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House of Commons

Monday 7 January 2008

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—

Child Poverty

1. Simon Hughes (North Southwark and Bermondsey) (LD): What recent assessment he has made of his Department’s progress towards its target of halving child poverty by 2010; and if he will make a statement. [175866]

The Secretary of State for Work and Pensions (Mr. Peter Hain): In the past 10 years our policies have helped to lift 600,000 children out of relative poverty. Our new policies announced earlier this year will lift up to 300,000 more children out of poverty.

Simon Hughes: The Secretary of State will have seen the report from the Institute for Public Policy Research only last week which shows that there are still 1.4 million children in households in poverty—the same figure as 10 years ago—and that there are 200,000 more households with children in poverty than there were 10 years ago. Given that failure over 10 years, and the fact that the target date for the Government’s goal is only two years hence, what is being done to ensure that the Government target not only those in families with no work, but those who may have someone in the household in work but for whom the benefits reduction means that they are trapped in a position as bad, if not worse, than before?

Mr. Hain: As the hon. Gentleman will know, the IPPR report praised what we have done compared with the record of our predecessors—child poverty doubled under the previous Government—but it said that we have to do better. The hon. Gentleman is right to press me on that, and we shall address the issue with couple parents, especially whether it is worth the while of the second parent to work. I remind him of what we are doing in London, which affects his constituents. We are rolling out the in-work credit, which will be increased to £60 for lone parents for the first year to encourage them to go into work. We know that the child of a lone parent out of work is five times more likely to be in poverty than the child of one in work. We are extending child care, and we are making sure that couple parents also have access to the new deal. So we are addressing the issues, especially in London, but we have more work to do. However, we have made massive progress, compared with what we inherited.

Roger Berry (Kingswood) (Lab): Notwithstanding the Government’s significant progress on child poverty, official figures suggest that one in three children living in a household with a disabled adult live in poverty. Figures to be published tomorrow in a new report by Leonard Cheshire Disability suggest that that is a serious underestimate. Does my right hon. Friend agree that ending children poverty will require important measures to tackle the serious poverty faced by millions of disabled people in this country? Unless that is done, we will not achieve our laudable goal of ending child poverty.

Mr. Hain: I agree with my hon. Friend, who has championed the rights of disabled people, including children, for many years. Our policies are the right ones, because they will encourage more parents on
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disability benefit or who have a disabled child to come into work, with the right child care support, in order to make more prosperous futures for themselves. They are not policies designed simply to kick people into work regardless of whether they are disabled or of whether they have a disabled child and appropriate child care available—as the Opposition seem to be spinning. Our policies are the right policies to address child poverty, and that will remain our absolute priority.

Mr. James Gray (North Wiltshire) (Con): If the Secretary of State is confident about achieving his targets of first halving and then doing away with child poverty, will he take a leaf out of the book of the Secretary of State for Environment, Food and Rural Affairs, who is putting the carbon reduction target in statute in the Climate Change Bill, which will soon come here from the other place? Will the Secretary of State for Work and Pensions place his target on the statute book with a civil penalty for the Government in the event that they do not achieve it?

Mr. Hain: That is a novel suggestion from a Conservative Back Bencher, when the whole Conservative position is against targets. Indeed, they continually castigate us for having targets. [Hon. Members: “Answer.”] I will answer the question. We will stick to our policies. Some 600,000 children are already out of poverty and another 300,000 will be lifted out by policies that we have recently announced. More will come as a result of extra reforms that we will announce in the future, and I hope that the hon. Gentleman will support our policies instead of continually opposing them.

Mr. Frank Field (Birkenhead) (Lab): May I ask the Secretary of State to make more of the Government’s success, given that if a single parent is working 16 hours or more a week neither she nor her children are in poverty? That is an extraordinary achievement. However, we may still have a real problem for many two-parent families who are in work and poor, because the formula does not take account of the second adult in the household. Now that my right hon. Friend has dealt rather successfully with the pensions underpayment, for Allied Steel and Wire, will he put his mind to this issue and similarly win the Prime Minister’s support for a change to be made?

Mr. Hain: I am grateful to my right hon. Friend for what he said, as often he puts his finger on a serious issue. One thing that we have to address is that it is extremely costly to deal with this issue—extremely costly. We have been seeing whether we can find more innovative and perhaps less costly, more targeted approaches, but we are aware of the question for two-parent families—couple parents—and the disincentive for the second one to work is an issue to be addressed. However, as my right hon. Friend said, we are light years away from the situation we inherited. We would have been in dire circumstances if we had continued the old Conservative policies.

