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The order also refers to council tax benefit, which my hon. Friend the Member for Windsor (Adam Afriyie) mentioned. There are pensioners who are eligible for council tax benefit but who will not get it; they will not be able to access the upratings under this order, because they are not claiming the benefit. Will the Minister comment not only on the astonishingly low take-up of council tax benefit for pensioners, but on the fact that the rate of take-up is apparently declining? Using the DWP’s tax benefit model tables, since 1997 average council tax has risen by 75 per cent.,
and over the same period there has been a decrease of about 11 per cent. in the take-up of council tax benefit for pensioners. Currently, only about 56 per cent. of pensioners are claiming this benefit to which they are entitled. In 2003-04, 41 per cent. of pensioners entitled to council tax benefit but not claiming it were below the Government’s own poverty line.
According to the previously mentioned NAO report “Progress in Tackling Pensioner Poverty”, if the council tax benefit take-up rate were improved to about 95 per cent., 160,000 pensioners would be lifted out of poverty, according to the Government’s own poverty measure. Those are significant statistics; they show that if there were better take-up of the last two benefits mentioned—pension credit and council tax benefit—we would get more pensioners out of poverty more quickly than is currently projected.
For owner-occupiers, many of whom are pensioners, the council tax benefit take-up is in the range of 36 to 41 per cent. That proportion has fallen, and the poor level of take-up damages the prospects of pensioners on low incomes. Will the Minister tell us what steps he is taking, and will take, to improve take-up? That is not a party political point; I know that he has been working on this, and that outside groups want him to work on it, and the Opposition have a duty to ask about it. We look forward to hearing his comments.
The story that the statistics tell is ultimately one of a benefit system that is too complex and too bureaucratic. So that the Minister understands that I am being balanced, I repeat that I do not believe for one second that benefit complexity was invented by Ministers some time after 1997. What I am suggesting is that there has been a problem for a long time, and that during the last 10 years, although well-meaning attempts have been made to reduce benefit complexity and bureaucracy—I do not doubt the bona fides of Ministers in that regard—the problem persists. The answers given to the questions that many Members, particularly me, have tabled on underpayment and overpayment in relation to a raft of benefits—not only pension credit, income support and jobseeker’s allowance, which are the big-ticket benefits—reveal that there is still a very high level of inaccuracy, whether in terms of customer error, customer fraud or official error.
This is not a “policy wonk” debate; it is important for a much better reason. Support is not getting to those who need it most: those at the bottom end of the income scale. Of course, that is ultimately what this motion is about—delivering more support and help to those who need it.
The NAO report to which I referred earlier underlines the fact that complexity is part of the problem in delivering support to those who need it. It states:
“Many pensioners and those that advise them”—
let us not forget the lobby groups and support groups that advise pensioners—
“consider the systems and administrative procedures for claiming benefits to be too complex. In all there are 23 potential entitlements for pensioners, with 36 linkages between 16 of them.”
The 17th report of the Social Security Advisory Committee, published in 2004, says that
“complexity characterises the entire benefits system...the size, complexity and dispersion of the benefits system, and the blurring of the boundaries over what should constitute its proper role has led to a pervading sense of a loss of cohesion”.
Bodies do not get much more independent than the Social Security Advisory Committee. Help the Aged tells us the following in its campaign on benefit complexity:
“The (benefits for pensioners) system is so muddled and poorly advertised that even Pension Credit, a widely advertised benefit aimed at some of the poorest older people, is only claimed by just over half of those entitled to it.”
Adam Afriyie: My hon. Friend might like to know that at a recent lunch at the Age Concern office in my constituency, I asked the 20 to 30 elderly people there whether they were taking up their full benefits, and not one of them said that they were. When I asked why, they said that the system was too complicated and involved too much of an intrusion.
Mr. Ruffley: In his inimitable way, my hon. Friend makes an important point, taken from the real world—in this case, the real world of Windsor. That statistic and that experience do not surprise me at all. Again, I am not suggesting for one minute that the same comment might not have been made in the 18 golden years of the last Conservative Administration, before 1997, but I do say that pensioners are unable to access what they need in the way that they need to, as my hon. Friend’s example demonstrates. Indeed, I am sure that we could all give similar examples from our own constituencies, so however well the Government think that they are doing, they can do better.
Mr. Ruffley: I am very happy to give way to the Minister.
James Purnell: Would the hon. Gentleman describe the fact that 39 per cent. of pensioners lived in relative poverty as part of those golden years?
Mr. Ruffley: I would not wish to characterise any Administration—not even the hon. Gentleman’s—by picking out one statistic. I merely point out that, happily for all parts of this House, poverty in 2007 is perhaps considered a more important issue for debate than it has ever been, and certainly in my recent political memory. That is a good thing, and the debate should be about the future and not too much about the past.
The Government have policies that they champion and talk about, which is fine, but to say that everything is fine and dandy, and everything in the garden is rosy, will not do, because people out there do not believe it. They want a simpler, fairer benefits system and a Government who will deliver it. They will judge a Government by their results, not just by their policy announcements—and that goes for any Government, I hasten to add.
