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Mr. Steve Webb (Northavon) (LD): Normally, when I see this annual event coming up on the parliamentary calendar, my heart sinks somewhat. We used to have an entire day of parliamentary debate on the two orders each year, but we started to notice that the debate ran out of steam about halfway through the day. I notice today that there does not appear to be a single Back-Bench Labour MP trying to speak in the entire debate, even though we are talking about £100 billion or so of public expenditure.

None the less, the debate provides an opportunity, as we observed earlier, to reflect on strategy for reform of the welfare state somewhat more broadly. It has already been a rather revealing afternoon in that respect. In a sense, we are contrasting the three approaches to the issue. The one thing that has emerged this afternoon from the comments made by the hon. Member for Havant (Mr. Willetts) is the issue of linking the pension credit to earnings and the basic state pension to earnings. That seems to me inconsistent with the assertion that 1 million people will be lifted off means-tested benefits. I wonder whether we can get some clarification on that at some point.

The motions are about the rate of benefits next year and therefore we must start with some discussion of adequacy in benefits. The infamous person coming from Mars to look at our deliberations would see that we were talking about a very thick volume full of different rates for different sorts of people and would assume that those rates were based on something. In fact, they appear to be based on what they used to be, plus a bit. There is no objective, external basis on which we pay certain amounts to different groups. I have heard the Minister for Pensions on the radio saying that this is something that he did not go in for in a big way. However, I wonder whether, in the quiet watches of the night, the Secretary of State might reflect on the fact that, year after year, we have been paying people on, for example, incapacity benefit increases of 70p, 80p and 50p, and their position has been falling further and further behind that of pensioners on pension credit and families with children. There must surely come a point in that process when we say not that enough is enough, but that enough is not enough. In other words, the process of just adding, in this case, a very small percentage increase to incapacity benefit leaves those benefits too small.

The Secretary of State got a bit cross with me when I accused him, at the time of the uprating statement, of saying that life on incapacity benefit was comfortable. He denied saying it. I went back to Hansard and I found him saying precisely that. He used precisely the analogy in the newspaper report that he used in Hansard when responding for the first time to oral questions. It is quite clear that it is something that someone said to him: being
 
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on incapacity benefit is like falling in a ditch and then one starts to get comfortable. That is precisely what he said.

Alan Johnson: At last we get to the origin of the quotation. A representative of the Leonard Cheshire association, who is a paraplegic, said to me and several other people, "The problem with incapacity benefit is that it's like fool's gold. They send you away to lie in a ditch, without offering any helping hand, and after a while, lying in the ditch, you start to feel comfortable in it and so you get used to being on benefits." If people think that that is something that I have said—if they think that I said that £74.15 a week is what people can live on comfortably—I am grateful for what the hon. Gentleman said just now, because I was puzzled about when I had said that. It was not me who said that; it was a paraplegic who was describing his feeling about being on incapacity benefit.

Mr. Webb: I am grateful to the Secretary of State, but he will accept that that obviously struck a chord with him, because he has repeated it twice—once in the House, and once to a newspaper. I am trying to make the point that the word "comfortable", even in that context, could not possibly be applied to that standard of living. The question is therefore: how long do we continue to increase incapacity benefit? It is a poor benefit, because every year we increase it by 50p or 70p, while pensioners' benefits, family tax credits and benefits for workers increase in line with earning. Childless people on national insurance benefits are therefore left further behind the majority of the population, including pensioners, working families with children and other working people. That is unsustainable in the long term. The Secretary of State has properly admitted that the pension credit is not a long-term answer, and neither is a retail prices-linked incapacity benefit when everything else is earnings-linked. That cannot continue indefinitely.

Kevin Brennan: Should the hon. Gentleman not concentrate on the fact that 80 per cent. of people on incapacity benefit would like to work if they could? Schemes such as the want-to-work scheme in my constituency pays people £60 a week for the first four months that they take a job, £40 for the next four months and £20 for the next four months. If they cannot hold the job down, they can go back on to incapacity benefit. If we could get those people into work we could uprate incapacity benefit for the people left on it in line with earnings or perhaps even above that.

Mr. Webb: No one disputes the fact that large numbers of people on incapacity benefit and other disability benefits would like to work. However, every time that the issue is raised in the House, I am struck by the fact that the same number is always cited. Seven years ago, we were told that 1 million disabled people wanted to work, and that number is still cited today. Either the Government are using old research or they have not made any progress on the agenda for seven or eight years, which is a crime. We do not want people to have to claim the benefits in the order if there is a better alternative, but too many people get stuck on them.

There are anomalies arising from the benefit rates, and I shall deal with two of them. First, the under-25s are in an anomalous position, as people in that age
 
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group receive lower rates of means-tested benefits. That derives from an essentially Thatcherite reform which, the hon. Member for Havant will recall—I do not know whether his fingerprints are all over it—said that young people should live with their mums and dads. It used to be the case that householders received more money and non-householders received less, but that was changed so that people aged 25 and over received more money and under-25s received less. Those means-tested benefits carry through into the housing benefit system, so that a 24-year-old who tries to live independently—they may have been thrown out of the family home or their parents may be unable to cope with them any more—receives less help with their housing than a 25-year-old. I cannot see any justification for that entirely arbitrary cut-off, which has been in existence since 1988. I accept that the Government are not going to say that they will do something about that, but that Tory creation is an anomaly. At the time, the Minister for Pensions was probably working for the Family Policy Studies Centre, and I very much doubt that he thought introducing penalties for the under-25s was a good thing. Does he think that it is a good thing now?

Another problem affects single, childless people under 25. Many lone parents are single and under 25 when they conceive. For the duration of their pregnancy they are living on the lowest benefit rate in the entire system, of just over £40. That is the environment in which their child grows before it is born, and I do not accept that that is good for the health or welfare of young women who are about to become mothers. There is another anomaly in the linkage of benefits for childless people to the retail prices index and the linkage of pension benefits and so on to earnings. On her 60th birthday, the income of a woman on income support nearly doubles because means-tested benefits have been linked to prices for so long that they have become devalued. Money has been put into pension credit, so there is a huge jump in the benefits available to someone at the age of 60. It is hard to find a rational basis for determining that the 59-year-old woman needs only £50 or so, whereas the 60-year-old woman needs £105. There needs to be some external look at what different sorts of people with different family compositions, different disabilities and so on need to live on, as a benchmark—not so that we can immediately put everyone's money up to the enhanced level, but to identify the groups who are particularly badly done by under the present structure.

Mr. Willetts: The hon. Gentleman is waxing eloquent about the cliff-edge effects on benefit changes at 25 or 65. Will he confirm that under his party's approach to pensions, the gap between the income at age 74 and the income at 75 will gradually get greater and greater?

Mr. Webb: Yes, that is correct, on a transitional basis. With pensions, as the hon. Gentleman well knows, one must set a destination—that is, one decent universal state pension payable to all those over state pension age, linked to earnings, sufficient to lift people clear of the means test and based on citizenship rather than on contributions. Clearly, it is implausible to get there in one go, so on a transitional basis we start with those over 75. As he says, that creates as beneficial cliff edge at 75. The difference is that I do not want that to be a permanent feature of the system, whereas the cliff edge
 
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at 25 and the current gap between 59 and 60-year-olds are both permanent features of the system. If the Secretary of State can tell me that those are transitional features that the Government will deal with and get rid of, I shall be delighted to hear it.

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