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House of Commons

Monday 12 March 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—

Freud Report

1. John Penrose (Weston-super-Mare) (Con): What assessment he has made of the implications for his Department’s budget of the recommendations of the Freud report on welfare to work. [126359]

The Secretary of State for Work and Pensions (Mr. John Hutton): The Government have welcomed the publication of the Freud report and are giving careful consideration to its recommendations and their financial implications. We hope to respond more fully later this year.

John Penrose: I think that I thank the Minister for that reply, but could he please give us a bit more detail, particularly on his quantification of the risks that one or more of the prime contractors will fail to deliver what they are supposed to achieve? Does he agree that two substantive risks need to be both quantified and managed? First, the prime contractors may fail to engage with one or more important groups of vulnerable jobseekers in their area because they will have a regional monopoly. Secondly, as commissioning bodies, they may fail to develop the capacity of the local voluntary and third sector organisations that will deliver the services on the ground.

Mr. Hutton: I agree with the hon. Gentleman about the risks involved in proceeding along the lines that David Freud has recommended, which is why we have not yet made any final decisions. The hon. Gentleman mentioned a number of those risks, and rightly so. It is worth reminding ourselves that, although David Freud proposed a network of regional monopolies, as the hon. Gentleman suggested, he felt that there could be some circumstances in which we should not proceed along those lines. Although tremendously exciting opportunities are opened up by Freud’s report to target more effective help and support on those who are hardest to reach and have proved to be the most difficult to get into employment, it is right that we look carefully at his recommendations. Obviously, we need to do some more modelling with the Treasury, but I am confident that we can find a way forward. David Freud was right also to suggest that the most sensible thing to do, if we can model the proposals and manage the risk carefully, would be to test the proposals in a number of pilots, and I think that is the right way to proceed.

Mr. Frank Field (Birkenhead) (Lab): Given the record number of new jobs under this Government and the record expenditure on welfare to work, how do the Government account for the only modest fall in inactivity rates?

Mr. Hutton: I think that 1 million people have been taken off benefits and, as my right hon. Friend would acknowledge, as others have, including the Organisation for Economic Co-operation and Development, Britain has an outstandingly good track record on welfare reform. The significance of David Freud’s report is that although he has—rightly—charted the success of the new deal and other interventions that we made, his
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prescription, looking forward, is right and we must now target an increasing share of our available resources on the hardest to reach and particularly those who are economically inactive, such as lone parents and people on incapacity benefit. That is very much what we want to do, and I look forward to my right hon. Friend’s support when we do so.

Mr. David Laws (Yeovil) (LD): If the Government are doing so well on welfare reform, why is the male employment rate in the United Kingdom now 10 percentage points below what it was under Harold Wilson, and why must we wait another six to eight years for David Freud’s proposals to be implemented?

Mr. Hutton: There you have it, Mr. Speaker: the curmudgeonly voice of the Liberal Democrats. It is worth making the obvious point: we have never claimed that every problem has been solved, and it is clear from the Freud report that that is so. However, it would be futile and rather pathetic not to acknowledge the progress that has been made. The employment rate in the United Kingdom is now among the highest of all the developed countries in the world and is the highest for nearly 30 years. That is progress. I look forward to the day when the Liberal Democrats come here and celebrate that progress with us, although I suspect from the hon. Gentleman’s comments that that will be some time yet.

Roger Berry (Kingswood) (Lab): The Freud report stresses the particular challenges faced by lone parents not in paid employment who have disabled children. Can my right hon. Friend tell the House what measures the Government plan to take to ensure that there is affordable, accessible and appropriate child care for such lone parents and their children?

Mr. Hutton: I am grateful to my hon. Friend, who will be aware that we have made a significant investment in improving access to child care since we came to office 10 years ago. There is a great deal still to be done, but it is important that that investment goes in. My hon. Friend will also be aware that as part of the work on the comprehensive spending review the Treasury is leading a project to look specifically at disabled children’s needs. My personal sense is that we should always look to do more to help families who are bringing up disabled children, and I very much look forward to the outcome of that piece of work.

Miss Anne Begg (Aberdeen, South) (Lab): There is no disagreement that those with multiple disadvantages need a great deal of input and help if they are to access the job market. David Freud recognises that that will cost a great deal of money. Does my right hon. Friend agree that the best people to get those with multiple disadvantages into the workplace may often be in the voluntary and third sectors, not just in the private sector? Will he ensure that the best quality of help is given to such people to make sure that they are not forced into work that is totally inappropriate for them?

Mr. Hutton: I agree strongly with what my hon. Friend says. When it comes to providing the most effective help and support, we can probably leave on one side a lot of the outdated ideology. We should look
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for the providers that can make the biggest impact. It is significant that virtually all the programmes in the new deal for disabled people have been delivered by the private or voluntary sector—they have been a great success. I urge hon. Members on both sides of the House to approach this with an open mind. We will look to contract with the best providers that hold out the prospect of helping the most people at the best value for money. That is the challenge that David Freud has put down to us and we intend to pick it up.

