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Susan Kramer (Richmond Park) (LD): Does the hon. Lady agree that sometimes in areas of affluence, such as my constituency where we have something closer to pockets of deprivation, families suffer even more? There are no low-cost shops and Government
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programmes do not reach out to those areas, so there is no Sure Start and no children’s centre. Many services that help others are missing for families for whom they matter just as much.

Ms Buck: There is truth in what the hon. Lady says. She almost mirrors my opening remarks about the dangers of individuation. People living on a low income amidst affluence face particular problems of inequality and there are particular challenges in reaching those households. None the less, in a spirit of devolution—given the role we expect local government to play—it is incumbent on local authorities to work independently and with other partners such as Jobcentre Plus and the Government to help deliver services to children in poverty. It is thus extremely worrying that, as far as I am aware, only one local authority—and even that may have changed—has a child poverty target in its local area agreement.

If we are to eradicate child poverty in the UK, money lies at the heart of the process—let us be under no illusion about that—but life chances, too, are central to that goal, and local authorities and local partners, including local voluntary and community organisations, are often best placed to deliver targeted and focused support to families. I hope the Government will pick up on the deeply worrying fact that so many local authorities do not say in their local area agreements that as a priority they will make it their duty to help overcome the problems of worklessness and child poverty.

Mr. David Heath (Somerton and Frome) (LD): The hon. Lady’s constituency is very different from mine, but one of the problems in rural areas is that individuals in a poor position are isolated from the support systems that she describes. Furthermore, local authorities are not funded to provide services to the most difficult-to-reach people because the unit costs of doing so are much higher than where there is an identifiable critical mass.

Ms Buck: I agree with the hon. Gentleman up to a point, but given that we are talking about devolution, one of the things we have to recognise is that each local authority has a responsibility to make a case to its local council taxpayers. Of course, there is a role for central Government in helping to support some of the measures, and in our debates about local finance we all make representations about the needs of urban authorities, the needs of authorities in the north versus those of the south and the needs of rural authorities versus those of London. The Government pick up many of those issues, but we continue to make representations on others.

We have to overcome a number of barriers if we are to meet the child poverty target, accepting, as we do, that for many people work will be the best way out of poverty. We know that incentives work. It is a proven fact. There may be plenty wrong with the administration of the tax and benefits system; we need constantly to refocus on how we can improve the delivery of tax credits, especially with regard to the overpayment problems. However, in principle, the tax credit system and other measures in the tax and benefits system are proven to work. The continuing problems of poverty and worklessness are in areas where the incentives do not work because they do not overcome the barriers.

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Our London Child Poverty Commission has demonstrated beyond doubt that if the same level of incentive—for many people, not just for job entry but above all for job retention—delivered in London and other inner-city areas as it does in many other parts of the country, we would meet most of our targets. Why do the incentives not work? There are two reasons. The first is to do with housing costs, so I very much welcome the commitment to a review of housing benefit, although I shall wait to see what it says—I shall not approve it in advance. Clearly, we must make housing benefit effective as an in-work benefit, which it is not at the moment, particularly for families in high-rental areas. That review is welcome, and I will follow it very closely.

The other issue to consider is child care. One of the welcome paragraphs buried away in the Budget report included a commitment to extend the child care affordability programme in London. It has taken some time to get it up and running, but it is successful. It provides a subsidy to deliver affordable child care in areas of very high child care costs. It is a very good thing, and we want it to be rolled out and extended.

What does not work is the child care tax credit. The Government finally have to throw up their hands and say, “No, we’ve tried this; it is a failure; we must move on.” As my right hon. Friend the Financial Secretary to the Treasury knows very well, I have supplied her with figures to demonstrate that in my borough—a whole inner-London local authority—only 400 households receive the child care tax credit. If we are to help lone parents in particular to make the leap from worklessness to employment and sustain it, we cannot say that the vehicle for delivering that is child care tax credit or, indeed, child care vouchers, the numbers of which we do not even track. We cannot rely on a tax credit that does not deliver for most people most of the time. It is now absolutely crucial that we pull up the stumps on the child care tax credit and say that we will switch it to a flexible form of funding—an Oyster card-style system that gives people an entitlement to child care that meets the needs of flexible child care, which is what parents want, particularly lone parents, who so frequently want part-time employment but cannot find part-time child care.

