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House of Commons

Monday 27 November 2006

The House met at half-past Two o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions

Work and Pensions

The Secretary of State was asked—

City Strategies

1. Mr. Graham Allen (Nottingham, North) (Lab): What progress is being made on implementing city strategies on welfare to work. [102896]

The Minister for Employment and Welfare Reform (Mr. Jim Murphy): Our city strategy is a more flexible and locally delivered approach to welfare reform. The House will be delighted to learn that Nottingham is one of the pathfinders on the city strategy, and that it, along with other areas of the country, is developing delivery plans, which should be submitted to the Department for Work and Pensions by 29 December.

Mr. Allen: Nottingham was very pleased to have a city strategy on welfare to work, but a number of issues still need examination. Will my hon. Friend consider the question of the reward levels in cases where city strategies meet Government targets to get people off welfare and into work? He talks about flexibility, so will he consider the future of the 16-hour rule, which is a matter of some concern? If we had such flexibility, we could get a number of other people off welfare and back into work.

Mr. Murphy: My hon. Friend speaks with great authority on this and many other issues. He chairs the One Nottingham organisation. I believe that he has shared with the House his view, and the analysis is such, that Nottingham is the sixth richest local authority area in one respect, but the seventh poorest in another. There are enormous challenges still to be overcome in Nottingham and elsewhere.

On the targets and rewards, of course we are discussing with my hon. Friend and others the exact way to continue to fund success in Nottingham. We will look at the most flexible way to ensure that people who are out of work have the opportunity to train, get back into the labour force and contribute both to their own family and to our economy.

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Income Statistics

2. Greg Clark (Tunbridge Wells) (Con): What change there has been since 1997 in the number of people recorded in the Department’s survey data as having income below 40 per cent. of median income. [102897]

The Secretary of State for Work and Pensions (Mr. John Hutton): As a result of the measures taken by this Government, the rise in severe poverty which occurred under the previous Administration has been halted. Taking 1997-98 as a baseline, there has been no increase in the number of people having below 40 per cent. of median relative income. The number of children in such households has fallen by 100,000. By the internationally recognised measure of poverty, we have lifted 1.9 million individuals, including 700,000 children, out of poverty over the same period.

Greg Clark: I thank the Secretary of State for his reply, but I urge him to consult his own figures, which he has disclosed to me through the Library. They show that despite record spending on social security benefits, a buoyant economy and nine and a half years of new Labour, there are 750,000 more people in severe poverty than there were a decade ago, 600,000 of whom have been put there under this Government. Will the Secretary of State now commit his Government to reducing the number of people caught in severe poverty?

Mr. Hutton: We have reduced the number, as I have said. We are happy to be judged on the basis of the measures that we have taken, but we will certainly not be judged on the basis of the measures that the previous Government took. If the hon. Gentleman was being straight and honest with the House, as he always is, he would have referred to the fact that the figures that he just quoted cover the period from 1993 onwards. I do not think that he is either Toynbee or Churchill; I think this is just twaddle.

Mr. Terry Rooney (Bradford, North) (Lab): Does my right hon. Friend agree that dealing with absolute poverty, not relative poverty, is the major priority, and that it does not matter which newspaper column one reads, what really matters is having the political guts and ideology to put policies and resources in place to address this most pressing issue?

Mr. Hutton: I am grateful to my hon. Friend. I agree with him, although I would add that we must deal with absolute and relative poverty. That is what we are trying to do. The proof of the pudding always comes down to one simple thing: it is all well and good to talk the talk, but one must will the ends as well as the means. For the Conservatives, including the hon. Member for Bury St. Edmunds (Mr. Ruffley), who is one of the shadow spokespeople, and the hon. Member for Tunbridge Wells (Greg Clark), who I understand is now the Tory Trot from Tunbridge Wells—

Mr. David Ruffley (Bury St. Edmunds) (Con): It still needs more work.

Mr. Hutton: I think it worked pretty well. What does not make economic or political sense is coming to this place proposing various measures to tackle poverty while writing pamphlets calling for £50 billion-worth of tax cuts.

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Bob Spink (Castle Point) (Con): Since the Secretary of State seems to accept 40 per cent. of relative median income as a definition of severe poverty, will he accept that the Government should regularly measure the number of children in severe poverty, as so defined, and report on it as part of their strategy for tackling child poverty?

Mr. Hutton: I would prefer to use the internationally recognised figure, which is 60 per cent. of median income. It is true that the Department publishes figures on households having below 40 per cent. of median income, but it is best to stick to the international basis so that we can get a proper comparison.

