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House of Commons

Monday 5 February 2007

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—


1. Mr. Robert Goodwill (Scarborough and Whitby) (Con): What assessment he has made of the implications of the recent European Court of Justice ruling for the Government’s response to the parliamentary ombudsman’s report “Trusting in the Pensions Promise”. [118073]

The Secretary of State for Work and Pensions (Mr. John Hutton): As I made clear in my written statement on 26 January, we are giving careful consideration to the ruling of the European Court of Justice and the implications, if any, for the financial assistance scheme and the Pension Protection Fund.

Mr. Goodwill: The Government have ignored both the parliamentary ombudsman and the House’s Public Administration Committee. Now the European Court of Justice has ruled that the UK pension rules offer inadequate protection for workers such as those formerly employed by Scarborough coach builder Henlys. Could it be that the solution to the problem is being blocked by the Treasury until the new incumbent at No. 10 can come in and take the credit?

Mr. Hutton: No, that is not true. This is a serious issue, and I do not think that the hon. Gentleman’s latter point was a serious contribution to the proceedings. We have put nearly £2.5 billion into the financial assistance scheme to provide taxpayers’ money to compensate those who have lost the most when their occupational pension schemes have collapsed owing to employer insolvency. That is not an insignificant response; it is an extremely positive response. It is worth bearing in mind that there were no such public funds available to support people who were caught up in these terrible situations before 2004. In relation to the Henlys scheme, in which I understand the hon. Gentleman has a constituency interest, I can tell him and the House that 38 members of the Henlys scheme have been assessed for support by the financial assistance scheme, and 32 of them are now in payment.

Kelvin Hopkins (Luton, North) (Lab): My right hon. Friend will be aware that the Select Committee, of which I am a member, has strongly recommended that the Government pay up. How much would that cost, and is it not affordable?

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Mr. Hutton: I am aware of my hon. Friend’s role on the Select Committee, and I remember clearly the day that I gave evidence to it. We have already published the estimates of the cost of a full compensation scheme, which we have made available to the House and outside. It would cost significantly more than the £2.5 billion that we have pledged to it. The Government have tried hard to be supportive of those who have lost the most, but we must also be mindful that we are using public resources in a compensation scheme, so we have to balance what is fair to the taxpayer with what is fair to those who have lost the most. We have tried hard to strike the right balance.

Mr. David Laws (Yeovil) (LD): So far the Government have, as we have heard, ignored the conclusions of the ombudsman and the recommendations of the Select Committee, and they have now been criticised by the European Court of Justice. Can the Secretary of State give us a promise that if, in the upcoming judicial review, the courts in this country find that the Government have acted unlawfully in rejecting the recommendations and the findings of the ombudsman, it will be time for the Government to do the decent thing and bring forward a fair compensation package for the individuals in question? Will he give us that guarantee?

Mr. Hutton: Of course the Government—any Government—will follow the obligations imposed on them by the courts and the due legal process. There is no question of our doing otherwise. On Wednesday in the High Court we will argue our case very strongly with regard to the way in which we have responded to the ombudsman’s report. In relation to the European Court of Justice case, it is worth reminding ourselves that the case is still continuing before the High Court in England. There is therefore an obvious limitation on what I can say today about how we might respond to any subsequent ruling by the Court.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): The Secretary of State can be proud of both the financial assistance scheme and the Pension Protection Fund. However, does he accept that by not looking more carefully at the ombudsman’s ruling, he is undermining the Government’s attempts to establish trust in the long term in pension provision? Even if the problems go back a long time ago to a Conservative Government, by not meeting the ombudsman’s requests, we are undermining that trust.

Mr. Hutton: I am grateful to my hon. Friend for her words of support in relation to the actions that we have taken—but it is simply not true that we have ignored the ombudsman’s report as she suggested. We produced an extra £2 billion-worth of public money to go into the financial assistance scheme after the ombudsman produced her report, so I do not believe it is right to say that we have ignored the ombudsman’s report. We have the greatest respect for the office of the ombudsman and we had the advantage of seeing her report in draft some considerable time before it was published. I can assure my hon. Friend, and every Member of the House, that we have given it the fullest and most careful consideration.

