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Mr. Tony McWalter (Hemel Hempstead) (Lab/Co-op): In a way, the hon. Gentleman has shot my fox, as I was about to say that the Government's measurements of poverty involve those three ingredients. The Library paper on child poverty makes it clear that that is the context for the Budget debate. As he might know, the paper begins by quoting a previous Conservative Chancellor of the Exchequer, who said that defining poverty was so hard that he was not going to bother. As a result, he certainly did nothing about it.
Mr. Goodman: All Governments are very wary of defining poverty, as our Select Committee discovered
when we asked Ministers about this issue. The hon. Gentleman is right to draw attention to those measurements, and I hope that, like me, he wants to know more about how they will work in respect of the 2010 target.I had hoped that the Chancellor would say something about housing costs. Previously, the Government have attempted to hit their target on the basis of incomes before and after housing costs. But we now know that, although they will continue to publish the "after housing costs" figure, they tend to make the calculation on a "before housing costs" basis. With due respect to the Government—many of my Labour colleagues on the Select Committee share this view—if one makes the calculation on a "before housing costs" basis in London and the south-east, where such costs are extremely high, one gets an artificially good result. So we need to be sure that the 2010 measurement is fair in that regard.
Neither the Chancellor nor the Secretary of State for Work and Pensions has taken the opportunity to say whether Northern Ireland, where child poverty is extraordinarily high, will be included in the figures in 2010. The Government did not have to hand—or so they tell us—the family resources survey information that they needed to include Northern Ireland in the measurements in 2004. But that information is to hand in such a way as to enable them to measure poverty in Northern Ireland, as well as elsewhere in the United Kingdom, for the 2010 target, so perhaps the Minister could make it clear whether the Government intend to do so.
It is important to look very closely at the figures on child poverty, but I hope that the House agrees that, in the end, measuring child poverty and poverty in general is not everything. What we really need to know—such information is not always to hand—is whether the money that the Government have put into reducing child poverty and the rise in the incomes of poorer people, which cannot be dissociated from worldwide economic growth, are actually improving life chances. On the basis of the evidence available, we seem not to know the answer. We cannot be sure that such income increases are boosting health and happiness, improving relationships and parenting, raising educational attainment, breaking the cycle of crime, and improving not just standards of living, but quality of life.
I want to conclude by considering three groups of people whose life chances were not improved by last week's Budget, the first of which is pensioners. The Government must now accept that they have a very deep problem with their pensions policy. From trawling voluntary groups, industry and business, it has become clear that only the Government support an approach that concentrates on means-testing as a way of relieving pensioner poverty. According to the most recent figures that I have seen, someone who draws the state second pension in full will not have enough money to float themselves off means-tested benefits. By 2025 and 2050, a huge proportion of pensioners will be entirely dependent on such benefits. That will damage savings and pensioners consider it an affront to their dignity. I have drawn attention before, in the context of Select Committee reports, to the extremely poor take-up figures. We knew in the days before the minimum income guarantee had been replaced with pension credit, that the non-take-up rate for the MIG
was approximately a third. We now know that the non-take-up rate for pension credit is about half. That means that half of our poorest pensioners are gaining nothing whatever from pension credit, and nothing in the Budget or the Pensions Bill will put right the mis-structuring of the Government's pension policy.
Mr. Tom Harris (Glasgow, Cathcart) (Lab): Does the hon. Gentleman accept that there is some benefit in targeting money on the less-well-off pensioner? Surely the Conservative policy of re-establishing the link between the basic state pension and earnings would simply give additional funds to every single pensioner in the country, including perhaps Baroness Thatcher and others like her who do not need it. Is it not better to target the money to where it will be most effective?
Mr. Goodman: I am not aghast in horror at the prospect of paying a higher state pension to Baroness Thatcher, but I put it to the hon. Gentleman that, among sections of Labour Back Benchers, our pensions policy is more popular than the Government's. The essential problem with the means-testing policy is the take-up. If the hon. Gentleman's constituency is typical, half the poorest pensioners living in it are not receiving pension credit. For reasons that I have already explained, that is wrong.
