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Mr. Speaker: The hon. Gentleman has put the matter on the record, but I put it on the record that that is not a matter for the Chair.
13 Oct 2004 : Column 289

Opposition Day

[18th Allotted Day]

Pensions and Welfare Reform

Mr. Speaker: We now come to the debate on the Opposition motion. I have selected the amendment in the name of the Prime Minister.

12.43 pm

Mr. David Willetts (Havant) (Con): I beg to move,

That this House condemns the Government's continued failure to bring forward proposals to strengthen pensions and savings or to reform the welfare state; takes note of the deeply worrying interim findings of the Turner Commission and of the contrast between the Commission's detailed analysis and the Prime Minister's empty and inadequate rhetoric on pensions and welfare reform; further notes with concern the high levels of economic inactivity; condemns the lack of incentive to make private pension provision and the failure to help 1.7 million people, including many of the poorest pensioners, who are entitled to the Pension Credit but do not receive it; regrets the failure of the Government to address the crisis in state, personal and company pensions; observes that the Pensions Bill is still widely regarded as poorly drafted and that the Pension Protection Fund does not provide the 'guarantee' claimed for it by Ministers; and urges the Government to join the growing consensus of organisations representing pensioners, pension providers, employers and trade unions that the basic state pension needs to be significantly improved and that the spread of means-testing should be reversed so that older people can be assured of dignity and security in retirement.

I draw the attention of the House to my entry in the Register of Members' Interests.

It has been an extraordinary 10 days, even in the history of this Government's attempts to reform the welfare state and to tackle the pensions crisis. The week began with eager anticipation of what we were told would be a major speech by the Prime Minister on the subject. It was heavily trailed in advance by No. 10. We were told by the The Times that

The Independent said:

The Daily Mirror said:

That is what we were told in advance of the speech, so of course the loyal troops of the left-wing think tanks all marched up the hill to hear this great pronouncement, accompanied by the long-suffering lobby, who had been told to expect something big. What they got was

That was the great new programme for reforming welfare. I guess that we do want an opportunity society, and 10 years ago the Prime Minister could have got away with just giving us another of his visions, but in the past 10 years we have had "a decent society", "a creative economy", "a stakeholder economy", "a new age of achievement", "a partnership economy", "the third way", "a giving age", and of course my favourite,

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We have had pledges and vows and covenants. Notice how the currency gets devalued and these commitments have to get ever more intense. What we have not had, and we did not get on Monday, are any practical policies either to reform welfare or to tackle the pensions crisis. An interesting question is: what went wrong? Why did this much-trailed speech fail to deliver? Explanations are already flying around.

The Blairite explanation is that the Prime Minister was about to deliver a very good speech but the Chancellor got at it. He was just about to do it, but sadly it was copied to the Treasury over the weekend and all the stuff on incapacity benefit was removed by that guy at No. 11. The Brownites say that the Prime Minister does not have the faintest idea what to do, that their man knows what to do, but the Prime Minister has no substance at all.

I welcome the new Secretary of State for what I think will be his first speech in the House in that role, but I tell him that he will have a grim few months of being fought over by the Chancellor and the Prime Minister. It all goes back to that ancient international treaty known to political journalists as the Granita pact, which reserves economic and social policy for the Chancellor. The Secretary of State and his Department are in the position of one of those sad colonial outposts with two great imperial powers clashing over who controls it—one day it is the Chancellor and the next it is No. 10, and the poor Secretary of State is caught between them. The Kremlinologists will want to know when he speaks today whether he does so as the voice of No. 10 or of No. 11.

Meanwhile, as the Government are paralysed in this endless argument between Nos. 10 and 11, what is happening in the real world with the problems of people trapped on incapacity benefit, outside the labour market or worried about the security of their pensions? I shall turn in a moment to the pensions crisis, but as we are also talking about reform of the welfare state, let me refer the Secretary of State to the labour market statistics out this morning, which show that the Government are failing not only on pensions but on the reform of welfare and on tackling the problems of economic inactivity.

Will the Secretary of State confirm that today's figures show that the number of young people under 25 who are not working or studying or training has now risen above 1.1 million? Seven years after the introduction of the new deal, the number of young people out of contact with the labour market and neither working nor studying is as high as it was when Labour came to office in May 1997. The Government have made no progress whatever.

At oral questions on Monday, the Minister for Work—it is good to see her here today—seemed baffled when we cited these figures, and did not seem familiar with a table that Conservative Members have studied closely: table D4 of "Labour Market Trends", which is published monthly. —[Interruption.] I see my hon. Friends nodding. If the Minister studied that table every month, she would see clear evidence that, whatever the Government say about the new deal, it is failing to deliver.
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Today's figures also contain new evidence on the number of people who are economically inactive—the number of people outside the labour market altogether. That figure has also hit a record high: 7.93 million, which is the highest figure since 1983, so we do need welfare reform. Even though the Government are bringing down official unemployment as measured according to the number of people claiming unemployment benefits, they are making no progress whatever in tackling the problem of those who are not participating at all in the labour force. If anything, as they reduce the number of people on unemployment benefits, the number claiming other benefits goes up. For example, the number of people on incapacity benefit is going up. That is why it would have been so good to hear some practical proposals from the Prime Minister on Monday.

Kali Mountford (Colne Valley) (Lab): Should not the hon. Gentleman tell the House the whole story behind these figures? Is it not true that fewer people are now claiming the very benefits that he is talking about? The problem is that the people who ended up on those benefits under the tenure of his Government have lost confidence and it is now very difficult to place them in jobs. The hon. Gentleman should tell the whole story. Is it not true that fewer people are now claiming such benefits?

Mr. Willetts: The whole story is that the number of people on incapacity benefit fell from its introduction in 1995 until 2000. We know what happened in 2000. The Prime Minister had another one of his welfare reforms: he introduced means-testing of new claims for incapacity benefit. We warned at the time what the consequence of that would be. Such claimants, who are vulnerable and on the margins of the labour market, are reluctant to leave the benefit because they fear that if they have to re-claim, they will do so on less favourable terms than before. As a result, the length of time that such people spend on this benefit is going up. That is the problem—the stock of people on the benefit. It is no good simply focusing on the flow on to the benefit if people are remaining on it for longer—or for ever—once they are on it. Under this Government, the average length of time that people spend on incapacity benefit has gone through the five-year mark. That is a scandal. This is why everybody hoped that on Monday, the Prime Minister would offer some practical measures to tackle the problem. He failed to do so.

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