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Mr. Philip Dunne (Ludlow) (Con): Does the hon. Gentleman agree that it is extraordinary that for the 16th or 17th year in succession, the Department's accounts have been qualified and not signed off? Is it not surprising that sorting out their own Department's accounts is not Ministers' highest priority?

Danny Alexander: I am grateful for that intervention and I agree that that should be a priority. The DWP has
 
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a number of issues that it needs to sort out, many of which are high priorities: the Child Support Agency is one, as is the Post Office card account. None the less, the issue that the hon. Gentleman highlights should be given much greater attention.

I come to housing benefit and the existing incentives to work. Chapter 6 of the welfare reform Green Paper is entitled, "A radical new approach to Housing Benefits". There must have been a mistake in the copy that I received, because all that it had was a not very radical chapter on how the not particularly radical local housing allowance might be rolled out nationally. Perhaps the explanation for that is simply the gap between rhetoric and reality to which we have become all too accustomed from this Government over the years.

The uprating before us today once again fails to uprate earnings disregards for housing benefit and council tax benefit. In 1988, £5 of a single person's earned income was disregarded. Today, the figure is still £5, but it is a devalued £5.

Mr. Graham Stuart : Bring back Mrs. Thatcher!

Danny Alexander: I believe that Baroness Thatcher is entitled to other benefits these days. If uprating had at least kept pace with inflation, the earnings disregard for housing benefit and council tax benefit would now be £8.35. In other words, the Government are clawing back from the poorest people £175.20 per year per person by not uprating these disregards. I urge the Minister to pay close attention to that issue in future years.

An even greater disincentive to work is the combined housing benefit and council tax benefit taper, which withdraws 85 per cent. of people's earnings for every extra pound earned. All Members will doubtless have heard constituents complain about this issue, and I am pleased that the Minister confirmed in a written answer to me that the pathfinder project evaluation would examine income tapers. I hope that the Minister will give a further assurance that it will form a substantial part of the evaluation, and the recommendations that are to follow.

Finally, I turn to another group of people directly affected by the orders—claimants who are single or under 25 years of age. Young single claimants are often overlooked, but they face growing inequality as the gap between their incomes and the average income widens because their benefits are linked to prices. There is a prejudice against people aged under 25, who are especially hard hit by lower benefit rates and the unfair single room rent.

In opposition, the Government opposed the single room rent. Many Labour Back Benchers have supported parliamentary motions calling for it to be ended, and Shelter reminds us repeatedly that it causes homelessness.The median rent shortfall for those receiving the single room rent is £31 a week. These orders will raise to £45.50 the jobseekers allowance paid to people under 25, but subtracting from that amount the £31 rent shortfall caused by the housing benefit regulations means that they will have only £14.50 to live on each week.The system is unfair. It increases homelessness, encourages fraud and can also help to promote the grey economy. Government estimates are
 
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that 12,000 young people were subject to the single room rent in May 2005. At an average shortfall of £31, it would cost only £372,000 to end the single room rent. Can the Minister find that amount in the Department's budget?

As I said, my party will not divide the House over these orders. We are happy to support the benefit uprating proposals, but the Government still face substantial challenges in respect of pensions and welfare policy. They are far from meeting those challenges at present, and I look forward to their response to the debate.

1.51 pm

Mr. Graham Stuart (Beverley and Holderness) (Con): It is a privilege to follow the speeches by my hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley) and the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander), who put the proposed upratings into context. The Government came to power in 1997 promising radical and ambitious reform, and the Prime Minister vowed that the cost of what he called failure would be reduced in the first five years of the Labour Government. In the event, the cost of failure has risen since the Government came to office.

The backdrop to any uprating of benefit is the general state of the economy. In 1997, the incoming Labour Government had an opportunity to reform the welfare state that was without parallel since its formation. We all support the welfare state if it gives people dignity rather than means-testing, and relieves poverty rather than continues it. The unparalleled opportunity to reform the welfare state was the result of the transformation of the economy that took place under the previous Conservative Government.

In 1979, the British economy was a basket case, but by 1997 it had become the strongest and most powerful in Europe. The Labour Government inherited that economy, but unfortunately they have squandered the legacy, to the detriment of some of the poorest and most vulnerable people in this country.

As the articulate spokesmen for both the main Opposition parties have made clear, the result has been that the people with least have been let down. The British economy had returned to being the powerhouse of Europe in 1997, but the opportunity to reduce the number of people languishing on incapacity benefit has been lost since then. The number of people claiming that benefit was 2.37 million in May 1997, but by February 2005, it had risen to 2.68 million. That is a testament to the Government's failure to deliver for those with least, and the backdrop of economic strength bequeathed by the previous Conservative Government makes it all the more shameful. I hoped that the Minister would show more humility and display more of the quality of grace that he mentioned when he opened the debate.

The question of benefits uprating touches certain key elements of the approach of Government and all political parties to dealing with the most vulnerable people in our society. Ministers repeat their mantras about providing for the many, not the few. They apply words like "radical" and "ambitious" to their plans for looking after those with least. That may be electorally effective, but my right hon. Friend the Member for Witney (Mr. Cameron) is equal to the challenge of
 
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making it clear to people that the Conservative party has always been dedicated to the improvement of those with least in our society. For example, William Wilberforce led the movement to abolish slavery, and the 19th century's 10-hour working day initiative was led by a Conservative.

Over the past 100 years, the Conservative party has been entrusted with uprating benefits on more occasions than the Labour party. That is because the people of this country recognise that we are committed to social justice and to uplifting the poor. Disraeli and any number of other Conservative leaders have supported the notion of Britain as one nation, with a benefits system—the uprating of some elements of which we are discussing today—implemented to best effect.