Ms Karen Buck (Regent's Park and Kensington, North) (Lab): The Government have been extremely successful in making progress in tackling both relative and absolute poverty in many areas of the country, but sadly that has not been the case in London. As a consequence, one of the wards in my constituency has a staggering 83 per cent. of children growing up in workless households. In order to make further progress on the national perspective, as well as in London, will my right hon. Friend urgently review the effectiveness of measures such as tax credits, child care delivery and dealing with housing costs?

Mr. Hutton: I agree with my hon. Friend. There is poverty of place, with which we are all familiar, but there is also poverty of race, which is a particular problem in many parts of inner London. We must address those issues, and I assure my hon. Friend, and all my hon. Friends, that we are considering them as a matter of urgency. The city strategy in east London and west London will help to improve delivery and focus on meeting these challenging targets. When we are ready, we will come back to the House with further measures.

Mr. David Laws (Yeovil) (LD): Today’s report from the think-tank, Reform, indicates that the poverty trap in Britain is greater than in any other Organisation for Economic Co-operation and Development nation—a point made a year ago by the right hon. Member for Darlington (Mr. Milburn)—and that 2 million people on low incomes face effective tax rates of up to 50 per cent. when they try to go back into employment. Does the Secretary of State accept that criticism of Government policy, and what does he intend to do about it?

Mr. Hutton: We have made it our policy from the beginning to ensure that work pays. Tax credits, the new deal and other measures have allowed us to take nearly 900,000 people off benefits who would otherwise have been looking for work. That has been progress in the right direction. We naturally keep all such matters under review. I know that the Lib Dems are trying to get closer to the Tories—good luck to them on that one—but I suggest to the hon. Gentleman that he does not rely too much on the data in that Reform pamphlet, as most of it is economically illiterate, as well.

Mr. Frank Field (Birkenhead) (Lab): Would it be right to draw from the Secretary of State’s speeches over the past few months that while there is much for Labour Members to be proud of, there is still much to do? As a
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Government, we have seen the creation of an additional 2 million jobs, and we have spent an additional £60 billion on welfare reform, yet the number of working-age claimants during our stewardship has only fallen from 5.6 million to 5.4 million. May I therefore encourage him to continue the debate that he has begun and to make it central to the renewal of this Government?

Mr. Hutton: I agree with my right hon. Friend in this regard: the work on all these issues will never be done. What is important is to set a course, and I think that we have set the right one. We have matched rights with responsibilities, and we have been prepared to invest more in an active welfare state to help more people who want to work to have the opportunity to do so. If he is asking me whether the work is done, I say clearly not. We have not yet eliminated poverty. We need to redouble our efforts if we are to succeed in doing that, and I hope that he and others will support us when we do.

Benefits (Overpayment)

3. Mr. Tim Boswell (Daventry) (Con): What steps he is taking to reduce the level of debt owing to his Department arising from overpayment of benefits. [102898]

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. James Plaskitt): We began the debt recovery programme in 2001 to bring increased focus on to the management and recovery of debt. Centralised debt centres were in place by 2004. Earlier this year, the new IT system became fully operational. Recovery levels for this financial year are running significantly ahead of previous years.

Mr. Boswell: Yes, but with overpayments now running at nearly £1 billion a year, half of them being the result of official error, can the Minister offer the House anything more encouraging than an error taskforce staffed by 12, 10 of whom are part-timers, possibly—I know not—overpaying benefits in the rest of their time? Can he undertake firmly to the House that after a long period of beginning to analyse the problem, we may now at last have action from Ministers on tackling the overhang of debt, which is well over £1 billion, and even more importantly, on tackling the complexities of the system at source to remove the source of the errors?

Mr. Plaskitt: As I have said to the hon. Gentleman, we are already seeing in the current financial year an accelerating rate of debt recovery as a result of the improvements that we have already made. New debt comes on to the books at about £400 million a year. There are two things to do—to reduce the level of debt coming into the system and then to improve the rate of debt recovery—both of which are already being done. To correct the hon. Gentleman on something that he said, about three quarters of the debt that is currently due is down to customer error, not official error.

Julia Goldsworthy (Falmouth and Camborne) (LD): Looking at the issue from the other end of the telescope, what assessment has the Minister’s Department made of individuals getting into increased personal debt as a
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result of delays in processing benefit payments? Increasing numbers of constituents are coming to me in desperation over that problem.

Mr. Plaskitt: Of course, it is important at all times that we process debt as rapidly as possible. Several changes have been made in the way of benefit simplification to help to achieve that. We continually simplify forms to make processing easier, and we do more data sharing between different parts of the Department to ensure that information does not have to be given to us on repeat occasions. All those changes are making it easier for our customers to engage with the benefits system.

