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5.29 pm

Sir John Butterfill (Bournemouth, West) (Con): May I point out that I am the first Opposition Back Bencher to be able to speak in this debate? Only one other Labour Back Bencher has spoken, and nearly all the time for Back Benchers has gone, if we want to hear the Minister wind up, which I am sure we all do. I shall therefore be very brief.

The issue of the guaranteed minimum pensions and their uprating has hardly been mentioned. A great opportunity has been lost in recent pensions legislation to get rid of guaranteed minimum pensions altogether. They could have been taken out of the system if some creative thinking had been applied. As it is, they cost a lot of money in administration for those few employers who still have defined-benefit schemes and add an enormous amount to the cost. The failure to uprate them fully in line with RPI—the capping procedure—means that a further burden rests on the employers, and that is not what was originally intended. A thorough review of the way in which GMP works is long overdue.

There are other problems relating to the administration. For example, many schemes have found that the information coming from HM Revenue and Customs and the National Insurance Contributions Office has been either misleading or incorrect. That again causes problems for the employers who are running the schemes. It is an urgent problem that needs to be addressed.

At the moment we have a surplus of indices, which appears almost designed to confuse the general public who are entitled to benefits. We have RPI, the RPI minus X, the consumer prices index and the Rossi index, which is lower than all the others. Most people cannot understand them. Why is it that those who seek income-related benefits, such as jobseeker’s allowance, housing benefit and income support, should be discriminated against by the use of the Rossi index, which is lower than all the other indices? Does the Minister think that jobseekers do not have to pay rent, mortgage interest or council tax? Why are those items omitted from the index, when those people often have to pay them?

Mr. Mike O'Brien rose—

Sir John Butterfill: I shall not give way to the Minister—he can reply when he winds up shortly—because many of my hon. Friends also wish to speak.

It is bizarre that those who are most in need, who have lost their jobs or have not been able to get jobs, are subject to the lowest index. The Government have deliberately muddied the water with a plethora of indices designed to mislead the general public at a time when they need better and clearer information.

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5.33 pm

Anne Main (St. Albans) (Con): I thank my hon. Friend the Member for Bournemouth, West (Sir John Butterfill) for being brief, because many of us have something to say about the uprating.

We all agree that benefits are supposed to support those in need and ensure a decent standard of living for those whose income falls short, but they were never meant to be a lifestyle choice or a refuge for scroungers or fraudsters. Unfortunately, as the hon. Member for Newport, West (Paul Flynn) said, many of those who do not claim benefits are those in the greatest need, so benefits are not going where they are supposed to go.

While we need to get rid of some of the flagrant abuses in the system, we also need the shake-up of the system that the Minister mentioned to ensure that genuine claimants do not lose out to benefit cheats. The Government know that they have to get a grip on the issue, because taxpayers too often read in the media about high profile cases of people making multiple fraudulent claims and seeing this country as a soft touch. Benefit fraud was nearly three and a half times as high in 2004 as it was in 1999, and was the second most commonly committed fraud offence in England and Wales after obtaining property by deception. The estimated loss to the Department for Work and Pensions in that period was just under £1 billion.

The uprating is fine, but not if all it does is provide more for fraudsters to target. As the judge said in the case I mentioned earlier, it was disturbing that alarm bells had not rung earlier. We need a better communication system not only to get benefits to where they are supposed to go, but to ensure that we are not losing out to fraudulent claimants who see us as a soft touch with few checks and balances in the system.

I am also surprised that it has not been mentioned that today’s uprating of benefits will also affect some EU claimants who have come into the country and claimed for children who do not live here. Many of my colleagues and people in the street find that somewhat bizarre. I look forward to the Minister’s explanation of whether we can put in place any measures to crack down on fraud and to ensure that only genuine payments are made through the system as regards any benefits that are paid outside our country’s shores. I have serious concerns that if the level of fraud in our country is not being cracked down on, the level of fraud outside this country might be even more enormous. I find it worrying that we are not putting in place the same checks as we are putting in place in this country when it comes to dealing with some 14,000 migrants who claim child benefit for children who do not live in this state, costing our taxpayers at least £250,000. That is a worrying situation.

