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House of Commons

Monday 4 June 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—

New Deal

1. Mr. David Amess (Southend, West) (Con): What recent assessment he has made of the effectiveness of the new deal for young people. [140289]

The Secretary of State for Work and Pensions (Mr. John Hutton): Since 1997, long-term youth claimant unemployment has fallen by over 70 per cent. Independent research published by the National Institute of Economic and Social Research confirms that the new deal has contributed significantly to that improvement. It found that long-term youth unemployment would have been twice as high without the new deal for young people. As a result, the Department is spending £5 billion per year less on unemployment benefits than in 1997.

Mr. Amess: The figures that have been presented to me tell me that, unfortunately, nearly half of all young jobseekers who leave the new deal for young people return to benefit after a year. What are the Government trying to do to direct those young people into sustainable jobs and to change the present situation?

Mr. Hutton: We are looking to improve the delivery of services under the new deal and we will make announcements about that shortly, but there is no doubt that the new deal for young people has been a success, as I described. It has helped over 700 young people in the hon. Gentleman’s constituency. Without this Labour Government putting that investment in, they would have been looking at years of unemployment, as they did under the previous Conservative Government.

Jeff Ennis (Barnsley, East and Mexborough) (Lab): In my constituency, 1,700 young people have been helped back into work under the new deal. However, over 4,000 16 to 18-year-olds are categorised as NEETs—not in education, employment or training. Does my right hon. Friend agree that we need to be positively targeting those young people via successful schemes such as train to gain and entry to employment, which we are operating successfully in Barnsley, East and Mexborough?

Mr. Hutton: I am grateful to my hon. Friend. There is no doubt that we need to target additional help and support for that category of young people. Train to gain will help us to do that. The activity agreements that my right hon. Friend the Chancellor announced in the Budget will help us, too. It is important, however, to keep the matter in context. In 1993, one in four 16 to 25-year-olds was not in education, employment or training. Now the figure is closer to one in six.

Mr. Frank Field (Birkenhead) (Lab): Does the Secretary of State agree that, despite the successes of the new deal, unemployment among young people is now rising, the number of NEETs is rising and so is the inactivity rate? Although many of us hope that he will have a long stewardship of the Department to implement many of his longer-term decentralising reforms, might not one move be to bring in the new deal from day one of unemployment?

Mr. Hutton: We will respond shortly to the Freud report on the next stage of welfare reform. David Freud recommended that we provide more targeted
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help and support at an earlier point in the process for those who perhaps have the greatest overall barriers in coming back to work. We will make an announcement about that shortly, but we continue to look carefully at the new deal, at how it is working, and at the need to increase flexibility and better control front-line aspects of the new deal programme.

Personal Accounts

2. Rosie Cooper (West Lancashire) (Lab): What progress is being made towards the introduction of personal accounts. [140290]

The Secretary of State for Work and Pensions (Mr. John Hutton): We will publish our response to the consultation on the personal accounts White Paper shortly, together with our response to the recent Select Committee on Work and Pensions inquiry. Our intention remains to introduce a Bill in the next Session of Parliament.

Rosie Cooper: Personal accounts give many thousands of working families in my constituency who do not have an occupational pension an investment option, but only if they have confidence in that option to invest in those accounts. Can the Secretary of State indicate what he will do to ensure that those people have confidence and invest in those accounts?

Mr. Hutton: The first and perhaps most important thing that we can all do is to make sure that there is a strong and enduring consensus around the policy itself. I believe that that is the case after the excellent work that Lord Turner did. The key responsibility, of course, will be in this House. We have legislation to enact in the next Session, as I said. It will be important that the personal accounts delivery authority, the new independent board that will be set up to oversee the introduction of the new policy, has the right remit and produces the right guidance, information and help for millions of workers who are not familiar with occupational pension schemes, but who, like many people in my hon. Friend’s constituency, are keen to start saving. It is the responsibility of Ministers, the delivery authority and all of us in the House to continue to make the case for additional workplace savings. We must do all we can here to solidify that consensus and to ensure that the reform can serve her constituents in the way in which she and I would both like.

Mr. David Laws (Yeovil) (LD): Does the Secretary of State agree that, alongside encouraging personal accounts, the Government must do all they can to keep good-quality defined benefit schemes in operation? If so, why have the Government chosen explicitly to ignore the recommendation of the Government Actuary in relation to the level of the contracted-out rebate that applies from April this year? Is not that decision essentially another back-door tax on pensions? Will the Secretary of State review that decision in April 2008, which the right hon. Member for East Ham (Mr. Timms) indicated would happen when he was Minister for Pensions?