Julia Goldsworthy (Falmouth and Camborne) (LD): Is the Secretary of State aware that the Government will fail to hit their targets on child poverty in the south-west if nothing is done to tackle water bills in the area, which are the highest in the country? Will he ask the child poverty unit to meet to discuss that issue?

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Mr. Hain: As the hon. Lady knows, with my right hon. Friend the Secretary of State for Children, Schools and Families, I have established a poverty unit, which I assume is the one to which she referred, and we shall certainly consider that issue. I am well aware of the question, and also of the world increase in energy prices, which affects people’s incomes. What we need to do is provide more opportunities for people to get into work by removing the barriers, as we are doing in the south-west, where record numbers have come into work and where there are record numbers of vacancies to get people off benefits and into work in the future.

Tony Lloyd (Manchester, Central) (Lab): My right hon. Friend will know that my constituency has the unenviable record of the highest levels of child poverty in the country. Does he recognise that in a city such as Manchester, booming though it is, many people are missing out on the boom and that the way into work, particularly for women who head single-parent families, is not just finding jobs but having access to basic education to guarantee that they are equipped for the world of work?

Mr. Hain: Yes, I agree. It is not just a question of going into any old job, as some of the rhetoric and spin of Opposition pronouncements suggest. It is a question of providing the right support—which is costly; it costs taxpayers’ money to provide that support—including the skills that will make sure that lone parents or couple parents both get a job, as they are increasingly under the Government, and that they keep the job and improve their position in work. That is the way to lift people out of poverty in inner-city areas such as my hon. Friend’s constituency.

Chris Grayling (Epsom and Ewell) (Con): We of course welcome any moves that genuinely tackle child poverty. There is not a single child in this country under 10 years old who was not born under a Labour Government, so may I ask the Secretary of State why the number of those children living in poverty is rising?

Mr. Hain: As I have just explained to the House, including the hon. Gentleman, if he looks at what we are doing compared with the policies that would have been implemented if his party had stayed in power, he will see increasing numbers of children coming out of poverty. More and more parents are getting work, with a higher employment rate and a lower benefit level than under the Conservatives. That is the trajectory we are set on, and we are reforming all the time to make sure that we deal with some of the bottlenecks that have been in place for a long time.

Over the past few days, the hon. Gentleman has been going on about reducing incapacity benefit levels, which are partly responsible for child poverty and poverty generally. The level of incapacity benefit tripled under the Conservatives, as people were smuggled out of jobs and off the jobs count. We are reducing that and we will continue to do so as we get more and more people into work and conquer poverty.

Chris Grayling: The Secretary of State must think he is still on his sun lounger on the beach. He keeps talking about people coming out of child poverty, but the reality is that last year the number of children living
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in poverty went up. Why after 10 years of Labour government does Britain have a higher proportion of children living in workless households than any other country in Europe?

Mr. Hain: Actually, we were lagging well below the average in Europe under the Conservative Government. We are now above the average, but that is not good enough for us and we will do even better. It would be interesting to know how the hon. Gentleman will pay for the policies he advocates. How will he pay for them? At the Tory party conference, he announced, along with his leader—

Mr. Speaker: Order.

Occupational Pensions

2. Martin Linton (Battersea) (Lab): What steps his Department is taking to encourage employers to provide access to an occupational pension scheme for employees. [175867]

The Minister for Pensions Reform (Mr. Mike O'Brien): The Pensions Bill, having its Second Reading today, will introduce a requirement on all employers automatically to enrol workers who are eligible into a qualifying workplace pension scheme. Our estimates indicate that that will result in up to 9 million people newly participating or saving more in workplace schemes, with total pension contributions increasing by up to £10 billion.

Martin Linton: Is not the key to the success of the Government’s proposals an obligation on employers to match, or make significant contributions towards, the sum paid by the employee or worker? Is it not that which creates a strong incentive for the employee to save?

Mr. O'Brien: My hon. Friend is absolutely right. Under our Bill, employers will for the first time be required to contribute to workers’ pensions. The employee will contribute 4 per cent., the employer 3 per cent., and the tax system about 1 per cent. We estimate that more than 1 million workers who are already saving will see their employer’s contribution raised as a result, and millions more who have no occupational pension scheme will get the benefit of an employer’s contribution. Overall, annual pension contributions from employees and employers are estimated to increase by about £10 billion by 2015.

Mr. Oliver Heald (North-East Hertfordshire) (Con): Since 1997, almost 2 million fewer workers are in final salary schemes. How will Ministers ensure that personal accounts do not lead to more employers quitting schemes into which they are paying contributions of 14 per cent., in favour of personal accounts, into which they need pay only 3 per cent.?