Another issue that was not raised too frequently in the debate is fuel poverty. We have heard about the winter fuel payment, but that goes to the elderly and to pensioners. Fuel poverty affects many of my constituents—I have referred to this before—and 16 per cent. of homes in St. Albans find themselves in fuel poverty. Many of those families receive multiple benefits, so they will welcome the uprating. It is very worrying that the Government are missing their fuel poverty target. I know that the Energy Bill is in Committee, but we need to put in place better systems to ensure social tariffs and
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to direct benefits to alleviate fuel poverty for those families who suffer from it. Of course, many of those families have children, too.

Part of the problem has been communication about how benefits are claimed. I tried to introduce a private Member’s Bill not long after I came to the House to try to encourage people to take up benefits on behalf of those who are terminally ill. Indeed, the uptake of that benefit—the disability living allowance—is still woefully poor. I was assured that communication from the Government would improve. Unfortunately, I have not seen that improvement. I welcome the warm words about encouraging pensioners through a phone call or through other means to take up pensioner benefits, but I have heard the same encouraging words before about people who are diagnosed as terminally ill and are unaware of the benefits that they are entitled to claim. I hope that the Government will take on board the fact that people who need benefits at various stages in their life—particularly towards the end of their life—need clarity and simplicity in the system so that they get the benefits to which they are entitled. I do not feel that there has been any movement on that, and that is a shame.

In St. Albans, we have seen a rather good report about targeting people in order to stop fraud. Yet again, we fell down on the subject of communication about how to access benefits. That was also highlighted in a report by the Public Accounts Committee.

The uprating of benefits is extremely welcome in the case of those families who are truly deserving. I do not welcome the fact that fraudsters see the uprating as an extra few pounds in their pocket, nor the fact that they will not be stopped from claiming fraudulently. As the hon. Member for Newport, West said, we will not welcome it if the benefits are uprated and then sit idle and unclaimed by those who truly deserve to claim them. The Minister should put on his thinking cap and ensure that the benefits are not only uprated but made truly available to those who deserve to claim them.

5.39 pm

Mr. Charles Walker (Broxbourne) (Con): I am grateful to be called to speak in this lively debate. I am delighted that I am the fourth Back Bencher to have the chance to say my piece.

I agree with my hon. Friend the Member for Bournemouth, West (Sir John Butterfill) about the use of various indexes. We in the House find them very confusing indeed and we are meant to be the professionals. I know for certain that my constituents are completely baffled by the difference between the consumer prices index, the retail prices index and Rossi, which my hon. Friend mentioned—they probably think that Rossi is an Italian football player. We owe it to the public to be transparent when we talk about inflation. I do not think it is beyond the wit of man for the great brains in this place and the civil service to come up with just one index that accurately reflects the cost of living.

I want to touch on the subject of pensioners. I am delighted that they will have a much-needed increase in their pension, because they are often the people with the least disposable income and, indeed, the smallest
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income. However, I do not share the Government’s enthusiasm for what has been achieved over the past 10 years. In my constituency, like many others, pensioners struggle hard to make ends meet. Council tax seems to go up by about 5 per cent. year on year, and much of the increase is because councils have to deliver central Government initiatives that are either underfunded or completely unfunded. The cost of fuel for pensioners is going up at an extremely high rate, which is not adequately reflected in the allowances they receive to pay for their fuel, particularly in the winter months.

Anne Main: As a fellow Hertfordshire MP, my hon. Friend may have noticed the unfortunate sneering from the hon. Member for South Swindon (Anne Snelgrove) and some of her colleagues when we said that the small grants we receive in terms of funding allowances mean that we often have disproportionately large rises in council tax.

Mr. Walker: I do not want this to be a partisan debate, but my hon. Friend makes a good point. When she was discussing the plight of her constituents in St. Albans, there was some sneering from the Labour Benches. I point out to those Members that there are many thousands of Labour voters in St. Albans—indeed, it was a Labour seat until the last general election when my hon. Friend won it for the Conservatives. I was slightly annoyed by the sneering, which injected a rather sour tone into the debate, but I am sure those Labour Members are very sorry about it.

