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21 Feb 2008 : Column 594

In 2007-08, to date, there have been over 200,000 successful new applications for pension credit, and we are on track to surpass the target of 235,000 for the year. This year 680,000 home visits to hard-to-reach customers have been conducted through partner organisations, offering pensioners an holistic service that takes account of all their needs, including benefit eligibility. I am confident that our record in combating pensioner poverty is good, and that the measures I have announced will help thousands more pensioners to move out of poverty.

We will also uprate benefits and allowances for the working-age population. The order provides for an extra £630 million for disabled people and carers, and an extra £420 million for those of working age. Child-related allowances paid in the income-related benefits will be increased in parallel with child tax credits. That is intended to ensure that families entitled to such benefits see the full value of increases in the tax credits. Next April, the allowance paid for a child who is dependent on the income-related benefits will increase by £5.14 a week to £52.59, a rise of almost 11 per cent. That shows our commitment to providing financial support for families on low and moderate incomes. Tax credits currently benefit nearly 6 million families and 10 million children.

As in previous years, the uprating provides an opportunity for us to deal with anomalies and make the system simpler. From next April, the single-person rate for income support and jobseeker's allowance will be the same for all 16 to 24-year-olds. For the relatively small number of 16 and 17-year-olds who claim, that amounts to an increase of £12.30, raising their weekly benefit from £35.65 to £47.95. The change will give extra help to a small number of vulnerable teenagers, as well as simplifying the benefit structure.

This year’s uprating strengthens our pledge for an active welfare state that gives people an opportunity to return to the labour market and contribute to our society, and provides the security of an essential safety net for those who fall on hard times; but we can never be complacent. Our welfare state must continue to foster independence by giving people the support that they need, not so that they can become dependent but precisely so that they do not. Our goal is a welfare state that gives a hand up rather than a handout, and a way out of worklessness, not worklessness as a way of life. Our goals are ambitious—we want to remove 1 million people from incapacity benefit, and to enable 300,000 more single parents and 1 million more older people to work—but we are building on a platform of strength and stability. We can talk with real confidence about what has been achieved in the last 10 years: more jobs, more skills, more opportunity and less poverty. Since 1997, we have had the longest period of sustained growth in a generation. The number of people in work is at a record level: 29.4 million. Since 1997, the number of people on benefits has fallen by 1 million. The new deal has helped more than 1.7 million people into work.

Chris Ruane: And that is with the minimum wage.

Mr. O'Brien: As my hon. Friend says, that is with a minimum wage in place for those on low incomes. He will remember that under previous Governments
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people were paid, quite legally, hourly wages in the region of £1.20. We are now dealing not only with poverty in terms of the welfare state, but with poverty issues where people are in work. [Interruption.] The hon. Member for Hemel Hempstead (Mike Penning) says from a sedentary position: “Comrade.” Well, I am pleased to see that he has now joined the ranks of other comrades—and it also appears that he has raised his fist.

Mike Penning (Hemel Hempstead) (Con) rose—

Mr. O'Brien: I thought the hon. Gentleman might protest. I want to make some progress, but as I mentioned him I shall give way.

Mike Penning: Far be it from me to spoil the Minister’s fun, but as he might know, I was a member of a trade union 20 years ago when some of his Back-Bench colleagues were not.

Mr. O'Brien: I am pleased to hear that the hon. Gentleman is a member of a trade union, and by the sound of it, and on the evidence of his apparent fist-waving, he has not lost some of his background, so I suspect that those who sit on his party’s Front Bench had better watch their backs. [Interruption.]

Madam Deputy Speaker: Order. I ask Members to refrain from making sedentary remarks and to concentrate on— [Interruption.] I hasten to add that I did not apportion blame; I merely referred to sedentary remarks.

Mr. O'Brien: Thank you, Madam Deputy Speaker.

We are dealing with some very serious issues. It is right that we exchange pleasantries and conduct our proceedings with good humour, but some of these issues are of great importance for some very poor people in our society, and we must get them right. That is why it is enormously important that the record shows that we have reduced child poverty by 600,000 since 1998. We should be proud of that. Such achievements have helped millions climb out of poverty, and they serve to contrast vividly with the poverty of thinking on the Opposition Benches—and the creation of millions of unemployed under previous Tory Governments.

My commitment today is that we will continue to build on the progress we have made to date, ensuring that we create in this country a welfare state that is rooted in social justice and provides a vital safety net. Those who can work should work, and we must put in place the mechanism to ensure that they do so; but those who genuinely cannot work must be provided with the help and safety net they need.

Anne Snelgrove: My hon. and learned Friend’s comments on lone parents going back to work are right, but is it not the case that 12.5 per cent. more lone parents are in work now than in 1997, and that work is the best way of lifting children out of poverty?