Stewart Hosie (Dundee, East) (SNP):
The hon. Gentleman has referred to complexity and bureaucracy several times, particularly in relation to pensioner benefits. Does he assume that his commission looking into this
issue will end means-testing for pensions and the pension credit, or will the Conservative party stay wedded to them?
Mr. Ruffley: The hon. Gentleman will have to wait for the publication of the policy commission’s report; I am not going to do a Mystic Meg impression and guess what it will say. There will of course be a full, grown-up debate on the idea of a simpler and fairer benefits system, and all parties are welcome to contribute, but I am not going to make any premature judgments about means-testing. Ministers know as well as we do that some element of means-testing will be necessary in any benefits system in a mature western industrialised democracy. It is stupid to suggest that we could abolish means-testing across all benefits as a matter of ideological principle. The tricky question for all parties is where to draw the line. The hon. Gentleman will have to wait and see how the debate unfolds.
Lone parents will access many of the benefits that are the subject of this order. I welcome the Department’s recent comments on the importance of getting lone parents back to work, but we must be sure to get the language right. This is not about “sticks”. The days have gone when politicians wielded a big stick towards customers of the benefit system. We need a lot more “carrot”, and my party understands that policy imperative. We have to win hearts and minds when it comes to getting people out of dependency, not to employ tough macho rhetoric. I hope that we do not hear too much of that from Ministers, or anyone else.
It is important to reform the regime for lone parents—in the sense of providing more opportunities, not of forcing them into work in a punitive way—because child poverty levels are a function, to a greater or lesser extent, of whether a lone parent is in work. In that context, it is worth remembering, when considering the benefits that are the subject of this order, that the Government have another string to their bow. Uprating is sensible and necessary, but it is not a sufficient condition for tackling poverty across all income groups and sectors of society.
The Minister referred to the Welfare Reform Bill, but we must remember—again in a grown-up and mature way—that it was perhaps not the flagship radical reform promised at the time of the Green Paper. We know that Ministers accept that the Bill did not do enough to support people back into work. Why else would the Secretary of State have commissioned a review in December last year, led by the Minister for Employment and Welfare Reform, assisted by Mr. David Freud? That will be of interest to those receiving the benefits that are the subject of this order. They will get their uprating, as we will not vote against the order, but they will want to know what is going on when the Secretary of State has to commission, in very short order, a radical look at what the welfare state does. At least, that is how his briefers represented it to journalists.
Perhaps the Minister who winds up will share with the House some details about when the Freud review will be published and debated. Someone from the Department briefed the Financial Times this time last week—there is no reason why they should not do
so—that we could expect the review some time this week. In the interests of a decent, grown-up and informed debate, Ministers might wish to inform the rest of the House when we may expect the Freud review, and also assure us that they will ask the Leader of the House for some Government time in which to debate its contents.
I hope that when we debate next year’s uprating order, fewer people will be in dependency and more people who want support will get it. I also hope that the millions of people who say that they would work if they had the proper support will have had the chance that they want to have a better life for themselves and their families and to be less reliant on benefits. We hope, too, that more of our fellow citizens will be able to make arrangements for their pensionable age, so that some of the currently all-too-low pensioner incomes will be higher. We will work with the Government on any proposals they may make, but I serve them notice that Her Majesty’s loyal Opposition will make their own proposals to deliver better welfare and a fairer system that lifts more people out of dependency, which is not where so many of our citizens really want to be.
5.40 pm
Mr. David Laws (Yeovil) (LD): I am pleased to be able to take part in the debate. Last year, the hon. Member for Bury St. Edmunds (Mr. Ruffley) summed up for his party in the debate on benefits uprating, which he characterised as interesting, important and short. Last year, only two Conservative Back Benchers spoke and no Government Back Benchers; it looks as though our proceedings will be similarly short today.
However, as the Minister for Pensions Reform and the hon. Gentleman indicated in their speeches, the debate is important because it has impacts on the uprating of all benefits—means-tested and non-means-tested—administered by the Department for Work and Pensions. As the Minister noted, the uprating will cost about £3.56 billion. We are allocating a little less than three hours to debate it, a scrutiny rate of more than £1 billion an hour by my calculations. We are talking about the uprating of £125 billion-worth of benefits, which, including the uprating of child and working tax credits, gives a total amount of benefits administered by the DWP and Her Majesty’s Revenue and Customs of about £150 billion—more than a quarter of the total managed expenditure of £585 billion for 2007-08, and the largest component of Government expenditure.
As both the Government and the Conservative spokesmen indicated, those benefit increases will have an impact on many of the lowest income people in society. The Minister gave us, understandably, an upbeat perspective on progress against poverty since 1997. Like all Ministers, he is inclined to emphasise the positives, but to put the importance of the uprating statement in context we ought to note that 20 per cent. of the population are still in relative poverty, according to the Government’s definition. That amounts to 11.4 million people: 3.4 million children, 6.2 million adults of working age and almost 2 million pensioners, despite the Minister’s suggestion that pensioners can get out of poverty by claiming means-tested benefits. Poverty rates are still high: 27 per cent. for children and 17 per cent. for pensioners.
