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However, as my hon. Friend the shadow Chancellor pointed out this afternoon, the backdrop to such work-focused policy initiatives does not look terribly encouraging. Unemployment is at a seven-year record and rising. Long-term youth unemployment, which according to the Prime Minister as recently as September has been eradicated on the planet he inhabits, stands at 175,000 in the world where the rest of us live. Productivity growth has halved, and Britain is sliding down the international competitiveness league tables. All that makes the targets on reduction in claimant numbers, on increase in work force participation and on delayed retirement
much more difficult for the Secretary of State to achieve. I am sure that that thought gives the Chancellor many sleepless nights.
We will not support the abandonment of the 2.7 million people currently on incapacity benefit. The shocking truth is that the Secretary of State plans to reduce the number of claimants almost entirely by stemming the flow of new claimants. Almost none of the intended reduction will be achieved by people coming off long-term benefits and going back into work.
The Secretary of State says he has not got the money for a more extensive roll-out of the pathways to work programme. We appreciate the need for fiscal discipline, but there is a way to roll out pathways for the benefit of existing claimants without risk or cost to the Treasury by inviting the private and voluntary sector providers, who are negotiating for contracts under the Secretary of State’s programme, to take on existing claimants at their own risk. No result, no payment. The providers say they could do it; 1 million existing claimants say that they want it. It is a win-win option for claimants, for taxpayers and for the economy, so why is the Secretary of State not pursuing it, rather than turning his back on existing claimants?
The Government's central poverty focus has been children, and rightly so. Tackling child poverty is the key to breaking the cycle of poverty, which from generation to generation becomes entrenched, not just as material poverty but as a poverty of hope and aspiration. However, figures published by our social justice policy group last week showed just how shallow the Government's achievements are. Their targets are focused on households that have less than 60 per cent. of median earnings, so the Government's efforts have been equally focused on moving those just below that line to just above it.
Mr. Hammond: At the same time, the number of people living in deep poverty, below 40 per cent. of median earnings, has shot up—
Mr. Speaker: Order. The hon. Gentleman should be quiet.
Mr. Hammond: The number of people living in deep poverty, below 40 per cent. of median earnings, has shot up by 400,000 between 1996-97 and 2004-05, the latest year for which figures are available. If the Economic Secretary thinks that those figures are not right, I would be happy to hear from him. The percentage of children in persistent poverty is unchanged over the same period. That reminds us, if a reminder were needed, that good intentions do not translate automatically into good outcomes.
Poverty exists, of course, right across the age spectrum. New Labour boasts of the success of pension credit, and clearly it has lifted several hundred thousand poor pensioners out of relative poverty—[Hon. Members: “Ah!”] We accept that. That is why we support the new architecture for the state pension system, which includes pension credit. However, the
weakness of mass means-testing as a strategy is also underlined. Some 1.5 million pensioners, half of them living in poverty, fail to claim because the forms are too complex, because the process is too intrusive and because they are too proud.
The pensions Bill and the White Paper mentioned in the Gracious Speech will not solve that problem and will not address the immediate crisis facing Britain’s occupational pension funds. Duck and weave as the Chancellor might, he cannot escape responsibility for the crisis, as it was he who imposed a £5 billion a year stealth tax on pension funds, accelerating the collapse of final salary schemes in the private sector and causing a loss of confidence, which has almost halved Britain’s savings ratio since he came to office.
Some 60,000 pension schemes with 1 million members have begun winding up on the Chancellor’s watch, and the crisis has cost 125,000 people all or part of their pension as their schemes have failed—we heard an impassioned plea on their behalf from the hon. Member for Cannock Chase (Dr. Wright). It has also reinforced the pensions apartheid that increasingly exists between the private and public sectors. Public sector unfunded pension liabilities are now estimated at up to £1 trillion. That is the real crisis, about which the Gracious Speech has nothing to say to those who have saved all their lives, who did exactly as Governments told them to do and who have been left with little or nothing.
With breathtaking arrogance, the Chancellor and the Secretary of State have decided in their wisdom that the ombudsman and the Public Administration Committee are wrong, and that the Government will sit in judgment on themselves. This is not about a couple of leaflets, as they would have us believe, but about a systematic weakening of the security of fund members through reductions in funding levels and the ignoring of actuarial advice, all of which was going on while Government information was reassuring members that their money was safe.
I am not asking the Secretary of State to write a blank cheque with taxpayers’ money. I am asking him to display a little humility and accept the finding of maladministration by the ombudsman, to engage in the discussion with all the stakeholders, to examine unclaimed assets and residual assets in the failed schemes, and to come up with sensible figures for the net cost of support at different levels. In short, I am asking him to show some leadership in resolving the situation. This issue is a terrible blot on this Government’s record, and risks undermining all the Secretary of State’s attempts to rebuild confidence in the pensions system for the future.