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Mr. Philip Hammond (Runnymede and Weybridge) (Con): The Secretary of State talks about the financial assistance scheme as though it had a fixed cost; he said that the Government were finding £2.5 billion. Will he confirm, however, that the Government’s commitment under that scheme is in fact to pay, without limit, top-ups to a defined benefit level, and that as yet, they know neither the total value of the assets nor the liabilities of the schemes? Does he therefore acknowledge that the total cost could be much higher—or, indeed, much lower—than the figure that he has cited?

Mr. Hutton: We have made significant provision, and tried to estimate the costs as best we can. Obviously we will have to keep the costs under review, and see what happens in practice. However, I believe that we have made prudent and adequate provision for the losses that those who are closest to retirement have sustained.

Mr. Hammond: The point is that this is an open-ended, defined benefit commitment, and the state has already accepted that risk. Will the Secretary of State therefore reconsider whether forcing failed schemes to purchase annuities for members is the best use of those members’ funds? After all, the PPF is not forced to purchase annuities.

Mr. Hutton: We certainly look continuously at all those issues. Personally, I think that it is sensible and prudent to require annuitisation in those circumstances, because that is a sensible way of managing risk for the long term. We are giving careful consideration to the wider issues raised by the European Court of Justice ruling, and to what that will mean looking forward to the future of the financial assistance scheme and the PPF.

Housing Benefit

2. Mr. Bob Blizzard (Waveney) (Lab): How many local authorities did not achieve the performance targets for the administration of housing benefit in the last 12 months for which figures are available. [118074]

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. James Plaskitt): Average performance in housing benefit administration across all local authorities is improving significantly. Last year, four local authorities failed to meet the Department’s minimum standards for housing benefit administration, 38 councils were assessed as meeting only the minimum requirements, but 226 were providing a good service and a further 128 were providing an excellent service.

Mr. Blizzard: I thank my hon. Friend for that answer, but for more than five years, housing benefit in my constituency has not been administered efficiently by Waveney district council; on occasions, it has been disastrously bad. Despite some recent improvement, about half the local landlords will not now let their properties to people on housing benefit, and I am worried that some of the poorest people are being disadvantaged as a result. Will my hon. Friend monitor the situation carefully? Might the new housing allowance pilots provide the answer to the problem?

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Mr. Plaskitt: I can assure my hon. Friend that I am monitoring the situation carefully. I now see monthly reports on the performance of Waveney council, because there is clearly a problem there. The council had £1 million from us via the performance standards fund, and as a result it got its housing benefit administration up to about the national average in the early part of 2006. Since then, however, its performance has deteriorated sharply, which is having exactly the effects that my hon. Friend described. The council is now taking 64 days to process new claims, compared with the national average of 34 days. Officials in my Department met officials from the council last week, and made it clear that the council’s performance was unacceptable and improvement was urgently needed. We cannot see any reason why its performance should be so bad, and it is about time that Conservative-run council got its act together.

Mr. Philip Hollobone (Kettering) (Con): It is estimated that, in the year to March 2006, some £770 million of housing benefit was overpaid, almost £200 million of which was due to official error. How does the Minister intend to tackle that problem?

Mr. Plaskitt: The latest figures, published last week, show that official error as a proportion of housing benefit expenditure is at a steady share of the total. I can assure the hon. Gentleman, however, that the fraud losses in housing benefit have fallen over the past four or five years by 47 per cent., and are now at their lowest ever recorded level. The biggest increase in error is down to customer error. I should point out that last year we recovered £300 million from the overpayment figure that he mentioned. My Department and the local authorities are together aiming to improve performance in respect of error in housing benefit, and I shall be launching our part of the strategy with the local authorities this week. This is part of the broad counter-error strategy, which I launched last month, designed to reduce error losses across the whole benefit system by £1 billion over five years.


