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Madam Deputy Speaker (Sylvia Heal): With this we may consider the draft Guaranteed Minimum Pensions Increase Order 2005.

Alan Johnson: I am satisfied that both orders are compatible with the European convention on human rights.

The uprating order will, as usual, increase most national insurance benefits by the retail prices index amount of 3.1 per cent. and most income-related benefits according to the Rossi index, by 1 per cent. The guaranteed minimum pensions increase order sets out the amount by which contracted-out occupational pension schemes must increase members' guaranteed minimum pensions which accrued between 1988 and 1997. Where the annual increase in the RPI exceeds 3 per cent., the guaranteed minimum pensions indexation requirement is capped at that level under the primary legislation. This year's order therefore provides for an increase of 3 per cent.

This year's uprating adds nearly £3 billion of extra Government spending, tackling poverty by helping those most in need. Of the £2.1 billion extra for pensioners, over half a billion pounds—£580 million—is above-inflation spending.

Since 1997, our total annual spending on financial support for children has increased by over £10 billion in real terms. That is in stark contrast to the 1980s and 1990s, when child benefit was frozen for three years and pensioners received only inflation-level increases, even as social security spending spiralled out of control.

When the Conservative party was in power, unemployment twice hit 3 million and the numbers on incapacity benefit trebled to 2.6 million. By 1997, one in five families had no one in work and one in three children were growing up in poverty. There are now more people in jobs than ever before. Unemployment is at its lowest for 30 years, with long-term youth unemployment 90 per cent. lower than in 1997. We now spend £5 billion less on unemployment benefits than we did in 1997. With almost three-quarters of the working-age population in work, our employment rate is the highest of any of the G8 countries.

Already our new deal for lone parents has helped nearly 300,000 lone parents into work and helped to increase their employment rate to 55.8 per cent.—a 10 percentage point increase since 1997—with 200,000 fewer lone parents claiming income support and nearly 1 million lone parents now in work. However, we need to do more. We know that work is the best way to lift families out of poverty and nine out of 10 lone parents tell us that they want to work, but to enable them to do that they need to have affordable and accessible child care.
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We are committed to providing over 2 million sustainable child care places by 2010 and a Sure Start centre in every community across England—an increase from 600 to 3,500 over the same period.

Mr. Steve Webb (Northavon) (LD): As the Secretary of State will know, this afternoon is an opportunity for thinking big picture about the approach to the welfare state. He mentions child care. Governments usually say that parents should decide what is best for their children. However, he has set a 70 per cent. target for lone parents getting back into work. What if 70 per cent. of lone parents do not come to the answer that he wants them to come to?

Alan Johnson: I would not say that we have set a target of 70 per cent. What we have pointed out is that the European Union average is 70 per cent. We have said that one part of our objective of raising the employment rate from 74.9 per cent. to 80 per cent. would be moving another 300,000 lone parents into work. I really believe that lone parents, if they get the right help and support, are pleased to do that. I will have more to say later about how we intend to tackle that, without interfering with the issue of choice for lone parents.

Andrew Selous (South-West Bedfordshire) (Con): I was under the impression, the last time the Select Committee on Work and Pensions visited Brussels, that there was a European target of 70 per cent. of lone parents to be in the work force, to which the Government had signed up. Can the Secretary of State elucidate on that point?

Alan Johnson: There are so many targets in so many places, sometimes we all get a bit confused. The Lisbon process looked to get 70 per cent of working-age people in the European Union back to work. We achieved that some time ago. I am not aware of a specific 70 per cent. target in the European Union. If there is such a target, it has been met, because that is the average throughout the rest of the European Union. For various reasons, we have more lone parents in this country than most other European Union countries, but I see no reason why we cannot achieve that level.

Mr. David Willetts (Havant) (Con): As the Secretary of State said, there are many targets but, to confirm the point that was made by the hon. Member for Northavon (Mr. Webb), I think that what we are talking about is the target in the Secretary of State's own departmental five-year plan. That is a target and that is where the 70 per cent. appears.

Alan Johnson: Good, I always welcome clarification from people who read our documents very carefully—

Mr. Willetts: Has the Secretary of State read the document?

Alan Johnson: I wrote it.

Child care is not enough on its own. Lone parents need support in looking for work and they need to know that they will get a clear financial gain from work. Building on the success of the new deal for lone parents
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and work-focused interviews, the work search premium, which we are currently piloting, means that lone parents who have been on benefits for a year or more are offered an extra £20 per week for up to six months in return for agreeing actively and consistently to look for work.

Our in-work credit, which we are also piloting, means £40 per week for a year for those who move into work of more than 16 hours a week. That is paid on top of any out-of- work benefits that the lone parent may be entitled to and so represents a clear financial gain from work.

From this April, we are pulling together all the existing support for lone parents into an integrated package. The pathways to work for lone parents pilots will run in five districts: Bradford, Dudley and Sandwell, Leicestershire, north London and south-east London. Those pilots encapsulate our approach of rights and responsibilities, guaranteeing child care support, a clear financial gain from work and the ongoing help of trained professional advisers, all in return for a responsibility to engage more intensively with our employment advisers.

The ongoing professional support from trained personal advisers has been key to our success in increasing the lone parent employment rate. That new single package of initiatives gives our advisers the tools that they need to offer lone parents clearer, stronger and more comprehensive support than ever before. Additionally, for those with older children who are at secondary school, we will pilot automatic payment of an activity premium, on top of all existing benefits, conditional on taking up agreed activity to help them to move into work.

David Taylor (North-West Leicestershire) (Lab/Co-op): The Secretary of State referred to the pilot in my county. Can he tell the House at what stage he would envisage it being rolled out to other parts of the country because I fully expect and hope that it will prove to be a success in the terms that he has described?

Alan Johnson: We do not have any plans yet on the pathways to work for lone parents beyond the introduction of the pilots. We will see how the pilots go. In terms of pathways to work for people on incapacity benefit, we already have plans to roll that out to a third of the country.

From April, child tax credit will be increased in line with the growth in earnings while the maximum eligible child care costs covered by the working tax credit will increase from £135 to £175 per week for one child, and from £200 to £300 per week for two or more children.

We are extending paid maternity leave, so that instead of the 14 weeks of 1997, it will rise from six months to nine months in April 2007.

Mr. Willetts: Before the Secretary of State leaves the subject of tax credit and working tax credit, are he and his Department making any representations to the Treasury and to the Inland Revenue about the continuing problems that families face, especially as supposed overpayments of working tax credit and child tax credit are being reclaimed by the Inland Revenue? Is
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he aware of the distress that that is causing families? Is it causing them to approach the social fund? What is his Department doing to tackle the problem?

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