I return to heating and fuel for pensioners. I am not a great class warrior, but like my hon. Friend the Member for Hemel Hempstead (Mike Penning) I am a member of a trade union and I feel that there is a whiff of the Cedrics at British Gas. I was slightly concerned to hear that the company is making record profits when many pensioners are struggling to pay their bills. British Gas needs to have a long hard think about what it is doing. I am not against profit at all—profit is paid into pension funds—but I am really concerned that energy companies are making large sums of money off the back of some hard-pressed people in our communities. Pensioners are paying more for staple foods and the cost of bought-in care is increasing.

I shall touch briefly on incapacity benefit. I am delighted that people who are genuinely ill and unable to work will receive an uplift in their benefits. It is important that they have quality of life, although of course it will not be the same as if they were in work, but I hope that for many of them it is manageable. However, like many Members, I am concerned about the increase in the number of people in receipt of incapacity benefit. Being on benefit is no way to live if there is another option, so I hope that the Government are really committed to getting more people off incapacity benefit and back to work. Many people who have been out of work for a long period begin to doubt their ability to go back to the workplace; mental health issues creep in and there is loss of confidence. I hope that collectively, across the Chamber, we can come together to ensure that people who can work have the chance to do so.

I was pleased that there will be some adjustment to tax credits, but I am concerned that they are not necessarily the answer in the long term. All of us will
21 Feb 2008 : Column 623
have heard in our surgeries the harrowing cases of people in receipt of tax credits who are being pursued for back payments of between £4,000 and £7,000. One of the fundamental problems in this country is that people start paying tax on their income far too early. I have said it before in the Chamber, I say it now, and I will say it again.

It is incumbent on a civilised society to ensure that hard-working families whose earnings are at or near minimum wage level hold on to as much of their earnings as possible, rather than having their earnings taken off them by Government, through tax, and then laundered back to them in the form of tax credits. That robs people of their self-respect, and it is not the best way of helping those at the bottom of the income scale. Again, I am not seeking to make a partisan attack; that is just my fundamental belief, as a Member of Parliament and as a member of society. I hope that when our time comes and we are in government—as we will be, because we still live in a democracy—we will address the issue.

I represent Broxbourne, which is full of generous people who understand the need to look after the old, the infirm and those who are struggling between jobs, either because they are made unemployed through no fault of their own, or because they are having a difficult time. However, there is concern among all our constituents about the growth in the number of professional claimants—claimants who think that the state is there to support their way of life, and who think that they have no obligation to the state. When social security was created, the idea was that people paid into a fund that acted as a safety net, and could draw on it in their time of need. That is a noble, lasting, good idea. However, I am terribly concerned that a whole section of society think that they can draw on that fund, but have no obligation to support it or make any contribution towards it in their life.

If we are to retain long-term confidence in our system of social security, we need to make sure that it is seen to be fair—that those who have paid into it are at the head of the queue, and that it is there for them in their time of need. All of us will know of horrible cases in our constituencies in which people with successful lives, who may not have been earning a lot of money but who had stable jobs, a stable family life and a stable home, suddenly suffered a great tragedy or an illness. Those people’s lives can unravel incredibly quickly, and they find it difficult to access services and benefits. They struggle to keep themselves together. Sometimes they face losing their house or their children—they face all sorts of tragedies—yet on the other hand some people who have never done a stroke of work in their life, have never contributed to society in any reasonable way, seem to sail through everything, and have everything laid on for them. We must put hard-working people and families at the forefront of our benefits system.

The Daily Mail would have us believe that millions of immigrants are coming to this country and abusing our system. Of course there will be some—a minority—who do that. We must be mindful of that and we must not allow it to happen. However, I get annoyed when newspapers attack immigrant communities and fail to reflect the fact that there are many people born and bred in this country who abuse and cheat the system. Those people should be ashamed
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of themselves. I support any measures that ensure that people who do not have a right to access benefits do not get their hands on them.

5.48 pm

Mr. Mike O'Brien: This has been a useful, helpful debate, and many of the contributions that were made in the time available were important. It is fair to say that we Front Benchers took quite a bit of time in dealing with issues, as the hon. Member for Bournemouth, West (Sir John Butterfill) said, but we also took quite a few interventions. There is a trade-off: either Front Benchers take interventions— [Interruption.] Front Benchers are in unity, for once. Either we take interventions, and take up more time, or we do not take interventions and speak more briefly. If we do the latter, Members complain that we have not taken interventions, so we cannot win. The contributions that were made were important. If colleagues will bear with me, I will not take substantial interventions—well, I suppose I will if I am really pressed, but I would rather try to deal with the points made.