The Minister’s opening comments showed a little complacency about the employment situation and thus, by implication, the number of people dependent on benefits. He said that since 1997 the UK employment rate has improved and that it is one of the highest in the Organisation for Economic Co-operation and Development. However, he did not mention the changing composition of employment and the fact that, compared with the Wilson days of the mid-1970s, male employment is about 10 percentage points lower. It is now 79 per cent. compared to 89 per cent. in the mid-1970s. Since then there has been a big decline in male employment that has been made up by an increase in female employment, which feeds directly into the question of who is affected by the benefit uprating statement. The distribution of employment is increasingly unequal, so although there are many households where two people are employed and earning there are many where nobody at all is in employment. That is why we are in the bizarre situation of having not only one of the highest employment rates in Europe, but more children in workless households than any other country in the European Union. That is a strange combination of factors.
The hon. Member for Bury St. Edmunds set out in magnificent detail how benefits are uprated; he talked about the Rossi index and the minimum income guarantee going up by earnings. He was right to say that the different benefits about which we are talking will be uprated in different ways—through the retail prices index, the Rossi index or the earnings index. When we look at the paperwork, circulated in December by the Department, that sets out which benefits would be impacted, we find a long list that tells us something of the complexity of today’s benefits system. It lists 464 different rates, tapers, premiums and allowances that could be affected by today’s announcement, which is titled an upratings announcement. Interestingly, when we look at the benefits and how they will be uprated, we find that of the 464 different benefits, tapers, premiums and allowances, 130 are not uprated at all. In other words, it is an uprating and non-uprating statement.
Perhaps I am being slightly generous to the Department, as a number of items are missing entirely from the uprating statement, even some that relate to areas administered by the Department—for example, the 25p addition to the pension for those aged 80 and the Christmas bonus of £10. Those rather embarrassing items, which I do not think have been updated since the 1970s, are not mentioned at all.
Before we start on the uprating bit, it is worth saying something about the non-uprating part of the uprating statement. Rather a lot is not being uprated at all. There are the disregards for many people when they go into employment. We discussed that issue in the Pensions Bill Committee the other day. We pointed out that the disregard for people over the age of 60 who are claiming the pension credit but are in employment has not been uprated for many years. I cannot remember the exact number of years; it would be helpful if the Under-Secretary of State for Work and Pensions, the hon. Member for Warwick and Leamington (Mr. Plaskitt), told us when he winds up. However, for another year there is to be no uprating of the disregards for people in those circumstances. That means that many people—pensioners and others—have powerful disincentives to work. We also discovered that the disregards for housing benefit in respect of
child care are not being uprated. In other words, more people on housing benefit will find themselves squeezed by the fact that child care costs are going up but no allowance is made for that.
There are no upratings of the capital disregards that affect a number of the benefits. That means that more and more people with modest savings will find that their benefits will be disallowed. There is also no uprating of the winter fuel payment. The hon. Member for Bury St. Edmunds spoke in detail about how different elements of the retail prices index are going up very rapidly while other components are falling. I am not sure whether I would follow him all the way down the path that he set out for the social justice commission: that of having a series of different uprating factors for different benefits.
Mr. Ruffley: The hon. Gentleman should not infer from my speculative questioning that I am trying to lead the social justice policy group one way or the other. It is an independent body. For the avoidance of doubt, I should say that I was not advocating different measures; I was merely asking whether Ministers had thought about using different measures for different benefits.
Mr. Laws: I am grateful to the hon. Gentleman for that clarification. I fear that he may be accused of toying with and teasing us; he was tempting us to believe that under the Conservatives everyone might get uprated by a higher factor. I think that he is saying now that such a panacea would not be as evident under a Conservative Government as we might have hoped.
I am sure that the Under-Secretary will mention in his summing-up that some indices that are now actually higher than the rate of inflation—the pensions and prices index, for example—have, in the past, been lower for quite long periods. However, it is worth noting that the winter fuel payment has not been uprated this year. The Minister will confirm that there has been no uprating of the winter fuel payment since 2000-01—a very long time. Perhaps that is why the Department of Trade and Industry indicated in a written parliamentary answer a couple of months ago that it expects the recorded number of people in fuel poverty not to disappear to zero, which is the Government’s target, but to double from 1 million to 2 million between 2004 and 2006.
The hon. Member for Bury St. Edmunds mentioned in an intervention how much fuel costs have gone up over the last year alone. I think that he mentioned—if he did not, I will—that the September 2006 retail prices index for heating and lighting rose by 29.2 per cent. We would certainly not suggest that every single benefit should be uprated by some different factor, but there is a powerful logic behind the idea that the winter heating allowance, which is designed to compensate for heating costs, should in some way be related to those costs rather than be allowed to shrivel over time. The RPI shows that since 2000-01 the cost of fuel has gone up, on the Government’s own measure, by 67.8 per cent.—double even the increase over last year—which is considerably greater than the RPI increases.
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