We must also do away with a number of other barriers, such as asking for a deposit for child care. A low-income family could be asked for £1,500 up front before they even get their child care place. I very much welcome the fact that the child care affordability programme has been delivering in my constituency. However—I must put this on record because it has horrified me so much—my local authority, which is the flagship Conservative borough of Westminster, has taken up the child care affordability programme but then put up the rents for the council nurseries. A nursery in my constituency—Westminster Children’s Society, which is a voluntary organisation partner—is now paying back to the local authority £69,000 a year in rent. The money that the Government are paying for child care is simply pouring through the plughole and back into the local authority’s coffers. If anyone can convince me that that local authority is working in partnership to tackle poverty and unemployment, I am prepared to buy them a very large drink.

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Ms Keeble: Does my hon. Friend agree that it is complete nonsense that child care facilities, either nurseries or before or after-school clubs, that use school premises are charged exorbitant rents because of the requirements for economic returns under the private finance initiative contract? Does she agree that that problem needs to be sorted out, so that those child care services can continue to function economically?

Ms Buck: I agree. In fact, there are 100 anomalies in the system—some in local government, some in the benefits system and some in the tax credit system—and we have to work on them. It may be grey and detailed, but it is often in the precise implementation of benefits and services that the problems lie. Although I will vigorously campaign on next year’s Budget for substantial additional investment by the Government in the child tax credit, the working tax credit and a number of other measures to help us to meet the 2010 target, it is important not to dismiss as trivial many of those relatively specific measures at different levels in the system that can trap people in unemployment and poverty.

I have said that incentives work. Indeed, we know that they work, so we do not need a harsher penalty regime. In the past year, the number of people on jobseeker’s allowance subject to sanction has escalated. No one quite understands why that escalation has occurred, and it is fundamentally unnecessary, particularly for people with children, people on incapacity benefit and people with mental health problems. Sanctions will always be a part of the regime. No one is arguing that they should not exist and should not be applied, but it is through incentives, not sanctions, that we will crack this nut.

I should like to finish by reminding the House that we are talking about not pounds and shillings, but real people who encounter complexities and pressures that very few of us in the House have had to deal with, thankfully. In the past week or two—it is fresh in my mind—I saw in my surgery a bus driver and his family who are on tax credits. They are in temporary accommodation that costs £435 a week. The bus driver’s income changes marginally every single week, which means that his housing benefit has to be recalculated every single week. Since he went into work, he has not been out of housing benefit arrears and has had three notices seeking possession of his house. For doing what we want him to do—for going into employment—we have threatened to make him homeless. That is the kind of problem with which we have to deal.

Then there is the case of a single mother with three children—boys and girls aged 14, 12 and nine—who live in a one-bedroom flat. They have to sleep in shifts. The mother is still trying to go into work, but when she was last in employment she, too, ended up with a housing benefit overpayment of £3,500, and she is now a tolerated trespasser. Under those circumstances, the incentive to go to work evaporates. Word of mouth goes round, and staff in Jobcentre Plus then tell people in similar circumstances not to even think about going into work. As I have already said, one mother who wanted to go into work was asked for £1,500 in advance to secure a nursery place for her child. As a
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consequence, as I think someone has said today, there are nurseries that are only two-thirds full. That is an absolute absurdity.

We are talking about real people who are struggling with a complex set of circumstances. In addition to the problems I have mentioned, many of them have experienced domestic violence or have been homeless. I met a family last week who have been in nine different temporary accommodation addresses in eight years. That is the level of complexity on which we have to focus. We have to find ways of simplifying the system without losing a fundamental generosity that provides an effective incentive, because as I have said three times—I will say it again in my last words—incentives work.

3.22 pm

Angela Browning (Tiverton and Honiton) (Con): Given that we have the largest budget deficit in western Europe, it is not surprising that yesterday the Chancellor spent a lot of time talking about other issues, which left many of us wondering whether we were listening to a Budget speech. Clearly he has very little room to manoeuvre. Macro-economic figures have been mentioned, but we should look at the reason why we are in our current position, and at the Government’s inability to plan for the future, as regards the global turbulence that they keep talking about, and the domestic problems closer to home, many of which were brought about by the former Chancellor. I mentioned one of those problems in an intervention on my hon. Friend the Member for Tatton (Mr. Osborne): the disposal of the nation’s gold supplies has left us £4 billion worse off than we would have been.