Mr. Mike Weir (Angus) (SNP): The Secretary of State will know that concern has been expressed about the adequacy of the funding of the roll-out of pathways to work under the existing welfare benefits reform. Will he assure us that he will ensure that that is working properly before he embarks on the next phase? Has he held discussions with other Departments and the devolved Administrations about the cost of the child care that will be necessary if he is to push the programme for lone parents with children of 12 and over, especially those in the difficult group of the younger teens?

Mr. Hutton: We will obviously have proper discussions with the Scottish Executive on how to take this forward because, as he knows, child care is a devolved matter. However, it is worth putting on record the progress that has been made in Scotland in the past 10 years or so. We calculate that the jobs dividend to Scotland has been 200,000 extra jobs. Most, if not all, of that progress would be put at risk if the Scottish people were daft enough to accept the hon. Gentleman’s advice and move towards independence.

Mr. Tim Boswell (Daventry) (Con): Does the Secretary of State agree that as there is a common interest in sustained, long-term employment for these hard to place groups, it is absolutely essential that he does not close his mind to new and innovative organisations that might come along with something fresh to offer, or to specialist organisations that might operate either under the overall umbrella of commissioning or, in certain cases, independently, because of their specialist expertise?

Mr. Hutton: I agree with the hon. Gentleman, and I do not want to close my mind to any of those things. The hon. Member for Weston-super-Mare (John Penrose) properly identified one of the risks. If we go down the road that David Freud has recommended, we will need to ensure that we do not compromise the ability of some of the specialist providers to make a valuable contribution to the welfare to work agenda. I will do everything that I can to ensure that that does not happen.

Mr. Philip Hammond (Runnymede and Weybridge) (Con): Freud has made several radical proposals, including a progressive reduction in the age of the youngest child at which a lone parent would be expected to seek work. However, in the Secretary of State’s speech to last year’s Labour party conference, he went further than that and spoke with admiration for the Clinton reforms in the US, a central plank of which was the time-limiting of benefits for lone parents. Will the Secretary of State clear up the confusion about his
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attitude by confirming to the House that he has specifically ruled out the time-limiting of lone-parent benefits?

Mr. Hutton: I am surprised that the hon. Gentleman asks that question, because I have been asked it at least twice during recent Work and Pensions questions. On each occasion, I made it quite clear that we were not going down the road of time-limiting benefits.


2. Mr. Jim Cunningham (Coventry, South) (Lab): What recent assessment he has made of the adequacy of the basic state pension; and if he will make a statement. [126360]

The Minister for Pensions Reform (James Purnell): The Pensions Commission examined the adequacy of the state pension system and made recommendations for reform. On the basis of those recommendations, we have come forward with our proposals. The International Monetary Fund’s 2006 annual assessment, which was published this month, set out its broad agreement with our proposed pensions reform, saying:

Mr. Cunningham: I thank my hon. Friend for that answer. The work that the Government have done to get pensioners out of poverty is very much appreciated. As part of the coming Budget, will he consider whether to restore the earnings link, which is very important to pensioners?

James Purnell: As my hon. Friend knows, that is slightly above my pay grade. We have made our intention to restore the earnings link very clear. We have said that our objective is to do that in 2012, subject to affordability. It is worth saying that no pensioner has to rely on the basic state pension alone. Pension credit, which we brought in, has reduced the number of pensioners in relative poverty by 1 million. Pensioners are now less likely to be poor than the rest of the population, which is a remarkable achievement at a time of economic growth. According to the Institute for Fiscal Studies, the last time that it was achieved was

We have no intention of going back to that.

Mr. Mark Field (Cities of London and Westminster) (Con): What message does the Minister have for those who are just entering the workplace about the likelihood of their having an adequate state pension when the time comes to retire?

James Purnell: That is a good point; we are moving from a situation in which women get £90 a week on average from their state pensions to one in which they will get about £130 a week. That is a significant change, and it means that we can tell people who are starting work that if they work or care for most of their lives they will be lifted well above the level of the
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means-tested safety net, and so will have good incentives to save. That is exactly the message that we should be giving people.

Jeff Ennis (Barnsley, East and Mexborough) (Lab): The Minister will know that when pensioners attain the age of 80, they receive a derisory increase of some 25p a week to their state pension. Does he agree that the time is right either to scrap the 25p a week or to raise it significantly?

James Purnell: I am aware of the situation, not least because pensioners have written to me saying that they spent their first increase on a stamp to send me a letter about it, but it is worth putting that increase in the context of our introducing free TV licences for over-75s and winter fuel payments of £300 for people over 80. We recognise that as people get older they need more benefits, and that is exactly what we have provided. As my hon. Friend knows, the policy to which he referred has existed since the 1970s, and neither of the past two Governments have changed it, but we recognise the needs of older pensioners, and that is why we introduced the measures that I mentioned.

Peter Viggers (Gosport) (Con): The Minister has just spoken in favour of the supplementary benefits available to pensioners, but does he realise that those benefits are means-tested, which means that many people have no incentive whatever to save for their retirement? Is he worried about that, and what will he do about it?