3. Mr. Andrew Pelling (Croydon, Central) (Con): What steps his Department is taking to tackle London’s rate of worklessness. [118075]

The Minister for Employment and Welfare Reform (Mr. Jim Murphy): Over the past decade, claimant unemployment in London has halved from 320,000 to 162,000, but we are determined to go further to build on that success in the next few months.

Mr. Pelling: I am grateful to the Minister for his very brief answer—but the economic participation rate is much lower in London than in the rest of the economy. This is leaving us with a shortfall of about £5 billion of potential contribution to the UK’s gross domestic product. What is the Department doing to secure jobs for many of the people who are not participating in London’s economy, perhaps by encouraging foreign direct investment in deprived parts of the city, for example? What cross-departmental work is being done to co-ordinate those programmes, to argue the advantages of investment in public infrastructure, and perhaps to suggest that the
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Mayor should be responsible for skills training in London, so that we can achieve positive economic development in those deprived communities?

Mr. Murphy: I pay tribute to the hon. Gentleman for his work in helping to stimulate the London labour market. In fact, until recently he had three separate jobs of his own: as the Member of Parliament for Croydon, Central, as a member of the London assembly, and—until recently—as a councillor in Croydon. In many ways, he is a one-man labour market all on his own.

However, the hon. Gentleman raises a serious point about the challenges that still exist in London. Two big initiatives, of which I think he will be aware, are about to be rolled out across the city. The city strategy pilots will address specific challenges in the two distinct areas of east and west London. Additionally, pathways support for incapacity benefit customers will roll out across the city by the end of next year. Based on the experience across the rest of the UK, that will be a real boost to economic activity in London.

Mr. Frank Field (Birkenhead) (Lab): What lessons do the Government draw from the fact that although 2.5 million new jobs have been created since they were elected, many have been filled by immigrants coming here and wishing to work? Given the stubbornness of youth unemployment in London with regard to moving downwards, might not the Government consider time-limiting benefit?

Mr. Murphy: Given his experience in government at the Department for Work and Pensions and his more recent experience, my right hon. Friend is retaining a close interest in the welfare-to-work review, and he acknowledges that there has been real progress. As he said, 2.5 million more people are in work—and 29 million people are now in work in the UK.

I should add that less than 1 per cent. of those currently in our labour market are migrants from eastern Europe, although we would not get that impression from reading some of the popular press. There are real challenges, which are the subject of our ongoing long-term welfare review, in relation to what more we can do to support UK-born citizens in developing their skills in connection with the labour market. I do not want to pre-empt the outcome of the review currently being undertaken by David Freud.

Mark Pritchard (The Wrekin) (Con): Is there not a case for encouraging British citizens who do not speak English to learn English, so that they can access the workplace, make a contribution to society, increase social cohesion and improve community relations?

Further to the comments about time-limited benefits made by the right hon. Member for Birkenhead (Mr. Field), if, through a lack of language skills, British citizens unable to speak English do not access the workplace, should they not have their unemployment benefits cut off after 12 months? Is there not a great difference between a disability and an inability? Not speaking English is an inability, which can be overcome.

Mr. Murphy: We are always considering ways to reduce the barriers to the labour market for all sorts of our customers, regardless of their circumstances,
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background, disability, skills level, age or place of abode in the United Kingdom. One of the issues is how we overcome the multiple labour market disadvantages faced by some of the hon. Gentleman’s constituents and mine.

Without wishing to repeat the point that I offered in response to my right hon. Friend the Member for Birkenhead (Mr. Field), I should add that we are awaiting the outcome of David Freud’s review on the long-term challenges of welfare to work. We can then have a sensible conversation about some of the points that the hon. Gentleman has raised, entirely reasonably, this afternoon.

