Mr. Andrew Tyrie (Chichester) (Con): I have a couple of quick points to make at the start. First, the Opposition will not oppose the Bill this evening. Secondly, I just want to say how grateful I am for the responses that I have received from a number of organisations to my request for their views on the Bill, in particular, Barnardo's, Connexions, the Foyer Federation and the Prince's Trust. Some of what I will say today reflects points that they have made to me, and no doubt my hon. Friend the Member for Rayleigh (Mr. Francois) will raise others in Committee. The hon. Member for Amber Valley (Judy Mallaber), who is just leaving the Chamber, also raised some of the points that they have made. I did not mean to embarrass her; I meant to compliment her. The eligibility rules point to which she referred features in several of the representations that I have received.
I intend to make three general points. First, with only seven clauses and a couple of schedules, this is a small and relatively straightforward Bill, even taking into account the regulations and changes to the tax credits system that will accompany it. However, it raises a number of detailed and important questions that I shall deal with in a moment. I am afraid that that will probably be the most boring part of my speech for some hon. Members who are not so interested in the detail. [Hon. Members: "No!"] I am pleased to have such a ready audience for such material.
Secondly, the existing system of support is getting incredibly complicated. It is unacceptably complicated and reflects what is going on in the benefits system more widely. I worry that the Government do not have a clear idea of their destination in some of the reforms, despite what the Paymaster General said, and that the Bill will not help us get there anyway. I shall deal with that point in a moment.
The third point derives from the fact that a relatively senior member of the Treasury team is presenting the Bill to the House. Does it really make for good government that the Treasury has become a benefits agency? Is it sensible that gamekeepers have become poachers? How on earth has all that happened? I shall get into that issue at the end of my speech.
We need first to do a bit of detailed analysis of the Bill. The Paymaster General rightly ranged widely in setting out the reasons for the Bill, and I shall not repeat that
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background. The Bill is part of a much broader reform, and as she said, there will probably be more in the Budget. There will also be a White Paper, as she mentioned. The Bill is designed to make only a couple of simple amendments to the eligibility rulesone affecting unwaged trainees and the other dealing with people over 19 who are on courses.
On the first change, as the Paymaster General said, the idea is to remove the apparent discouragement in the current system for people in training. A number of them choose to stay in full-time education because the financial support is better, even though they may be better suited to training. That is one of the concerns that have been expressed to me. The other aim is to help people stay on after their 19th birthday. At present, payments stop as soon as they reach that point.
The provisions on unwaged trainees look uncomplicated, although it should be remembered that the eligibility criteria for child benefit affect a number of other benefits, so the Bill has had to introduce amendments in respect of the widowed mothers allowance, the widowed parents allowance and the guardians allowance, among other payments. It is claimed that the Bill will remove distortions. I am not convinced that they will all be removed, although I shall perhaps save the detailI have some of it herefor the Committee stage.
The entitlement of parents and carers to child benefit and the child tax credit currently stops at the 19th birthday, and the Government want people to be able to go on receiving the benefit while they are doing an appropriate course. As I have made clear, the Opposition will not oppose that proposal.
It is importantthe hon. Member for Yeovil (Mr. Laws) began to get into this territory a moment agothat we look at what impact the measures will have. In that regard, we have to rely on the regulatory impact assessments. I use the word "assessments" because we have already had two of them. First, an assessment was published in December. Frankly, it was so thin that I was surprised that the Paymaster General allowed it to get out of the Treasury at all. Secondly, a couple of days ago, we were given an assessment called the "Supplementary Partial Regulatory Impact Assessment". It is pretty partial and thin. It is a welcome supplement, but even when the assessments are taken together, we still have a pretty thin gruel.
Yet again, the Government have introduced a measure in quite a major spending area and we still do not have a proper regulatory impact assessment. The language of regulatory impact assessments is used, but the substance is not delivered. That is extremely worrying, and it probably explains the fact that so much money is being wasted in some areas of the public sector.
Rob Marris (Wolverhampton, South-West) (Lab):
I have read both the documents to which the hon. Gentleman refers. As he said, the Bill seems a fairly simple measure, even though it will cost £105 million a year. What is he saying is missing from the regulatory impact assessments? Is he saying that he wants more complex assessments when in fact we do not need them?
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Mr. Tyrie: If the hon. Gentleman will contain himself for a moment, I shall ask a few questions of the Paymaster General. If he wants to come back with the answers because he already knows them, I shall be delighted to take a second intervention.