The modern Conservative party shares many of the Government’s aspirations on poverty, pensions and welfare reform. As so often with this Government, it is not the aspiration but the delivery that lets them down. They say that it is the thought that counts, but that is cold comfort to people trapped on incapacity benefit, to people living on a pension which is a fraction of what they were expecting and what they saved for, or to people facing marginal tax and benefit withdrawal rates of 80 to 90 per cent. as they go into part-time work.
We doubt not Labour’s emotional commitment to tackling these problems, but its ability to deliver. We understand that sustainable social justice can be built only on strong economic foundations. With declining productivity, spending out of control, public debt up 8 per cent. in a single year and our once world-class pension system in tatters, it is clear that the clunking fist is losing its grip. For the Prime Minister, such a litany of failure is a serious dent to his legacy, but for his successor, whose only claim to fame is a claim to competent economic management, it is a disaster.
As my hon. Friend the shadow Chancellor said today, when people look back on the Chancellor’s 10 years in office, they will remember him as the Chancellor who failed to prepare Britain to compete in the new global economy; the Chancellor who, by his own fundamental yardstick, has fundamentally failed in his ambitions for the British economy; and the Chancellor who spent a decade dreaming of his future, only to find that he had become the past before he got there. When the people of this country finally lay this Government to rest, the epitaph on the headstone will surely read, “New Labour. 1997-2009. RIP. So much promised, so little delivered”.
Sir Patrick Cormack (South Staffordshire) (Con): On a point of order, Mr. Speaker. Was it not for very many years a convention of this House that the Members who moved and seconded the Loyal Address were present at least for the winding-up speeches at the end of the Queen’s Speech debate? Will you consider, Sir, sending a letter to remind all Members of some of the conventions and courtesies of this House, which seem to be being neglected?
Mr. Speaker: The hon. Gentleman has a point. As he knows, I have sent letters in the past to every hon. Member telling them of the conventions, and I will consider doing so again. I thank him very much.
9.45 pm
The Secretary of State for Work and Pensions (Mr. John Hutton): Let me begin by congratulating all right hon. and hon. Members who have spoken from the Back Benches, including, from the Conservative Benches, the right hon. Member for Wokingham (Mr. Redwood) and the hon. Members for South-West Hertfordshire (Mr. Gauke), for Surrey Heath (Michael Gove), for Ludlow (Mr. Dunne), for Wellingborough (Mr. Bone), and for Braintree (Mr. Newmark)—all of whom, apart from the hon. Member for Ludlow, are members of the No Turning Back group. I have been reading their latest contribution to the debate on public policy, to which I want to refer in a moment. We heard interesting contributions from them all; at least one thing they cannot be accused of is not turning up.
We have had a good debate, with thoughtful speeches by my hon. Friends the Member for Cannock Chase (Dr. Wright), for Dagenham (Jon Cruddas), for Linlithgow and East Falkirk (Michael Connarty), for Bishop Auckland (Helen Goodman), for Dudley, North (Mr. Austin), Northampton, North (Ms Keeble) and for Blaydon (Mr. Anderson). They all raised important issues and I am glad to have their support for the measures that we have outlined in the Queen’s Speech.
We also heard a very good speech from the right hon. Member for Ross, Skye and Lochaber (Mr. Kennedy), whom we welcome back to the House, and from the hon. Members for Angus (Mr. Weir) and for East Antrim (Sammy Wilson).
It was particularly good to hear from the right hon. Member for Wokingham, who is still the authentic voice of the Thatcherites on the Tory Benches and is now in charge of the Conservatives’ review of economic policy.
Mrs. Nadine Dorries (Mid-Bedfordshire) (Con): Today’s debate has been about probity and integrity, and honesty is very important in this Chamber. Will the Minister tell the House whether it was he who said that the Chancellor would make a bleeping awful Prime Minister?
Mr. Hutton: No; I have dealt with that many times before. Look, this is a serious debate—we are here to discuss the Government’s legislative programme.
As I said, the right hon. Member for Wokingham is in charge of the Conservatives’ review of economic policy. On the basis of his remarks today, we very much look forward to seeing his recommendations on how the Conservatives are going to reach out to the socially excluded.
I want to say a few words about the speech by the shadow Chancellor. It was clear to all of us and, I suspect, to everyone else listening to the debate, that his spending plans, of which we have seen several versions knocking about today, are completely out of control, that his tax policy is in chaos, and that he has no economic policy for ensuring growth or stability. In short, his speech was extraordinarily empty of both substance and vision. That is why we all look forward to hearing more from him in future.
Mr. Redwood: How on earth can the Minister say that my hon. Friend lacks substance when he gave a very good speech, whereas the Chancellor told us nothing about the Government’s plans or intentions or about this country’s economic progress and problems? Why does not he tell his right hon. Friend to give us some substance?
Mr. Hutton: I hope that the right hon. Gentleman feels better for that, but he obviously heard a very different speech from the rest of us.