Our aim has been to deliver justice for those who are workless, for those who are disabled and for pensioners. I shall deal first with pensioners. We are spending £75 billion on pensioners this year. The sum is set to rise to £78 billion next year and £86 billion by 2012. Since 1997, pensioner incomes have risen across the board, with the poorest benefiting the most. The uprating order underlines our commitment to provide extra security in retirement.

Several Members referred to issues related to fuel poverty. We recognise that fuel costs can be a particular concern for older people. That is why we introduced the winter fuel payment. Since 1997, it has increased tenfold to £200, and to £300 for the over-80s. Alongside that, our Warm Front programme has provided grants and aid to over 1.6 million households. Better insulation can lead to savings of up to a third off winter fuel bills.

However, we have seen recent rises in fuel costs. I am concerned about the impact that these increases will have on vulnerable customers—not only pensioners, but others, too. I am working with my hon. Friend the Minister for Energy to see whether we can engage with the energy sector and reduce the risks for the most vulnerable. Some of the more vulnerable groups can get help from fuel companies, which have social tariffs and programmes for insulation and so on, enabling them to target those most in need. We want to work much more effectively on that.

Only last week I announced a campaign to ensure that pensioners who are entitled to grants from Warm Front take them up. We are sending letters to 250,000 of the most vulnerable pensioners, encouraging them to apply for grants for better insulation and energy efficiency measures.

For the pensioners of tomorrow, we are ensuring that everyone can save for a better retirement and we have made some historic changes to the state pension. The earnings link will come back, and we will achieve equality for women’s state pensions within a generation.

Mr. MacNeil rose—

Mr. O'Brien: If the hon. Gentleman will bear with me, I am trying to deal with a large number of points rather quickly.

21 Feb 2008 : Column 625

The hon. Member for Bournemouth, West mentioned the uprating of guaranteed minimum pensions. GMPs ceased to accrue from April 1997, but past rights still exist. The Pensions Act 2007 allowed schemes to convert those rights to normal scheme rights, and the aim is to commence that legislation from, we hope, April 2009.

My hon. Friend the Member for Newport, West (Paul Flynn) raised several issues. He is right to say that the disability facilities grant has not been uprated since December 2005, when we implemented the proposal to exclude children’s cases from means-testing. We are expecting to update the regulations shortly and we will also consider a packet of changes. The Government regard the DFG programme as an important means of helping more than 35,000 older and disabled people each year to continue to live independently. We have substantially increased funding for the programme from £57 million in 1997 to £146 million in 2008-09. Further steps will be announced shortly.

My hon. Friend also spoke about the national insurance fund. Increasing the basic state pension to the level of the guarantee credit would cost about £20 billion a year. By 2015, that would rise to about £80 billion a year, which would wipe out the balance in the national insurance fund in a matter of years.

My hon. Friend mentioned the capital disregard in relation to pension credit. He is right to say that there is an issue. We have focused on trying to help the poorest. We know that 80 per cent. of those eligible for pension credit have less than £6,000 in capital.

I could deal at great length with equality for women, which is a complex issue. I am aware that there have been problems with recording home responsibilities protection in the past. Urgent work is under way to identify those affected. Where we find errors, we are correcting them. The Pension Service has been in contact with nearly 500,000 people, mostly women, regarding payment of contributions for the years 1996-97 to 2001-02. We are also contacting male pensioners who have had particular problems because of the lack of HRP recording in the past. We are trying to make sure that we get the issue right.

My hon. Friend also mentioned the cliff edge; I will soon have to deal with that during discussion of the Pensions Bill. That will be a better time to deal with the detailed arguments on what I accept is an important issue.

Since 1997, pensioner poverty has reduced by more than a third to 17 per cent., through targeted support such as pension credit and about £11 billion of extra funding. We have lifted more than 1 million pensioners out of relative poverty after housing costs. Owing to the tax and benefit changes that we have introduced, pensioner households are on average £1,500 a year or £29 a week better off in 2007-08 than they would have been under the 1997 system. The poorest pensioner households are about £2,000 a year or £42 a week better off.

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