6 or £7 a week—was simply not worth it.
Business, families and parents would have been saved an awful lot of hassle if the Government had only listened to the Liberal Democrats in the first place—I am glad to see the hon. Member for Havant nodding at that—and to others who supported us.
The working families tax credit has been changed, but the child tax credit has received almost no attention. It was frozen in the Budget—the amounts for families and the thresholds were frozen. Will it be one of those things that is nibbled away every year so that families on middle incomes do not necessarily spot what is going on but realise, as time goes by, that their support is being eroded? Perhaps the Chief Secretary will tell us whether that is a deliberate policy. Is it the Government's policy to freeze the family element and thresholds indefinitely so that the tax credit is more heavily concentrated on families on lower incomes? That would not necessarily be a bad policy; it could provide a fairer structure. However, the Government should be open and up front about it rather than simply forgetting to index the credit each year.
At the end of the financial year, our constituents will discover, if they have not done so already, that their family finances are on a rollercoaster. The Government will examine people's child tax credit assessment for 2003–04 and try to validate it. They will ask for income information in the following six months and check whether the amount paid in 2003–04 was right. Many people's circumstances will have changed since they filled in the form in January 2003, on the basis of their 2001–02 income. Many people will get a letter or a knock at the door and be told that they were paid the wrong amount in 2003–04, that the amount that they had started to receive in 2004–05 was also wrong, because the figure continued at the same rate as for 2003–04 and that the overpayment for 2003–04 and the first part of 2004–05 will therefore be recovered. That will be so severe that families will probably face hardship. They can then claim a hardship payment that will reduce the clawback but leave a larger amount to be
clawed back at the end of 2004–05. That will be carried over into the award for 2005–06, when circumstances will have changed and the fiasco will continue.Incomes will go up and down, as if on a rollercoaster, and people will never have certainty. They will never know whether what they currently receive is theirs to spend without someone trying to claw it back. Assessment over a year means that every change of circumstances has the potential to affect the award. Both partners' incomes, the number of children, whether partners stay together or get different jobs, and suchlike changes must be documented and perhaps reported because they might affect the award. Has not bureaucracy gone too far? Is not it time to go back to fixed awards—possibly with some flexibility for extreme changes of circumstances—which would save massively on bureaucracy and have the great beauty of ensuring that our constituents knew where they stood? At the moment, they do not. I hope that the Chancellor and the Government will consider that.
In his introductory remarks last week, my hon. Friend the Member for Twickenham (Dr. Cable) mentioned imbalances in the economy, referring to personal debt and credit. He calculated that the personal sector owes a trillion pounds and that that equals the combined external debt of Africa, Asia and Latin America put together. That suggests the scale of the debt mountain, but we heard precious little from the Chancellor about tackling personal debt.
Let me give one example that has arisen today. My researcher approached me for a pay rise—a common experience for me. She had received a letter from Barclays bank—her bank—offering her a pre-approved loan of £20,700. The bank suggested that she might spend it on a holiday or a car. I grant that she has expensive tastes, but that would pay for a pretty nice holiday or car. Her bank, which knows how much she earns, pre-approved the loan. The monthly repayments would be £934. I shall not say what percentage of her take-home pay that is, but it is more than half.
Those who want to save money are confronted by bureaucracy. I recently wanted to put some money into a cash individual savings account. I had not contributed any money for a year and I had to fill in all sorts of forms to justify being allowed to save in that ISA. However, anyone who wants to borrow money simply waits until an offer lands on the doormat.
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