The second group who will not benefit from the Budget are people with disabilities who are out of work, and I have some new information to share with the House about them. We are familiar with some of the figures and we know that there are something like 2.7 million people on incapacity benefit and that about 1.3 million of them want to work if they can find it. We also know—the Secretary of State for Work and Pensions said it earlier—that the only group of people on incapacity benefit whose numbers are rising are those with mental health problems.
I tabled some questions to the Secretary of State to ascertain more information about that group. As I have said, I do not believe that the Budget will greatly help them. These are the figures on men with affective disorders who are drawing benefit. In 1997, there were approximately 150,000; there are now some 235,000 drawing incapacity benefit. Turning to those with neurotic and stress-related disorders, there were about 119,000 in 1997; last year it had risen to about 135,000.
For women, the overall figures have gone up. In 1997, there were 1,032,000; last year, staggeringly, there were 1,120,000. In 1997, there were about 145,000 women with mood affective disorders, in comparison with about 232,000 last year. In 1997, there were about 101,000 women with neurotic and stress-related disorders, in comparison with 114,000 last year. The group of people drawing incapacity benefit whose numbers are rising are those with mental disorders of one sort or another.
Our criticism of the new deal has always been that too much money has gone into helping people who are likely to get employment in the labour market anyway, and not enough into helping those who find it difficult to get work and then to keep it. I believe that the Budget
provides nothing to help that particular group of people. If the Chancellor were more creatively and imaginatively minded, he would want to reflect on the proposals that we made in our last election manifesto for an incapacity benefit fundholder that could reach this hard-to-find group of people, help them into work and keep them there.The final group is young mums who want child care choice. The Budget proposals on child care essentially built on last year's proposals, which helped working parents. We have to see those proposals in the context of another Government target—that of getting 17 per cent. of lone parents into work by 2010. However, some mothers and fathers want to stay at home and look after their children when they are very young. Naturally, they will receive no benefit from employer-related measures in respect of people who work.
That has been acknowlegded by no less a figure than the Secretary of State for Trade and Industry. An article in The Daily Telegraph some months ago was excitingly headlined "We Failed Mothers Who Stay At Home, Admits Hewitt". In it, the right hon. Lady said:
- "I do think we have given the impression that we think all mothers should be out to work."
Finally, it will not be possible to reduce poverty effectively in the long term if family life is not stable. There is far greater equality on the continent, but the paradox is that far more payments are made there to families on high incomes. In France, parents have choice, and in Denmark women are encouraged to enter the labour market, but the key is that payments are made much higher up the income scale. I am worried by two elements in the Budget—the freezing of the family element of the child tax credit, and the fact that child benefit will not be changed. In fact, that has not increased in real terms since 1999.
Child care is a key theme for the future. I am sorry that it was not approached in the Budget in the choice-based way that some Select Committee members would prefer. In conclusion, the Budget was political in nature, rather than financial. Many of my constituents will agree with me that it offers them very little.
4.36 pm
Ms Candy Atherton (Falmouth and Camborne) (Lab): I apologise to you, Mr. Deputy Speaker, and to the House for not being present for the earlier speeches in today's debate. The Select Committee on Environment, Food and Rural Affairs, of which I am a member, has been taking evidence on gangmasters in relation to the Morecambe bay tragedy and is sitting later than normal.
I want to talk about those elements of the Budget that I consider to be good for Cornwall. The first of the specific matters that I want to raise is the reduction of VAT on heat pumps. That might seem obscure to many hon. Members, but my constituency delights in being home to the remains of the "hot rocks" project, which
the House may recall was closed by Mrs. Thatcher in the 1980s. The project was a pioneering scheme that drew heat from the ground to provide what was effectively free heating for homes, buildings and factories. Although the scheme did not last, a number of pioneering firms that were committed to the technology carried the work on, in co-operation with the Camborne School of Mines.One of the firms involved is called Geoscience, and is based near Falmouth. Heat pumps can produce five units of heat from one unit of energy derived by using the geothermal technology. The firm was concerned about the fact that it was paying VAT on heat pumps at the normal rate. I lobbied my hon. Friend the Economic Secretary about that, and I am glad to say that he listened. As a result, the rate was reduced in the Budget to 5 per cent. The people at Geoscience are delighted at that change. Although the Budget debate may seem fairly obscure to many, people in Cornwall who have a specific answer to the world's climate problems were listened to by Ministers, and I am very grateful for that.
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