Mr. O'Brien: That is absolutely right. It is important that we continue to assist lone parents to move out of poverty and into work and to ensure that their children
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get a better future. That is one of the Department’s key objectives. Our aim of providing help to lone parents has involved putting in a lot of resources, but it has been successful to date and we need to improve further still our ability to help lone parents. We are reducing the age level at which we want lone parents to move into employment, because we want their children to have the benefit of having parents who have jobs and who are able to lift their future—to raise the eyes of their children so that they can see a future of hope and of jobs and of a route out of poverty.

Mr. Gauke: When I looked into this subject last year, we had the lowest rate of lone-parent employment in Europe. Is that still the case?

Mr. O'Brien: Far more lone parents are in employment than was the case when this Government came into office, and we are ensuring that we get more lone parents into work. If the hon. Gentleman were to examine and compare our record with that of the previous Government, he would find that his party—I accept that he was not in Parliament at that stage—has something to be ashamed of whereas our party has something of which to be very proud. We will be even more pleased by the time of the next election because we will have helped even more lone parents into work.

The cost of uprating benefits for next year is nearly £4 billion, more than two thirds of which will go to pensioners. Together with the further measures to increase pension credit take-up that I announced recently, the money represents a substantial further investment in an active welfare state, social justice, reducing poverty and helping those in need. I commend these orders to the House.

4.5 pm

Mr. James Clappison (Hertsmere) (Con): Conservative Members welcome the opportunity to debate a subject of great importance to many of our constituents. We share many of the Minister’s general objectives, although we perhaps do not entirely agree with his narrative.

Mr. Mike O'Brien: I must seize the moment, because the hon. Gentleman says that he shares the objectives. Does he share the objective of our child poverty reduction target? Does he have such a target?

Mr. Clappison: The hon. and learned Gentleman is going over ground that we went over during questions on Monday. Of more material significance to this debate is whether the Government believe that they will hit their own target—a long period of silence will follow my saying that. I will come back to that point and give him another chance to intervene. Perhaps he will be able to tell us then whether the Government will hit their own targets.

I do not entirely share the hon. and learned Gentleman’s narrative. I am not sure that many of my constituents, particularly those who are saving for a pension, those who are part of a pension scheme or those who are in receipt of a pension would regard their finances with the same immense satisfaction as he seemed to feel about them. I shall say more about that in a moment.


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Conservatives recognise that today’s debate is being held against a background of renewed impetus in the wider debate about how to help our fellow citizens who struggle to get by, particularly our pensioners. I am pleased that the hon. Member for South Swindon (Anne Snelgrove) implicitly paid tribute to the work that Conservatives have done, as did the hon. and learned Gentleman in his remarks about lone parents. I pay tribute to the groundbreaking work of my right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) and his social justice commission. We regard this matter as being of the utmost priority. We want to help the workless to get back into work, where possible, and we want to find the best possible ways of enabling people to avoid poverty, including poverty later in life. We recognise the strong connection between worklessness and children growing up in poverty, and that it leads to fewer chances in life for those children.

Anne Snelgrove rose—

Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op) rose—

Mr. Clappison: I shall give way in a moment.

My next line was going to be the answer to a question put in an earlier intervention by my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke), to that answer being that Britain has the highest proportion of children in workless families of anywhere in Europe. If either the hon. Member for Swindon or the hon. Member for West Bromwich, West (Mr. Bailey) wants to deny that, I give them the chance to do so.

Anne Snelgrove: When I became a councillor in Berkshire in 1993, I was concerned about the huge number of people—lone parents with children and others—who were on incapacity benefit in my constituency. Doctors were putting such people on incapacity benefit because the benefits system was so low. The hon. Gentleman’s Government tripled the number of people on incapacity benefits between 1979 and 1997—an appalling target was hit.

Madam Deputy Speaker: Order. Before we go too far down this road, I ought to remind hon. Members that this order is about the uprating of benefits, so perhaps remarks will be confined to that.

Mr. Clappison: I was trying to set the scene for the details, and I shall come to those now. There is a provision for uprating incapacity benefits, so the salient answer to point made by the hon. Member for South Swindon is that it is likely, given the Government’s wretched record in getting people off long-term incapacity benefit, that many of the people she describes are still on that benefit. That is notwithstanding the fact that, overall—

Anne Snelgrove rose—

Mr. Clappison: Perhaps the hon. Lady will contain herself until I come to that part of my speech, bearing in mind your strictures, Madam Deputy Speaker. The Minister pulls a face, but he or one of his colleagues
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told me in a written answer last year that since 2000 the number of people who have been on incapacity benefit for five years or more has risen by 270,000. That is the problem with long-term incapacity benefit—

Anne Snelgrove rose—

Mr. Clappison: I shall give way to the hon. Lady, given that there is an uprating of long-term incapacity benefit and the Minister did not touch on it very much—although I am not surprised about that.