At the heart of the matter is the fact that we do not know what the cost or effects of the measures will be. We do not know what the behavioural effects or deadweight costs will be; how many people will be brought into, attracted to or kept in training; or what the consequences would be if the measures were not introduced. The most basic question is: how many extra people will benefit and what is the extra cost over and above the amount that will have to be paid to those who would go into training anyway? We need to compare those two numbers to decide whether to proceed with the measure. That is not an easy question.
Rob Marris: In paragraph 10 of the supplementary partial regulatory impact assessment, which I think was published on Monday, the final words are "£105m a year", referring to costs in relation to the 80,000 young people mentioned in the first line of that paragraph. As I understand it, the benefit is non-means-tested. If double the number of young people went on to unwaged training courses and the figure was 160,000, the costs would presumably be £210 million a year. Surely, that is the hon. Gentleman's answer.
as well as to child tax credit. We need a breakdown between those two aspects and to know what proportion would be spent on people who had not changed their behaviour in any way as a consequence of the measures. There is a deadweight cost. What we need to know in order to make a proper assessment and what the core of any regulatory impact assessment should be is how many extra people will be involved and the extra take-up that will result from the measure. That information is not provided in the document. Indeed, no attempt at all has been made to provide it. How many extra people will be trained? That is what we need to know, and I see that he nods in agreement.
We are not even absolutely sure about the straight-line costthe point that I made in the beginning of my response to the hon. Gentleman. On reading carefully paragraphs 8 to 10 of the regulatory impact assessment, I see no breakdown of the £105 million between the cost of child tax credit, child benefit and income support. I may have misread the document, and perhaps he knows that information. I do not have it, and as the Paymaster General is not leaping to her feet to tell me, I fear that she does not know either, even though she is introducing the measure. In order to assess the value of such a measure, it seems absolutely basic that we must know that information, and we do not.
Let us turn to the age 19 cut-off and see how far we get in trying to work out what the regulatory impact assessment has to say about that. The Government have changed their mind on this issue. I thought that they were proposing a cut-off at the 21st birthday, but it seems that that the age has now changed to 20, only one
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extra year. Incidentally, they say that they are doing so because they have some concerns about behavioural effects, a point made in paragraph 23 of the regulatory impact assessment, but the cost, which is put at £65 million, does not take account of behavioural effects, which seems extraordinary. We have been given a cost estimate, which we have been told by implication immediately to ignore. If we do not ignore the cost estimate, there is little logic in excluding 20-year-olds. We have been told that lifting the age from 19 to 20 will cost £65 million, but raising it to 21 will cost only £10 million more. If the cost tails off that dramatically, why have the Government rejected raising the age limit a little further?
The Paymaster General referred to representations, and a number of relevant organisations have made representations that people will still be caught at the cut-off at 21. She could consider raising the cut-off to 22, bearing it in mind that the cost tails off so quickly. She may want to consider that option, but we have not been provided with the information to assess it. I would be grateful if she told me the Government's estimate, which must be extremely small, of the cost of bringing help to people aged 21?
I realise that the Paymaster General may not have all the answers on the tip of her tongueI see that reinforcements are now arrivingand she may want to reply in a letter or in Committee, because it is important that those questions are answered. I have no illusions that they are easy, but they are relevant, and I hope that the Paymaster General and the Economic Secretary asked them vigorously of officials before they agreed to go ahead with the proposals.
At one point, the partial regulatory impact assessment states that it relies on anecdotal evidence. If that is the case, the Government should consider conducting a sampling survey. They have held a pilot; why not conduct a sampling survey on the points that I have just raised? Such a survey would not cost much and would enable the Government to answer the crucial question whether we are getting value for money for those proposals. We do not have evidence in front of us showing that we are getting value for money for the £170 million that will be spent as a consequence of the Bill.
I shall say a few words about complexity, which is my second major point, but I shall do my best not to detain hon. Members for too long. At the beginning of my speech, I said that complexity is a serious problem, and the tax credit and benefit system is now so complicated that scarcely anybody fully understands it. I am not suggesting that all the problems began in 1997, when the system was already complicated, but reforms since then have not made the situation any easier. As a result of recent reforms, seven benefits are specifically available to families with childrenchild benefit, child tax credit, working tax credit, statutory maternity pay, maternity allowance, guardians allowance and education maintenance allowance.