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Mr. Hutton: We always keep such decisions under careful review. The hon. Gentleman is a one-track record when he refers to all these reforms; he has nothing positive or constructive to offer. We both agree that consensus is an important part— [Interruption.] The hon. Gentleman is having a second bite at asking his question, but he should have got his first attempt right. If he had done so, I might have answered in the way that he would like, but I prefer to answer in the way that I wish given the question that he actually asked. I hope that the Liberal Democrats will at some point come to support—however grudgingly—the policy on personal accounts.

Ms Sally Keeble (Northampton, North) (Lab): Does my right hon. Friend agree that it is particularly women in work who have missed out on occupational pensions who miss out on pensions? How will he ensure that the new personal accounts are targeted on such people so that they get the necessary advice to ensure that they can fill that important gap in their pension provision?

Mr. Hutton: If we are to succeed in doing that—as my hon. Friend and I both wish us to do—we must continue the discussions that we are having with the pensions industry, employers and trade unions. It is important that personal accounts are targeted specifically on the group of people that Lord Turner and the Government have in mind: low and moderate income earners who work for companies that do not have an occupational pension scheme. We can continue to ensure that the policy works in the way that my hon. Friend and I want by making sure that there is a cap on contributions, that there are restrictions on transfers in and that there is a simple scheme exemption process. Personal accounts must be complementary—they must not compete with good-quality existing pensions. I am sure that we can design the system in that way.

Mr. John Redwood (Wokingham) (Con): Is not the Secretary of State ashamed of the low savings rate that there has been in this country under this Government, and is not the main reason for that the removal of tax reliefs, particularly on pension funds, along with the downgrading of tax relief on other saving schemes? Does he accept that we need better tax breaks to get people to save more, which they clearly need to do to have a prosperous retirement?

Mr. Hutton: Fiscal incentives will be attached to the introduction of personal accounts; I am sure that the right hon. Gentleman is aware of that. If he and his party colleagues truly believe what he has just said they would be proposing to reverse the dividend tax credit changes that we made. I understand that they are not planning to do so, although he personally might favour that.

Mr. Philip Hammond (Runnymede and Weybridge) (Con): The Secretary of State has already agreed with the hon. Member for West Lancashire (Rosie Cooper) that public confidence in the pension system must be restored if personal accounts are to be successfully introduced. Does he understand that a vital part of that process is the delivery, without further delay or prevarication, of a fair and equitable solution to the situation of the 125,000 victims of pension scheme failure whom the ombudsman’s report identified?

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Mr. Hutton: Yes, I do accept that, which is why we have brought forward further proposals to make the financial assistance scheme more comprehensive in its scope and more generous in its application. It is also why we have set up a review to discover whether there are other unclaimed assets that we can use to improve the minimum 80 per cent. guaranteed level of compensation that will be available under the FAS. As well as accepting that that is important, I am confident that the Government have introduced a full and comprehensive set of measures to deal with the problem. Looking forward, in respect of the Pension Protection Fund, we have the right guarantees in place.

Mr. Hammond: I am glad that the Secretary of State accepts the need to restore confidence, but how does the emotive and aggressive language of his High Court submission against the ombudsman help to restore that confidence? Will calling the ombudsman’s decision “flawed, irrational and peripheral” rebuild that confidence? Or perhaps he thinks that that objective will be best achieved by asserting that the parliamentary ombudsman—an Officer of this House—is

I will tell the Secretary of State what he needs to do if he wants to rebuild confidence—

Mr. Speaker: Order. The hon. Gentleman has rightly asked a question, but he should not give advice—not at this stage.

Mr. Hutton: The Secretary of State always acts on the basis of the legal advice that he receives. The Government’s lawyers produced those arguments and I am happy to stand by them.

Inactive Benefits

3. Philip Davies (Shipley) (Con): How many people are receiving inactive benefits; and if he will make a statement. [140291]

The Minister for Employment and Welfare Reform (Mr. Jim Murphy): As at November 2006, 3,701,710 people were in receipt of inactive benefits in Great Britain of whom the majority—almost 2.7 million—are customers on incapacity benefits.

Philip Davies: The number of people on incapacity benefit for five years or more has gone up from 67,000 in 1997 to 1.5 million today. What are the Government doing to address this problem, and how did they get themselves into this mess in the first place?

Mr. Murphy: The hon. Gentleman’s tone seems to be entirely out of synch with that of his Front-Bench colleagues on this important issue, on which they have sought to build consensus. The fact is that, after two decades of remarkable rises in the number of people on incapacity benefit, we have had two years of sustained falls; nevertheless, we still have to go further. The national roll-out of pathways is important, and the Welfare Reform Act 2007, which passed through this and the other place, is also an integral part of the process. Ultimately, we want to move away from a system under which too many people were written off
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during many years of Tory neglect and avoidance of supporting people who needed support through the welfare system.