Anne Snelgrove: What is important is what the Government are doing now. I pay tribute to Jobcentre Plus in my constituency, which has signed up more than 100 employers to work with people on incapacity benefit. It is very important to get them off that benefit and the Government are the first to tackle that issue. The hon. Gentleman should recognise that, because his Government did nothing—

Madam Deputy Speaker: Order. I shall repeat my remarks. This debate is about the uprating of social security benefits and pensions, rather than the much wider scope, however interesting and tempting that might be.

Mr. Clappison: I shall now follow your strictures very seriously, Madam Deputy Speaker, and turn to the details of the order.

The Minister mentioned a global figure for the uprating of £4 million. I have to ask about that, given the way in which things have gone missing recently. The Government Actuary’s Department reported, on the basis of the draft uprating order, that the estimated increase in benefit payments in 2008-09 is £2,663 million, which is some £2.6 billion, not the £4 billion that the Minister mentioned. I have been guided by a helpful note from the Library. The Minister pulls a face again: if he wants to give me some better information on what the Government Actuary’s Department said on the basis of the draft, I should be happy to receive it, as well as an account of the seemingly missing £1.4 billion. I ask because, today especially, it is important to scrutinise every item of Government expenditure, including those that seem to get lost.

Whether measured by the retail prices index or the Rossi index, the indexation reflects greater inflationary pressure. We understand from the details of the explanatory memorandum that the benefits indexed by reference to the RPI will rise by 3.9 per cent., and that benefits subject to the Rossi index—RPI less housing costs—will rise by 2.3 per cent. In order to form a view of the order, it is important to compare that with the position in previous years. The indexation compared to RPI last year was 3.6 per cent., and it was 2.7 per cent. in the year before that. The recipients of those benefits are therefore subject to a rising inflationary pressure.

That rising trend is underlined by last week’s bleak economic assessment by the Governor of the Bank of England. The Minister pulls another face at the word “bleak”, but I suggest he pay heed to the Governor’s warning of a rise in inflation that is likely to be so steep that he will probably have to write another letter to the Chancellor of the Exchequer explaining why inflation has risen so far above its target. We have to bear that
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warning in mind because, as a result of those inflationary pressures, families face a genuine reduction in their standard of living, unless we make the necessary provision.

That has implications, of course, for the families who are subject to the uprating in this order. They can be vulnerable to the inflationary pressure described by the Governor of the Bank of England, especially as he specifically highlighted the higher level of energy and food prices, which form a higher proportion of the budgets of families on low incomes and pensioners. It would appear that inflation has now risen to a seven month high with a jump last month and that fuel inflation, in particular, is running at 19.3 per cent., which is the highest since records began to be kept in 1997. That is a very high level for fuel inflation.

Some estimates put the average household bill for gas and electricity close to £1,000. We also see alarming reports about the proportion of pensioner budgets that are spent on those items and on council tax, a subject of concern to many pensioners to which I shall return later. We certainly need to keep that well in mind. It is a source of anxiety for pensioners and those close to retirement. One survey from a reputable source recently showed, perhaps in contrast to the rosy picture painted by the Minister, that inflation movements are the biggest retirement worry for people nearing life after work.

Mr. Bailey: I am listening to the hon. Gentleman with great interest. The issues he raises are obviously of some concern. Will he assure me that his party, in the unlikely event of it being in government, would be certain to guarantee matching this Government’s uprating under the proceeds of growth rules? On the basis of his argument, will he assure me that his party would put in extra to allay the concerns he has expressed?

Mr. Clappison: It is always a mistake to give cast-iron assurances in politics. I am pleased that the hon. Gentleman has so much interest in the next Government, and can give him the cast-iron assurance that it is beyond peradventure that I will not be the Chancellor of the Exchequer in the next Conservative Government. I can assure him that ours will be a Government based on sound finance.

Through the order, we are seeing an increase in the council tax benefit received by pensioner households. We welcome any measures that will help pensioners to receive the council tax benefits to which they are entitled. However—the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) touched on this important point—almost 40 per cent. of pensioners who are entitled to council tax benefit do not claim it. Take-up of council tax benefit has fallen by 12 per cent. since 1997, which might interest the hon. Member for West Bromwich, West.

The take-up of housing benefit by pensioners has also fallen. The failure to take up benefits, subject to these orders, will have an impact on the lives of pensioners because seven out of 10 pensioners who are entitled to housing benefit but do not claim it are living in relative poverty. That is part of a wider problem of failure to take up benefits and entitlements among
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pensioner households. Part of the problem lies in the relationship between pensioners and means-tested benefits. The Minister touched on some of the reasons why pensioners do not take up means-tested benefits. Of course, questions relating to pensioners and means-tested benefits have long been recognised. We all know that many pensioners have a certain attitude towards means-tested benefits. As the hon. Member for Newport, West (Paul Flynn) mentioned, other pensioners find it complicated to claim means-tested benefits.

The Minister talked about the historical picture. As he was pleased to talk about the 1990s, perhaps he will remember the pledge given by our Prime Minister when he became shadow Chancellor of the Exchequer in 1994. He told the Labour party conference that year:


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