Mr. O'Brien: The figure that the hon. Gentleman gives is wrong. I understand that it came out last week in a press release from Conservative Front Benchers which was inaccurate. As I understand it, they double-counted the figures. When the BBC did its own research, it realised that the figures that the Conservatives had given out were entirely wrong.

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We need to ensure that there is no levelling down, and that is why in the Pensions Bill we have introduced a number of conditions for personal accounts, which will ensure that people do not transfer in and out of them. There is a restriction of £3,500 on annual contributions. Also, 86 per cent. of employers have indicated to us that they are likely to maintain or increase the contribution that they make to their employees’ pension schemes. The Pensions Bill should therefore bring about a significant improvement to the pensions situation.

Lynda Waltho (Stourbridge) (Lab): While I welcome my hon. and learned Friend’s statement and the introduction of personal accounts, I am concerned that the proposed banding of contributions will discriminate against part-time workers, many of whom hold more than one part-time job, and most of whom are women. Will he look again at the possibility of allowing employer contributions on all earnings up to the £33,540 ceiling, and also at an option for employee contributions on the first £5,035?

Mr. O'Brien: We have had a very broad consultation on those matters, and we looked at the issue of part-time workers—an issue that has caused me great concern. We tried to find a way to assist part-time workers much more effectively. So far, it has proved very difficult to ensure that employers can register what are, in some cases, quite small jobs. We have not been able to find a way around that, but I am open to suggestions on how we might do that. I remain concerned about the issue that my hon. Friend raises.

Mr. Graham Stuart (Beverley and Holderness) (Con): For the new personal accounts to be successful, those on lower than average earnings will need to be persuaded that it is in their interests to invest in the new pensions. If they are not so persuaded, there is a danger that they will opt out, and that the whole system, and the benefits that it is supposed to bring, will collapse. The Pensions Minister himself said today that there was an issue in that respect; what can he say today to allay fears that those on lower than average earnings may opt out, and that the system may be fundamentally weakened?

Mr. O'Brien: I can reassure the hon. Gentleman that unlike the previous Conservative Government—who, pound for pound, took away all savings from those who saved, so that they did not benefit—we have introduced a savings credit, which enables those with savings to benefit, even if they are on pension credit. The Pensions Commission has made it clear that people have to save more. For the vast majority, the downsides of not saving outweigh the risk of saving that the hon. Gentleman identifies.

It is very difficult to predict which people will be in the group that the hon. Gentleman identifies. Those with pension pots of under £16,000 would have the benefit of trivial commutation. Those with pension pots of over £16,000 could get 25 per cent. back, so they would benefit from saving. Some of the suggested solutions are enormously expensive. None of them has been favoured by the hon. Gentleman’s party, as far as I am aware, although I heard a rather odd suggestion from the hon. Member for Epsom and Ewell (Chris Grayling) that everyone who made a contribution and did not
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benefit should have their contributions refunded—a suggestion about which, I suspect, the pensions industry would be very unhappy.

Ms Patricia Hewitt (Leicester, West) (Lab): I warmly welcome what my hon. Friend has done to promote occupational pension schemes, but what reassurance can he offer my constituents who worked, often for many years, for BUSM and contributed to its pension scheme, only to be left high and dry when much of the firm went bankrupt and the remnants were sold on to other firms? Will he meet me to discuss their position?

Mr. O'Brien: I would be happy to meet my right hon. Friend. As I understand it, when the business went down, the assets were passed from one company to another, and there are difficulties in getting the trustees to bring together the required information. However, I would be happy to meet my right hon. Friend and see whether there are ways in which we can help. If the company is in the position in which I think it is, the Pension Protection Fund would probably be able to provide help in due course, but I do not want to be categorical about that until I have had a discussion with her.

Mr. Nigel Waterson (Eastbourne) (Con): Did the Minister hear the chief executive of the personal accounts delivery authority on Radio 4 on 29 December, when he declined to commit himself to a 2012 start date for personal accounts? Does he agree that such a delay would be very worrying, and is he totally confident that the scheme will begin on schedule in 2012?

Mr. O'Brien: We intend it to begin in 2012, and the chief executive has been informed that that is what we intend.

Local Employment Partnerships

3. Jim Sheridan (Paisley and Renfrewshire, North) (Lab): What progress has been made on the implementation of local employment partnerships; and if he will make a statement. [175868]

The Secretary of State for Work and Pensions (Mr. Peter Hain): More and more employers are joining local employment partnerships—around 300 so far—with the number rising each week.

Jim Sheridan: I thank my right hon. Friend for his response. I visited my local job centre in Renfrew, and I was extremely impressed by the staff’s commitment to make the system work. What safeguards are in place to address the TUC’s concerns that work trials should not be used as a replacement for genuine paid employment?

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