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Mr. Nigel Waterson (Eastbourne) (Con): I thank the Minister for his customary courtesy in letting me have an advance copy of the statement.
I imagine that many of my colleagues are somewhat preoccupied with announcements that relate not to benefits but to the Conservative party and its future. I should like to take the first opportunity in the Chamber to congratulate my hon. Friend the Member for Witney (Mr. Cameron) on his overwhelming election as leader of our great party.
As a party, we naturally support any uprating of benefits. When the time comes, we shall not vote against them, unlike the Liberal Democrats, who memorably once voted against an uprating.
Perhaps the Minister could tell me in his response how much more the basic state pension would be next year if it were increased in line with earnings, not prices, as my party promised at the last election.
The statement is badged as being on welfare reform, yet, nearly nine years after the Government were first elected, we continue to hear the tired old rhetoric. The statement referred to the Government's "ambitious" programme and a "programme of radical reform", but where are those ambitious or radical proposals?
Perhaps I can understand Ministers' natural caution. After all, when the right hon. Member for Birkenhead (Mr. Field) was appointed the first Minister responsible for welfare and pension reform, the Prime Minister told him to think the unthinkable. He was promptly sacked for doing so.
The Government continue to dither about the reform of incapacity benefit. After a delay of many months, we are now promised a Green Paper in January. The problems of the Child Support Agency remain dire, with the recent revelation that the agency is spending more on its recovery department than it is recovering. When will Ministers decide that enough is enough? Only the other day, the Prime Minister revealed his view that root-and-branch reform was needed. I appreciate that he is less and less able to influence events, but when can we expect a statement on the CSA's future?
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As if that were not bad enough, many families throughout the land have been caused unnecessary worry by overpayments of tax credit and the insensitive pursuit of their repayment. It seems to have become a ritual on such occasions for Ministers to go on about the successes—or the alleged successes—of the new deal. It remains a stain on the Government's record that 1 million young people are not working or in education or training. When will Ministers make that tragic wasted talent a priority?
On pensions, I should perhaps declare an interest as I have some private pension provision. The Chancellor attempted to torpedo Lord Turner's report before it was even published. In a leaked letter, he said to Lord Turner:
"'you should not assume' that the current link of the pension credit to earnings will continue beyond 2008."
Will the Minister confirm that pension credit will continue to be linked to earnings beyond 2008? In the part of the letter dealing with the Turner report, it was said:
"and we believe they are the right basis . . . But there is still a great deal to be discussed and debated about the detail."
Presumably, that is especially with the Chancellor. That is not exactly a ringing endorsement of an exercise that has taken three years and has cost £1.6 million.
Let me ask the Minister a direct question. Can he assure the House, with an entirely straight face, that he and his right hon. Friend are approaching the Turner report with a genuinely open mind? Was all this excellent work and analysis to be discarded on the say-so of the Chancellor? Does the Minister at least accept one of Lord Turner's central conclusions: that means-testing needs to be reduced? At present, nearly half of all pensioners depend on means-tested benefits. By 2050, that proportion will have risen to more than 70 per cent. Yet there are still 1.7 million pensioners entitled to pension credit who are not claiming it. The latest figures show that despite all the money that is being spent in the form of advertising and given all the efforts of the Pension Service, take-up is hardly increasing at all.
I shall make a prediction. I believe that, just as the Government have done with the measure of poverty or the timing of the economic cycle, they are about to move the goal post on their previously stated targets for pension credit and announce that in reality, the actual target should always have been lower. That is the Government's preferred method of tackling a difficult problem—just change the target or the methodology. We know that the take-up for other benefits, such as council tax benefit, is even more lamentable. The latest statistics show that in 2002–03 alone, pensioners were failing to claim up to £2.9 billion in means-tested benefits. No wonder 2 million pensioners are still living in poverty.