Mr. Bob Blizzard (Waveney) (Lab): Overpayment of housing benefit also affects landlords and tenants. Because of the ongoing inefficiency of Waveney district council, most landlords there feel that they are losing out by having benefit clawed back. They are so fed up that they have started to put up signs in their letting offices that say “No DSS tenants”. That means that people who need accommodation in that sector are unable to get it, because of the benefit shambles caused by the local authority’s administration.

Mr. Plaskitt: As my hon. Friend knows, housing benefit is administered by about 400 different local authorities, and there is variable performance between them. However, he should also know that we have had investment running for a number of years that has worked with local authorities to improve their processing times. The results from that investment are extremely encouraging. Average processing times have reduced sharply and the authorities with the longest processing times have made the most improvement in reducing them. I reassure my hon. Friend that I keep an eye on all the performances of local authorities, and we are in regular touch with those that still do not perform sufficiently well.

John Bercow (Buckingham) (Con): Where overpayment results from official error, not that of the claimant, I put it to the Minister that recovery of the sum overpaid as a matter of great speed and urgency should not be the top priority; rather, the focus should be on justice, equity and consideration for the hapless victim of ministerial or departmental incompetence.

Mr. Plaskitt: I am happy to tell the hon. Gentleman that it is. If he cares to examine the rules that relate to recovery, he will see that recovery of overpaid benefit is not the top priority in recovery from those who are on any form of benefit. Indeed, housing costs and debts to fuel payment must be recovered before any overpayment of benefit. A rule that we apply throughout the process of recovering debts to the benefits system is that we shall not do so in a way that inflicts hardship on any of our customers.

Heating Allowance

4. Mr. David Anderson (Blaydon) (Lab): If he will make an additional payment to those entitled to heating allowance to reflect the recent increase in energy prices. [102899]

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The Parliamentary Under-Secretary of State for Work and Pensions (Mrs. Anne McGuire): The winter fuel payment rose from £20 in winter 1997-98 to £200 in winter 2000-01, and to £300 for those aged 80 or over in winter 2003-04. There are no plans to make an additional payment to those entitled to winter fuel payments to reflect the recent increase in energy prices.

Mr. Anderson: May I ask my hon. Friend whether she is aware that National Energy Action, which is one of the partners that is being used to deliver the warm homes agenda, has said that the Government’s figures for fuel poverty levels are based on 2004 levels? NEA’s latest estimates, which are based on this year’s figures and incomes rises, show that the figure for those facing fuel poverty is near to 2.8 million. May I ask my right hon. Friend the Secretary of State to work with NEA to try to get to the truth of where we are now and report back to the House as soon as possible?

Mrs. McGuire: We will obviously consider the views of the energy agency that my hon. Friend has highlighted, but I should also like to ensure that the House is fully aware that between 1997 and 2005 pensioner income increased by 25 per cent. We spent £2 billion on winter fuel payments in winter 2005-06, which is only part of the agenda to tackle fuel poverty. The Warm Front scheme and similar schemes in the devolved Administrations, to which my hon. Friend alluded, are also part of our campaign to ensure that fuel poverty is eradicated in this country.

Mark Pritchard (The Wrekin) (Con): I know that the Minister cares deeply about the issue, as I do. What discussions has she had with the Minister for Energy about ensuring that any reductions in wholesale gas prices, as we have seen recently, are passed on to the customer, particularly the elderly? We know that hundreds of elderly people froze to death last year as a result of being scared to turn on their gas fires. Could the Minister have a word with the Minister for Energy to ensure that the savings are passed on?

Mrs. McGuire: I do not wish to challenge the hon. Gentleman’s memory of the previous winter, but our impression was different. His recollection may reflect the situation prior to 1997, when no winter fuel payment was available, and the only thing to which pensioners could look forward was a £10 Christmas bonus and paying 17.5 per cent. on fuel. At the weekend, my right hon. Friend the Chancellor of the Exchequer indicated that energy companies also have responsibilities, and while some companies have good schemes to help low-income users, others do not. I know that the Chancellor’s ambition is to reduce the cost of energy for consumers as quickly as possible to reflect decreasing energy prices on the wholesale market.

Helen Goodman (Bishop Auckland) (Lab): As the Minister knows, low-income families with small children also have difficulty paying fuel bills at this time. Will she consider Save the Children’s suggestion of introducing one-off winter grants for those families too?

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Mrs. McGuire: I am aware of Save the Children’s campaign, and I spoke at our meeting with that organisation only the other evening. I refer my hon. Friend to the strong words of my right hon. Friend the Chancellor about the need for companies, too, to take responsibility and ensure that low-income users have a better deal, as I indicated to the hon. Member for The Wrekin (Mark Pritchard).

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