---

Mr. Willetts: I thought that the hon. Gentleman was being rhetorical, although come to think of it he is never rhetorical. We have set out clear figures on offsetting savings through means-tested benefits, on savings involving the new deal and on savings from changing the rules on income support for lone parents, which would enable us to finance our policy throughout the first Conservative Parliament. I set out in the document—no one has challenged any of the figures in it—that as long as we can continue to identify savings, which I am confident that we can, we will keep on going. I think that that is a more serious attempt to cost a policy than his proposal of simply abolishing the Department of Trade and Industry. If we are talking about who has bitten the bullet on what must be done to finance a policy, the pot is now calling the kettle black.

Mr. Webb: It took a moment to get that response from the hon. Gentleman, but I note that he did not query the £180 million shortfall—perhaps I should call it the pots and kettles black hole. He did not do that because the Conservatives admit to that deficit, but the figure is far too small. He says that he will offset savings through means-tested benefits, of which I have taken account, but there are two other ways in which he will pay for his policy, although that will leave him £180 million short.

First, the hon. Gentleman will scrap the new deal, which will provide £600 million every year, but I thought that the Conservatives said at their conference that they would replace it with a scheme through which charities and private companies would help people to get jobs. Will they do that for nothing? Where will the money come from to pay for that after the new deal is scrapped?

Mr. Willetts: A year ago, we set out in a document our policy on pensions and how that will be financed. I stand by the figures and no one has shown that they are wrong in any way. In the past few weeks, as a result of the exercise conducted by the James committee, further savings in the Department for Work and Pensions
 
13 Oct 2004 : Column 314
 
budget have been identified, so we will use some of those savings to finance the work-first policy that I launched at the Conservative party conference.

Mr. Webb: Such as?

Mr. Willetts: If it is not on our party's website, I am happy to send the hon. Gentleman the James committee report, which investigated the Department for Work and Pensions and identified further and different savings from the one that I used a year ago to finance our policy.

Mr. Webb: It is good to hear that the Conservatives are not going to use savings in other Departments to pay for their spending plans.

We have the new deal proposal and will have a closer look at where the alleged savings will come from, but another line has received almost no scrutiny whatever. The hon. Gentleman will say that there will be £100 million in the first year, £200 million in the second year, £300 million in the next year and £400 million in the year after that—nice round numbers—by requiring the lone parents of teenagers to look for jobs.

I suspect that most of us would not have a problem with the idea that lone parents whose youngest child is now a teenager should be thinking about the labour market, but where will the £400 million come from? It is necessary to make—dare I say it—heroic assumptions. The hon. Gentleman is assuming that half the lone parents whose youngest child is a teenager will get jobs. I do not know whether he has assumed that they will not get tax credits, or whether he has allowed for that. I do not know whether he has assumed that when they get a job, the person who would otherwise have got that job then goes on to benefits. Has he netted any of that off, or are they fantasy figures?

It is one thing to say that the Conservatives will give £7 a week to pensioners—although less to women—but it is another thing to make the figures up as the hon. Gentleman goes along. They are far less plausible than such documents give us reason to believe.

Mr. Willetts: The figures are cautious. If the hon. Gentleman looks at the evidence on the distribution of lone parents on income support by age of child, he will be surprised, as I was, at the number of lone parents on income support who have older children of secondary school age. I expected to find the figures bunched, with most of the lone parents on income support being parents of young children. That is not the case.

The labour force participation of lone parents is still much lower, even when their children are older, than mothers in couples. There is clear evidence from research at the London School of Economics that the best outcomes for the children of lone parents, especially the daughters, are if the parent is in contact with the labour force when the child is of secondary school age. We have made relatively modest assumptions for the savings once we take into account the large number of lone parents who have secondary age children.

Mr. Deputy Speaker (Sir Michael Lord): Order. Although I am enjoying the interchange, I remind the hon. Gentleman that it is an intervention.

Mr. Webb: It was an interesting intervention, which highlighted the extent to which the numbers behind the Conservative pension plans have not been explored—apart from by me, of course.
 
13 Oct 2004 : Column 315
 

In a sense, I do not disagree with the hon. Gentleman. There are good reasons to think about whether the lone parents of teenage kids should have closer contact with the labour market, but if it is in their interests, we must ask ourselves why the lone parents are not already getting jobs. Is it because there are barriers, such as child care, which simply requiring them to look for jobs does not overcome? Is it because some of them are in parts of the country where the labour market does not work well, so requiring them to look for work does not give them jobs?

Many lone parents of teenage children are probably in the wake of relationship breakdown. That may be a significant number of people. Do we want to put pressure on people who have just got divorced or separated and who are finding life difficult by telling them that we will take their money away unless they start looking for a job on day one? There are many unanswered questions and assumptions that have not been probed. I hope that we will have the chance to do that nearer to the election.

Rob Marris (Wolverhampton, South-West) (Lab): I am listening with interest and the hon. Gentleman makes a powerful point about Conservative policy. In terms of lone parents, will he also bear it in mind that the labour force participation rate is 54 per cent.? Most lone parents are women. The labour force participation rate of women is approximately 72 per cent., so there is not much room for pushing up participation and there will be costs associated with it, as he points out.

Mr. Webb: The hon. Gentleman raises a fair point about how far we can go with such a policy. One gets the feeling that the figures have been plucked from the air. I almost wonder whether the £400 million was the difference between the two numbers and was what was required.

Let me make just a couple of other observations on the Conservative approach. I listened in full in a studio to the speech by the hon. Member for Havant. The rhetoric was credible and convincing. He gave a realistic description of the problems. He has likened the pensions crisis to global warming and the war on terror. He is trying to tell us how serious he thinks it is. However, it is clear from the eight-point plan that it is a good job that we are not relying on him to deal with global warming because we would already be flooded. It is so limited in scope. There is a huge problem and what are the Conservatives going to do? They are going to give people £7, if they are lucky, by the end of a Parliament, still leaving the basic state pension £18 below the poverty line. How does that address the scale of the problem?

Mr. Kenneth Clarke (Rushcliffe) (Con): The hon. Gentleman has spent about a quarter of an hour mainly analysing the Conservative proposals. We are meant to be discussing Adair Turner's commission, which warns us all that the proportion of people aged 65 or over will double between now and 2050. As I understand the Liberal approach, it is to abandon the contributory principle on pensions, extend pensions entitlement wider than it is now, raise the value of the basic pension for everyone as soon as possible, and link it to earnings thereafter. Does he think that that is facing up to the
 
13 Oct 2004 : Column 316
 
difficulties of the challenge we face? Has he given any thought at all to the appalling level of unfunded obligations that he proposes to land on our children and grandchildren if the Liberals are ever let loose on the subject?

Mr. Webb: One of the ways in which the world has moved on since the right hon. and learned Gentleman was a senior Minister is that in those days future liability was a price-linked unfunded basic state pension and a price-linked unfunded means-tested system. We have moved to a situation in which, on current policies, we have an earnings-linked means test, which will apply to between three quarters and four fifths of all pensioners. If that is the current projection—

---