Three separate Departments are responsible for policy: the Treasury rules the roost on child benefit and child tax credit; the Department for Work and Pensions examines most other benefit issues; and the Department for Education and Skills runs the education maintenance allowance. That is not a good way in which to make benefit policy. The Bill originates in a
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review conducted by all those Departments, called "Supporting young people to achieve: towards a new deal for skills", which was published in March last year.
In truth, support for young people is, of course, horrendously complicated. The Government make that clear on page 16 of the document, which includes a chart that would leave even someone who is well versed in such matters bewildered as to their entitlement. The system is far too difficult to understand: I do not think that there is a family in the country who could successfully navigate its way through the thicket of regulations and rules, and I am not sure how many hon. Members could, either.
I was shocked to learn that the people who are supposed to administer the system and provide expert help do not seem to have a firm grip. Lest hon. Members think that I am exaggerating, I shall quote from the Government's own document, which states:
The Paymaster General referred to that point, which is obviously a major concern. To their credit, the Government have acknowledged that there is a crisis as a result of the paucity of advice. The social exclusion unit report, "Bridging the Gap", also makes that point clear.
which the Paymaster General referred to earlier and which will occur at some unspecified future date. The detail on how that will be accomplished consists of little more than a table on page 35, which is worthy in itself but is scarcely the stuff of serious policy making. I will believe in the simplification when I see it.
In the meantime, the DFES and the DWP will work in consultation with the voluntary sector to try to ensure that young people at least get better help and advice in understanding their entitlements. That is, of course, welcome, but sophisticated advice centres to explain people's benefit entitlements are not a solution but a reflection of the problem. Young people most need advice not on the benefits system but on what courses to take and on the crucial questions that will affect their lives, as my hon. Friend the Member for Banbury (Tony Baldry) pointed out in his intervention.
I have made it clear that we will not oppose the Bill, but I regret yet further layers of complication being added to child benefit. When child benefit was introduced, its great advantage was that it was simple: it was a universal benefit paid regardless of income, and it had almost 100 per cent. take-up. It could therefore play a role in relieving poverty, particularly at the bottom end, where people often suffer the most by missing out on benefits designed for them. Because it was a universal benefit, it did not have severe disincentive effects.
The tax and benefits system is now being constructed on an ad hoc basis, and it is far more complex. It creates more disincentive effects, often has unacceptably low take-up and often fails to help those who most need it. Anybody who reads the recent National Audit Office
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report on tax credits will find plenty of evidence for what I have just suggested. The new tax credits, including child tax credit, have not worked as intended, causing problems for claimants, employers and the Government, and they are extremely complicated.
A moment ago, I said that child benefit was originally a simple benefit for a simple purpose; it is now a much less simple benefit for multiple purposes. The Government see it as a tool to encourage more people to choose unwaged, work-based training, if that is their preference, instead of paid work-based training. It is seen as one of the tools needed to tackle the skills shortage and as part of the education system. This Bill, its accompanying regulations and the raft of measures that are likely to be announced shortly are no doubt well intentioned, but will they have the effects intended? I am not sure.
A Dutch economist, Jan Tinbergen, won a Nobel prize by making this simple point: use one social policy for each policy objective. The Government have located a problem, a skills shortage, which is what, "Supporting young people to achieve: towards a new deal for skills" is all about, and they have decided to use multiple policy instruments to tackle it.
My best guess, and my worst fear, is that the law of unintended consequences will apply, although I shall not try to predict how. If the Government were to get the chance to implement more legislation after the election, I would wager that before long they would have to return with yet another raft of measures to tackle the unintended consequences of the last set. There are so many examples of that having already happened with the Government's reforms that I hardly know where to begin. Perhaps, as I have already been speaking for a while, I will confine myself to three.
First, there were the individual learning accounts. Remember those? They were an early attempt by the Government to address the skills agenda, but they had to be abandoned because they generated so much fraud. Then there is the pension credit, a flagship policy introduced as recently as October 2003, but just over a year later we have had a number of press reports suggesting that it is to be scrapped. There are also the new tax credits to which I alluded. Those were presented as a light-touch system, responsive to the needs of families, but the overpayments problem seems to be growing all the time, and we do not yet know the full extent of it.
The plain fact is that this Chancellor cannot resist meddling. He is a spending Minister struggling to get out. He sometimes reminds me of an earnest professor of social engineering, with his incessant tweaking and adjusting of his own creation. We only have to look at the history of tax credits to see that. In the space of four years, this Chancellor has abolished family credit and introduced the working families tax credit.