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Alan Johnson: We are in close liaison with the Treasury over the issue for obvious reasons—it links with our joint objectives on tackling child poverty. The Treasury's view is clear. As in all tax matters, adjustments are made in the following tax year without putting a burden on individuals. Indeed, there is the opportunity to discount the overpayment if that would bring unnecessary concern to individuals. That approach is no different from how every previous Government approached such issues.

The maximum maternity pay and child benefits for mothers at home with their first baby will have risen by £5,000 in real terms since 1997. Therefore, we are committed to supporting parents both in fulfilling their parenting role and in fulfilling their aspirations in the workplace. With our record investment in the new deal and Jobcentre Plus, we have transformed the UK labour market. There are now 2 million more people in jobs than in 1997 and we have seen increased employment rates for lone parents, ethnic minorities, the low skilled and people aged 50 and over.

Mr. Webb: The Secretary of State is being characteristically generous in giving way. He mentioned fulfilling family responsibilities and career aspirations, and a classic case would be that of a woman who wants to go back to work and thinks that a family member—perhaps her sister—might be the best person to look after her young child. She can pay a complete stranger to do so and get thousands of pounds from the taxpayer, but if her sister puts in substantial hours each week caring for that child, there is no state support whatever. Does he think that the right balance to strike?

Alan Johnson: Such matters always have to be kept under review, and some—including many Labour Members—hold the view that family members should be included in the scheme and given such support. That said, Members have to accept that although we have made huge progress, certain issues still need to be looked at, so that we have a fairer system and meet the goal of providing proper child care, to allow parents to return to work.

For the fifth successive year, we are freezing non-dependant deductions to relieve the pressure on low-income parents who are housing their adult children. As a result of our roll-out of pathways to work for incapacity benefit claimants, together with the proposed reforms that I laid before the House when we published the five-year strategy, sickness and disability need no longer mean permanent withdrawal from work. In the pathways areas, six times as many people are getting back-to-work help, and twice as many are recorded as entering jobs as in the rest of the country.

Overall, new claims for incapacity benefit are down by one third since 1997, and the employment rate for disabled people seriously challenges the old stereotypes. For the first time, a disabled person is more likely to be in work than out of work. Combined with our disability discrimination legislation, such changes are transforming
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disabled people's rights and opportunities—a far cry from 1997, when, after 18 years of Conservative Government, they effectively had only two civil rights. Both those rights were granted reluctantly, after at least 14 attempts by Back Benchers from all parts of the House to introduce relevant legislation.

Most Conservative Members may wish to abolish the new deal, and talk incessantly about cuts, but the hon. Member for Daventry (Mr. Boswell)—unfortunately, he is not in his place—recently demonstrated his enthusiastic support for our policies while performing the only known constructive cut implemented by a Conservative politician in living memory. He formally cut the ribbon on a new Jobcentre Plus in his own constituency, and we were very pleased to see him there.

We are determined to ensure that everyone has the opportunity and incentive to work. We know that work helps to lift people out of poverty and to prepare for their retirement, but it is also the best pensions policy. Through the Pensions Act 2004, we have taken steps to bolster confidence in pension saving, helping people to make informed choices about saving more and working longer. The ground-breaking Pension Protection Fund, which will operate from this April, will revolutionise the security of occupational pension saving for some 10 million members of defined benefit schemes, and the financial assistance scheme will offer some help to those who have lost the most in the past. We are the first Government to take action to deal with the problems of thousands of pensioners who were deprived of their savings and lost their occupational pensions along with their jobs.

Although in many cases, the trustees of such schemes are not yet able to provide detailed information on the scale of individual losses, we have always wanted to make clear as early as possible the position of older workers, who have the least chance to make up the shortfall. Even though we are still collecting information, we now know enough to reassure those who will be within three years of their scheme pension age on 14 May 2004 that they will get no less than 80 per cent. of their core promised pension.

We have already committed ourselves to reviewing the financial assistance scheme after three years, and Government funding is already fixed for the current spending review period, up to and including 2007–08. But as with all our spending plans, we will review FAS funding in the next spending review, alongside other spending priorities.

Mr. Frank Field (Birkenhead) (Lab): I very much welcome my right hon. Friend's statement and thank him for it, but my welcome will be as nothing compared with that offered by many of our constituents. However, can he give us a little more information on the review that, I am thankful to say, he now seems to have taken on? We were originally promised a review of the scheme's structure, but is he now saying, in the light of the commitment offered to those about to reach retirement age, that there will be a funding review after three years? That would open the way to using the unclaimed assets of banks and building societies—and
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with that in mind, will he make available in the Library a document outlining how far the Government have got in negotiating with those important bodies?

Alan Johnson: I thank my right hon. Friend for his comments. He is absolutely right: this news has been well received throughout the country by those closest to retirement, who were extremely worried. On his latter point, I suggest that he attend the next Treasury Question Time and ask about unclaimed assets. We will begin our review during the next spending review—it will commence in 2006, ready for the next three-year period—and as part of that process we will look at FAS finances.

Richard Burden (Birmingham, Northfield) (Lab): I, too, welcome today's announcement, which is certainly good news for workers and retired workers at Kalamazoo, for the Cheney pensioners, for UEF employees and for members of the Birmingham Mint scheme. However, will my right hon. Friend give a little more detail on the financial review, which is indeed very good news? If it is to meet the needs of people who are a little more than three years away from retirement, it will have to start sooner than in three years' time. Otherwise, there will be a time lag between their reaching retirement age and their receiving the kind of support that those affected by today's announcement will receive. Will the review at least start within that time, even if it cannot conclude within it?

Alan Johnson: I can assure my hon. Friend that the review will start in 2006.

Perhaps I should say a little more about the FAS scheme before moving on to other issues. It will apply to pension schemes that started wind-up from 1 January 1997 until April this year. That was made clear in a previous statement, but it is as well to record it here. Depending on the pension age for their particular scheme and the date that wind-up started, members getting the 80 per cent. that we are announcing today will currently be aged anywhere between 57 and 73, so today's announcement gives real extra security to the significant number of people who are already in, or close to, retirement, and who face the most serious situation and, often, the biggest losses. Even after applying the minimum payment rule of £10 a week, we would expect some 15,000 scheme members to be included.

Sandra Osborne (Ayr) (Lab): I add my voice to those who acknowledged the review's importance. On 22 January 2002, I initiated a Westminster Hall debate on behalf of the UEF employees who lost their pensions when the company went into receivership, and I very much welcome the substantial help that the Government are delivering—as promised—for pensioners whose need is most pressing. However, will the monthly payments made to them through the financial assistance scheme be index-linked, as their pensions would have been?

Alan Johnson: No, they will not. I appreciate that the scheme to which my hon. Friend refers would have been index-linked, but many FAS schemes are not. We cannot make such a commitment, but we are making it clear that the money will be paid as a pension rather
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than as an annuity; indeed, it was clear on talking to my hon. Friend's constituents that that was a very important issue. Their feeling was that the Government should bear the risk, and that we should not allow any of that money to be diluted by diverting it elsewhere; rather, all of it should be directed towards assistance payments to them. However, I am afraid that I cannot give a helpful answer on the index-linking issue.

For today's pensioners, we have taken radical action to tackle pensioner poverty, which was the real pensions crisis that we faced when we came into office in 1997. From April, the retirement pension will go up by £2.45 a week for single pensioners and £3.95 a week for couples.

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