I want to pick up on something that the shadow Chancellor said about poverty that was, I am afraid, completely wrong. He said that the number of people living on less than 40 per cent. of median income has grown by 750,000 since this Government took office. That is completely untrue. In fact, there has been no rise at all in the number of people living below 40 per cent. of median income since 1997. He based his claims on figures that began in 1994 rather than in 1997 and was, completely unknown to him, attacking the record of his own party in government. Our measures to tackle deprivation—every one of them opposed by the Conservatives—have helped to take 700,000 children above the internationally recognised definition of poverty since 1997, while the poorest families are now on average £3,400 a year better off.
Mr. Philip Hammond: Will the Secretary of State give way?
Mr. Hutton: No, I will not. [Hon. Members: “Give way!”] I shall give way to the shadow Chancellor if he wants to correct what he said earlier, but I am not giving way to the hon. Gentleman.
On the subject of reducing poverty and tackling social exclusion, did not the hon. Member for Runnymede and Weybridge, the shadow Chancellor and the party that they represent have the opportunity to vote for all the measures that we have proposed and which have made such a positive impact in tackling poverty? Extra investment in the national health service—they opposed it. Extra investment in our schools—they voted against that too.
Michael Gove: Will the Secretary of State give way?
Mr. Hutton: No, I will not give way.
The Conservative party voted against the new deal, against tax credits and against the national minimum wage—the list goes on and on.
Mr. Philip Hammond: I am grateful to the Secretary of State for giving way. Since he said a few moments ago that there had been no increase at all in those living below 40 per cent. of median earning, perhaps I could quote him the precise figures. In 1996-97, 2.4 million people were living below 40 per cent. of median earnings, but in 2004-05, which is the last year for which figures are available, that number was 2.81 million. That is an increase of 410,000—not no increase at all.
Mr. Hutton: That is not right—the hon. Gentleman needs to look at the after-housing-costs figures, which are the proper definition.
The speech from the Throne reflects a legislative programme that addresses head on the challenges that our country faces. It is built on the foundations of unprecedented economic stability and prosperity, which have been delivered by my right hon. Friend the Chancellor of the Exchequer, and enshrines the fundamental objectives of the Government: to tackle poverty, extend opportunity and promote fairness. A strong economy and a fair society are things that the Tories never managed to achieve. In fact, they never delivered either.
The contrast could not be clearer now. Today we have the longest period of sustained economic growth of any G7 economy in post-war history, with growth in every quarter of every year since 1997.
Michael Gove: Will the Secretary of State give way?
We have the best combination of unemployment and inflation in the G7, instead of one of the worst under the Tories and, for the first time in 50 years, the best combination of high employment, low unemployment and low inactivity rates anywhere in the G7.
The Queen’s Speech provides a serious and heavyweight response to the challenges facing Britain today, whether it be the threat to our security or the impact of economic and demographic change in an increasingly global economy.
Michael Gove: Will the Secretary of State give way?
The Queen’s Speech carries forward, too, the central purpose of Labour in government, keeping our promises to the people to build a strong Britain, where economic strength and social justice together ensure opportunity for all.
We have heard a lot of references in this debate to welfare reform. The previous Conservative Government’s welfare reform policies were a total failure. The number of children living in poverty doubled. The number of people claiming lone parent or incapacity benefit trebled. Twice in a decade, the number of people unemployed exceeded 3 million.
Michael Gove: Will the Secretary of State give way?
Things are different now. The new deal has helped more than 1.7 million people into work. Today there are more people in work than ever before. Employment is up by more than 2.5 million since 1997, and up in every region and country of the United Kingdom, with the biggest increases in the neighbourhoods and cities that started in the worst position. The biggest falls in unemployment have been among those who were on benefits for the longest. Long-term claimant unemployment is down by more than 70 per cent. and long-term youth claimant unemployment has been virtually eradicated.
We introduced measures in the previous Session, carried over to this one, on welfare reform. Our Welfare Reform Bill will build on the progress that we have made. It will replace incapacity benefit with a new employment support allowance, and offer new support in return for new obligations for people to help themselves. It enshrines the proper balance between rights and responsibilities, and reflects the values of opportunity and security. I hope that it will continue to enjoy cross-party support.
Several hon. Members have referred to our proposed legislation on child support. Tackling child poverty will be the first priority of the reforms. The Bill will mark a clean break with the past, with new arrangements that work with parents to deliver the best outcomes for their children. The Bill begins the process of realigning policy with reality. Building on the recommendations made by Sir David Henshaw, it will help parents to take responsibility for making their own child maintenance arrangements, backed up with strong and effective support when that does not happen. The Bill will provide for the creation of a new organisation to replace the existing Child Support Agency. It will radically strengthen the available enforcement powers to recover maintenance from those who repeatedly fail to pay, including through the introduction of new powers in relation to curfews and the suspension of passports when necessary.
The pensions Bill, to which many hon. Members have referred, will meet the challenges of under-saving and demographic change highlighted by last year’s Turner report.
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