James Purnell: I wonder where the hon. Gentleman has been, because the Pensions Commission, which Lord Turner led, has just addressed exactly that point, and the IMF said in its findings that it will address the issue of the incentives to save. The IMF thinks that there is a good policy, and consensus has been built up on what the Pensions Commission supports. If he wants to stand outside that consensus, he is welcome to do so, but I think that we have a good set of policies for the future that will give people good incentives to save.

Jo Swinson (East Dunbartonshire) (LD): Despite the efforts of the Government and many hon. Members on both sides of the House to publicise pension credit entitlements, nearly 90,000 pensioners across Scotland are missing out on the pension credit to which they are entitled. Does the Minister think that that highlights the injustice of the complex and bureaucratic means-tested system of pensions? Surely it is high time that we moved to a system in which the Government paid a decent state pension, as of right, to everyone.

James Purnell: First, those figures are rubbish, and we told the Daily Record that before it published them. Secondly, the hon. Lady and her party are committed to scrapping the state second pension and the pension credit; that is what her party leader said recently. About half of pensioners get more from the state pension system than they would from the citizen’s pension that her party proposes. I am looking forward to the hon. Lady telling millions of pensioners, at the next election, that the Liberal Democrats propose to reduce their pension by making those changes.

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Kelvin Hopkins (Luton, North) (Lab): Following two decades of the Tories breaking the link between earnings and pensions, our pensions in Britain fell to the lowest level in Europe as a proportion of earnings. The comparisons now may not be as comfortable as we would like to think. Will my hon. Friend undertake to investigate pensions on the continent of Europe and in the European Union, to make a comparison, and to bring that comparison to the Commons with his statement?

James Purnell: There is a process under way within the European Union to do exactly that, but I am afraid that the figures do not show the whole picture. For example, they do not include all private pensions saving, which is important in our system in a way that it is not in other European systems. As a consequence of our proposals to link the state pension to earnings, the state pension will in future be worth twice as much as it would otherwise have been, so that is a big commitment. People in the Labour movement have campaigned for a commitment to a link to earnings for a long time, and I urge my hon. Friend to welcome that commitment as part of his support for our policies.

Mr. Nigel Waterson (Eastbourne) (Con): I am sure that the Secretary of State enjoys his regular cosy chats with the Chancellor, but will the Minister share with us, and with the estimated 3 million older people who will die before the link with earnings is implemented, how the Chancellor can say that the implementation may not be affordable in 2012, yet will definitely be affordable by 2015?

James Purnell: We have set out very clearly how we will finance that, but the interesting thing is the hon. Gentleman’s policy. Last time we debated the issue, his colleague the shadow Secretary of State said that he thought that restoring the link was affordable now; the hon. Member for Eastbourne (Mr. Waterson) then contradicted that in Committee; and last week his hon. Friend the shadow Chancellor said that there will not be any more money for pensions. What we are finding out about the Tories is that on presentation they want to face both ways, but on policy they are all over the place.

Disability Discrimination Acts

3. Andrew Gwynne (Denton and Reddish) (Lab): What assessment he has made of progress by private companies in meeting their obligations under the Disability Discrimination Acts 1995 and 2005. [126362]

The Parliamentary Under-Secretary of State for Work and Pensions (Mrs. Anne McGuire): We published research on 1 March which shows that organisations in the public, private and voluntary sectors are responding very positively to their obligations under the Disability Discrimination Acts.

Andrew Gwynne: I have seen that research and note that it finds that many employers still take a narrow view of disability, focusing mainly on sensory and physical impairments. What is my hon. Friend’s Department doing to ensure that all employers take on board their full obligations under the Disability
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Discrimination Acts to tackle all forms of discrimination against all forms of disability?

Mrs. McGuire: I thank my hon. Friend for drawing the House’s attention to that part of the research, which clearly indicates that there is still a very narrow focus. Some 10.5 million people in Britain are covered by the Disability Discrimination Acts, and not all of them—indeed, a minority—have sensory or mobility impairments. We need to broaden the scope and the impression and view of disability, and we are doing that by engaging with employers and the media and ensuring that people understand that there is a whole spectrum of disability, and not just people who have sensory or motor impairment. Later this year, we will start to roll out a campaign aimed specifically at employers to ensure that that message gets across.

Mr. Bob Blizzard (Waveney) (Lab): What role does my hon. Friend envisage for local authorities in raising awareness and providing advice to small businesses on their obligations under the Acts? Does she agree that communities can make co-ordinated progress only if local authorities and her Department work with the voluntary sector, including organisations such as the disability information and advice line in my constituency, which my hon. Friend recently visited?

Mrs. McGuire: I take this opportunity to thank my hon. Friend for arranging that visit, which clearly showed that where good local voluntary organisations work in partnership with other public authorities, they can enhance the message that is conveyed to the wider community. My hon. Friend is perfectly correct: we need to ensure that we use the leverage that local authorities, in particular, can bring to a local community, not just in the dissemination of information, which is crucial, but in how they conduct their own business in delivering services and employing disabled people. The disability equality duty was placed on public authorities to ensure that they do just that.

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