Mr. Andrew Love (Edmonton) (Lab/Co-op): The problem in my constituency is that whereas in recent months unemployment has been stagnant—slightly rising, in fact—the number of job vacancies for skilled employees has gone up. There is a mismatch. I know that that is not the Minister’s responsibility, but surely the Department for Work and Pensions must do something to bring together the people and skills that are necessary to address the problem in constituencies such as mine.

Mr. Murphy: My hon. Friend is absolutely right; that is one of the significant and enduring challenges that we still face. More than 900,000 people are on jobseeker’s allowance, but there are 600,000 vacancies in the economy. We have to be smarter at matching those still out of work with vacancies in the economy.

Part of that is about skills but part is about how we market the jobs. In future, through Jobcentre Plus, we should market jobs with flexible opportunities and family-friendly hours so that we maximise every opportunity not only to put people into work but to ensure that they stay in sustained employment that pays and lifts their families out of poverty.

Equal Opportunities

6. Mr. Rob Wilson (Reading, East) (Con): What assessment he has made of his Department’s performance in increasing the number of people with disabilities in employment. [118078]

The Parliamentary Under-Secretary of State for Work and Pensions (Mrs. Anne McGuire): Through a combination of stable economic growth and our successful labour market policies, including pathways to work, we have increased the employment rate of disabled people by more than 9 percentage points since 1998.

Mr. Wilson: I thank the Minister for that answer, but last year research by the Disability Rights Commission found that only one person in 10 with a severe learning disability had a job, and only two people in 10 with a mental health problem had a job. That research is supported by the increasing number of people I see at my surgeries who have suffered mental illness and find it difficult to get back into work. What are the Government doing specifically to target those very low rates of employment and get those people back to work?

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Mrs. McGuire: The hon. Gentleman has given the House some valuable information—although it is, of course, not news to the Department for Work and Pensions. That is why the Welfare Reform Bill is currently going through Parliament. It is also why we have adjusted and reviewed the personal capability assessment. He is right in identifying people with fluctuating mental health conditions, whose needs—their support needs, in particular—were perhaps not taken into account. Those with learning disabilities are way at the edge of the labour market, in spite of the fact that many people with learning disabilities would like to get into a job. Indeed, I am buoyed up by the optimism that there is around the country about how many of those with learning disabilities can move into jobs.

Miss Anne Begg (Aberdeen, South) (Lab): A week last Friday, I was invited to speak at the launch of the roll-out of pathways to work in the Aberdeen area. It was an extremely good and positive event. People were very happy that pathways to work was coming to Aberdeen. However, as usual at such events, although some employers were present, there were not enough of them. What are the Government going to do to get employers involved in the whole process? Without them—without the jobs—what the Government are doing in getting people work-ready does not add up to very much.

Mrs. McGuire: My hon. Friend is correct. There are three elements to our welfare reform strategy. One is obviously the legislation. Another is how we have reformed the way in which we work, through Jobcentre Plus and various other programmes, especially in relation to disability employment. The third element, however, is the expectation of employers, which we are making a priority through our employers panels and by engaging with local employers and local employers’ associations, particularly in the small and medium-sized enterprises sector, where there are a great number of jobs to be had.

I was in another part of the north of Scotland when my colleagues were in Aberdeen, and in Inverness and Stornoway I saw fantastic examples of what is happening, including at the Shirlie project in Inverness, which works in particular with young people whose ambitions have been thwarted over many years because of a lack of expectations about what they could do. Given the right support, through pathways, they can achieve a significant amount in the employment market.

Mr. Jeremy Hunt (South-West Surrey) (Con): What example does the Minister think it sets to the private sector and other Departments that during the period in which the DWP has been tightening its belt as a response to the Gershon process, the number of disabled employees has shrunk by more than double the rate experienced by other employees? The disability equality duty came into practice in December, so when will the Government practise what they preach?

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