Keith Vaz (Leicester, East) (Lab): It must be right that those who cannot work because they are simply not able to perform their duties as an employee are able to get benefits. However, is my hon. Friend satisfied that the appeals system is working quickly enough, so that, when people are not given the benefits that they deserve, they can go to the tribunal speedily to enable such decisions to be made and be satisfied with the result, and so that we can have proper deliberations on these matters?

Mr. Murphy: My right hon. Friend is right to say that we must ensure that the appeals mechanism is speedy, but it must also be accurate. An important part of that is getting the initial assessment correct, because if we can do that, far fewer appeals will be needed and the type of frustrations that he identified will no longer be in play. That is why, when we reform the personal capability assessment, we will transform it so that it takes into account modern trends in disability, mental health illness and learning disabilities. That is a real change from the past.

Mr. Owen Paterson (North Shropshire) (Con): The Minister did not really answer my hon. Friend the Member for Shipley (Philip Davies) at all. Why were 2 per cent. more people of working age on incapacity benefit in August 2006, compared with May 1997?

Mr. Murphy: The fact is that there have been two years of reductions in the number of people on incapacity benefit. The investment that has been put in place through pathways, which the hon. Gentleman and his colleagues opposed every penny piece of, has had an important impact. Some 32,000 people have got into work through the roll-out of pathways thus far, and 900,000 fewer people are on inactive benefits today, compared with a decade ago; that is more than 300 people each and every working day supported off benefit and into work. When we voted on these issues in the Commons, the hon. Gentleman opposed every single penny piece of investment to make all this work and to make the transformation of people’s lives possible.

David Taylor (North-West Leicestershire) (Lab/Co-op): About 8 million people of working age are economically inactive. The number on benefits is perhaps slightly under half that, but the largest single group on incapacity benefit remains those with chronic mental ill health conditions. Is the Minister convinced that we are doing enough to tackle some of the problems that those people experience in getting into work, particularly with medium-sized employers, among whom there seems to be a continuing reluctance to accept the employability of such individuals?

Mr. Murphy: My hon. Friend is right, and one of the successes of pathways thus far is that we are trying to support people, often with complicated needs, who have been excluded from the labour market for prolonged periods. Importantly, that includes those with learning disabilities—the labour market’s attitudes
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toward those people are gradually changing, although not enough—and those with a fluctuating mental health illness, who constitute the largest number of people coming on to the benefit. Again, the change in the assessment should help in that regard, but my hon. Friend is absolutely right to say that we have to go further in working with employers—both private and public sector—to give job opportunities to those on incapacity benefit with a mental health illness who wish to work.

Mr. David Ruffley (Bury St. Edmunds) (Con): There is an emerging consensus that there must be large-scale recycling of benefit savings to fund many more voluntary and private sector welfare-to-work programmes. However, that can happen only if the Chancellor of the Exchequer allows benefit savings from the Department for Work and Pensions’ annually managed expenditure budget to be moved across to its departmental expenditure limits budget. Can the Minister confirm today that the Chancellor has personally signed up to that, because there is a genuine fear in the sector that he has not, and that he is once again being the road block to reform?

Mr. Murphy: The Chancellor publicly declared that he would champion that and many other reforms in the public sector, and along with my right hon. Friend the Secretary of State, he attended the launch of the Freud report. The fact is that, if we had continued with the increases in the number of people on incapacity benefit that we inherited from the party of the hon. Member for Bury St. Edmunds (Mr. Ruffley), we would not be talking about reductions in the number of people on incapacity benefit; the number today would be 4 million. In terms of the attitude of the Chancellor, the sound economy, macro-economic stability, the investment in the new deal and the active labour market policies—all of which he championed, in contrast to the Opposition—have helped to make a reality of much of our success in the world of welfare.

Child Maintenance

5. Miss Anne McIntosh (Vale of York) (Con): Whether he plans to review issues relating to child contact and access as part of his reforms of child maintenance. [140294]

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. James Plaskitt): No, we will continue to treat contact and child maintenance as separate issues.

Miss McIntosh: Does the Minister not realise that, in many instances, fathers are being excluded from the upbringing of their children? Although it was recognised that there were good reasons for separating the issues when the current legislation was introduced, does he agree that every child benefits from access to, and contact with, both parents, and from both parents being involved in their upbringing? Would this not be a good moment to review the legislation and consider shared parenting?

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