Danny Alexander: The hon. Gentleman is in full flow about something for which he feels great passion. I do not want to interrupt him so much as inject a little balance. He has mentioned incapacity benefit. During the years of Conservative Government, the number of people receiving incapacity benefit ballooned. That might have been because that Government wanted to massage down the unemployment figures and massage up the figures for incapacity benefit.

Madam Deputy Speaker: Order. Before the hon. Gentleman replies, perhaps I might remind hon. Members again that we are debating the current proposals for uprating social security benefits.

Mr. Stuart: Thank you for your strictures, Madam Deputy Speaker. I am aware of them and will observe them meticulously.

Mr. Ruffley: We are all aware of them.

Mr. Stuart: My hon. Friend is right, but I hope that I might be allowed a final sally in respect of incapacity benefit. Although the number of claimants ballooned under—

Danny Alexander: Many are still claiming incapacity benefit today.

Mr. Stuart: That is true, but it is why it is all the more shameful and sad that the Government have squandered the unparalleled opportunity presented by the transformed economy that they inherited and have let down the people who most need help.

The Minister used the interesting word "consensus". I have been in the House only since last May, and I try not to be cynical, but whenever I hear a Minister use that word I know that he is presiding over a system that is chaotic and failing. That is why, in a desperate bid to shore up his weakening political position, he uses that word to seek the support of the Opposition.

However, the good news from my hon. Friend the Member for Bury St. Edmunds is that the Conservative party is always prepared to work for the good of the most vulnerable people. We will work to achieve consensus to support them and give them the dignity of work. People want dignity, not means-testing.

I am nervous of touching on the new deal but shall do so only in passing and certainly less than the Minister did. Only 15 per cent. of people aged more than 25 who
 
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were out of work when the so-called successful new deal was introduced—that is, only one person in seven—have returned to work and so no longer need to claim benefits. Six out of every seven benefit claimants have been failed by that enormously expensive and bureaucratic programme.

I welcome the Conservative party's continuing commitment to programmes that will help and support people and get them into work. In contrast to what too often amounts to political posturing among Labour Members, I do not even mind if we keep the new deal name. That is a matter of indifference to me, as long as we move away from the politics of failure and get all those people still languishing out of work back into employment. That is what the Conservative party is about. That is why we transformed the economy, and that is the opportunity that I hope that we will take on again when we next form the Government.

The Minister referred to the number of children in poverty. He will be aware, although he is no longer in his place, that the percentage of children experiencing persistent low income—those in the unhappy state of remaining below 60 per cent. of median household income in at least three out of four years—was 16 per cent. in 1996–97 and remained at 16 per cent. for the following three years to 1999–2000. We need to recognise that far too many children still live in poverty and that the Government have not delivered the transformation that they promised. I hope that we will see fewer eye-catching initiatives and more hard work to make the systems that we already have work better. When we have a Conservative Government, we will make the systems work better. We will be less interested in headlines and more interested in reducing poverty for those with least.

The Minister's words on pensions were hardest to take. As my hon. Friend the Member for Bury St. Edmunds said, Labour's first Minister with responsibility for welfare reform said last year that when Labour came to power we had one of the strongest pension systems in Europe. Now we have one of the weakest. That is a searing indictment of the Government's failure. They have removed opportunity from hard-working people and replaced it with means-testing. I have yet to meet a constituent, whether from the far left like so many Labour Members who rebel against the Government, or from the right, or of no known political persuasion, who wishes to spend their life working hard and paying tax in order to end up on means-tested benefit. They do not want to have to fill in 24-page forms to get pension credit or 12-page forms to get their council tax benefit.

When I attended the Hornsea pensioners annual Christmas lunch, I sat beside an upstanding, hard-working, socially contributing and economically successful member of the community who, in his old age, has, because of the Government's £5 billion raid on pensions, ended up in need of means-tested benefits in order to live properly—[Interruption.] Ministers may laugh at the predicament of hard-working, decent people who are forced into relying on means-tested benefits at the end of a life in which they have suffered no ill-luck and no great illness. They consider themselves successful members of our society. They
 
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have always worked, they brought up their children and they tried to do the right thing. This Government have made such people feel like beggars from the state. The gentleman whom I sat next to at Christmas lunch told me that he had seen adverts saying, "It's yours: claim it". So, he filled out all the forms and sent them off. By return, he was told that his building society accounts had not been sent in original form and was asked to supply every last one, even one that had £80 in it. He told me that he chucked the lot in the bin. The 1.5 million people in the same situation deserve better, but they have been let down by a Government who are addicted to means-testing instead of providing dignity for people in their old age.

Age Concern estimates that more than 2 million retired people are living in households with incomes below the Government's official poverty line. I would have thought that Labour Members would be campaigning vociferously on behalf of women, who benefit least from the current system. We know that fewer of the recently retired have money coming in from an occupational pension. We also know that 1 million people have seen their occupational pension schemes wound up—more than 60,000 schemes—because of the policies of this Government, who have raided pensions to the tune of £5 billion a year. That is not a modern, active and inclusive welfare state. For Ministers to persist in saying that is nothing short of a deception of the British people, and I hope that it will be increasingly recognised as such.

Pensioners, people on incapacity benefit and people on the new deal—in other words, some of the most vulnerable people in our society—are not well served by the benefits uprating today. They are being let down. The basic state pension, for people who have contributed all their lives, was 21 per cent. of average earnings when this Government came to power, but it is now just 15.9 per cent. That is the legacy that this Government will leave.


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