Only yesterday, the Chancellor of the Exchequer made it clear that the payment to help older people pay their council tax bills was a one-off for one year only. As it turned out, that was election year. Despite the amounts spent on local government finance, many
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councils, especially in the south-east, are predicting further sharp rises in council tax in addition to the massive rises that are already being suffered under the Government. Do Ministers not realise the terror that many pensioners have of receiving a council tax demand or a utility bill?
How can we ensure that older people keep warm when gas prices, especially, are soaring? The Government's lack of an energy policy is as glaringly apparent as their lack of a pensions policy. In its comments on yesterday's announcements, Age Concern referred to winter fuel payments, which it welcomes. It referred to the fact that, sadly, 31,000 pensioners died last winter as a result of the cold. It added that
"the Government needs to reform the basic state pension so that all pensioners know that they will have enough money in their pockets to pay their basic costs."
The growth in dependency on the state does not seem to bother the Chancellor. Does it bother the Minister, perhaps, that across British society as a whole, one third of households now rely on the state for more than half their income? If it does not bother him, it should.
Does it not add insult to injury to those in the private sector, and those who have no occupational pension, that the public sector are to enjoy the same pension terms, including retirement at 60 or even earlier, for the next 40 years?
Will the Minister tell the House where we are on error and fraud in the system? According to the Public Accounts Committee, about £3 billion a year could be lost through fraud and error.
Yesterday's statement, and the reaction of the Chancellor of the Exchequer to Lord Turner's report, proves—if proof were still needed—that it is the present incumbent of No. 11 who is the roadblock to reform in the welfare system, as well as across the whole of public services. For far too long the Department of Work and Pensions has behaved like a wholly-owned subsidiary of the Treasury. Is it not high time that Ministers started to come up with some ideas of their own for welfare reform?
Mr. Timms: The hon. Gentleman asked me about the uprating of the basic state pension. I have not been able to do the calculation that he asked about, but I can tell him that, as a result of this announcement, the basic state pension has risen since 1997 by 8 per cent. in real terms, as opposed to 1.7 per cent. after 18 years under the previous Government, so those who are concerned to have a higher basic state pension would do well to support the Labour party, rather than the party that he represents.
The hon. Gentleman talked about the radical reform of the welfare system. That is why the number of people in work is up by 2 million. That is why we have been able to lift 2 million pensioners out of poverty since 1997 and consigned abject pensioner poverty to the history books. Those are dramatic, radical and important changes, and we are determined to build on them in the next phase of welfare reform.
I can confirm to the hon. Gentleman that, in our response to the Turner commission, we do have a genuinely open mind. Nothing has been ruled in or out by the Government. The hon. Gentleman asked me that question directly and I give him that answer directly. We
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will bring back proposals in the spring, which I hope will be on the basis of as broad a consensus as possible across the House and across the country.
I hope that the hon. Gentleman welcomed the announcements by my right hon. Friend the Chancellor about additional help for 16 and 17-year-olds to move into work. I hope as well, given the points that the hon. Gentleman made a moment ago, that he welcomed the announcements about the expansion of the warm front programme to help pensioners to install central heating and installation. All those announcements directly address the issues that he raised.
The hon. Gentleman has a point about the rather low take-up of council tax benefit among pensioners. That is why the Pension Service is ringing up pensioners in receipt of pension credit to encourage and help them to apply for council tax benefit and housing benefit if they are entitled to them, in order that we can increase the take-up of those benefits among those who are entitled to them.
The hon. Gentleman asked about public sector pensions. It is worth making the point that, in not much more than 10 years, the number of people in public sector schemes with a pension age of 65 will more than halve, so the agreement that has been reached on public sector pensions will lead to substantial changes much more quickly than some people have realised. I think that that puts into perspective the point that he made about that.
On error and fraud, the extent of fraud has gone down by two thirds since 1997 in the most vulnerable benefits: income support and jobseeker's allowance. That is welcome progress. When the Conservative party was in office it did not even measure the extent of the problem. We have made dramatic progress.
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