Another domestic problem is the raid that the former Chancellor, now the Prime Minister, made on the nation’s pension funds. It is worth recalling that when Labour came to office in 1997, there were more funds in private pensions in this country than in the rest of Europe put together. Anybody who was then in work and who was doing the right thing for themselves by saving for their future—creating their pension—would have had confidence that when they reached retirement age, they would have provided for their retirement, having made significant contributions from their earnings. As we know, it is increasingly the case that when people now reach state retirement age, they face greater financial uncertainty than previous generations did. Today I would like to address the issues affecting that group of people.

Quite properly, we have heard much in today’s debate about child poverty. It is an important issue, although I notice that we still did not get the Secretary of State to confirm from the Dispatch Box that he intended to meet his own 2010 target, which after all is only two years away.

I shall focus on the older age group, and perhaps I should declare an interest as I am in receipt of the state retirement pension and will benefit, of course, from the increase in fuel support announced by the Chancellor yesterday, which is welcome. However, in my constituency, there is a high proportion of people living on retirement incomes, coupled with a working population. In the south-west as a whole, we have historically had lower than average wages, but in my constituency we have
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wages lower than the south-west average. I am therefore used to constituency casework that deals with the difficulties of a retired population, and particularly with the difficulties of families on low incomes.

It is important to consider single people. Not everyone marries, and single people get older, too. They often do not have high incomes and they eventually get to retirement age, so I shall look across the spectrum at those on lower incomes generally. What I see in the immediate future for them are insurmountable problems. We know that the retail prices index is at 4.1 per cent., but that is no indicator of the real cost of living. That is true throughout the country but especially in rural Devon where people rely more on their own vehicles or on a very fractured public transport system.

Food prices, for example, have gone up by 7 per cent. In the South West Water area, which includes my constituency, water rates in the coming year will go up by 8.7 per cent. Even those who have a water meter will see an increase of 5.6 per cent. in their water charges. Council tax has gone up above the RPI rate. Attention is not always directed at the elements of the council tax. One of those, the police precept, is up by more than 7 per cent. in the coming year. Those are all bills that must be paid out of modest fixed incomes.

Mr. Heath: One other fixed cost for the people the hon. Lady is describing in her constituency, as in mine, is liquefied gas or oil-fired central heating for their homes, which has risen out of all proportion to its previous cost.

Angela Browning: I agree. I know the profile of the hon. Gentleman’s constituency, which is not dissimilar from that of my constituency. The next item on my list was fuel, which is up 19 per cent. When we speak about fuel, we encompass the cost of travel. For many people, it is not just a matter of travelling round looking at the beautiful Devon countryside, but of travelling to access essential services such as doctors and dentists, for those who have one. All that adds to the household bill.

We know that people’s disposable income has dropped and is forecast to go down further. Nothing in the Budget gives me any comfort that the Chancellor is suggesting ways in which the drop in the standard of living will be mitigated. It gets worse for a certain group of people on lower incomes who have already been mentioned in the debate—those affected by the changes announced by the Prime Minister in his last Budget as Chancellor, which the Liberal Democrats rightly call the doubling of the 10p income tax rate. It was paraded as a reduction in tax, but those—ironically, the very hard-pressed group I am describing—earning just over £5,000 and up to £18,000, which includes many pensioners and many on low incomes, will see their income tax go up.

I wrote to the Financial Secretary on behalf of one such constituent—a lady constituent of mine—and received a letter back outlining why, in the 2007 Budget, the then Chancellor had felt that that had been a good move. It was a good move for people like me, who earn a higher amount of money and pay a higher rate of tax, but at the end of the day, given what I and many like me earn, we will not experience the same impact as my constituents on lower incomes. In her letter, the Financial Secretary said:

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I shared that response with my constituent who wrote back to explain:

It seems quite appalling that no consideration was given in 2007 to how this new tax would impact disproportionately on those on fixed incomes and those on low earnings, of whom there are many in my constituency.

I say to the Financial Secretary that it is not too late. Many of us in my party have heard for many years about fairness and justice—they were referred to earlier by the right hon. Member for North Tyneside (Mr. Byers) in a very good speech. I ask the Financial Secretary, where is the fairness and justice on the part of this Labour Government? They are penalising those on modest incomes, particularly those who are about to become, or have just become, pensioners.

It is now popular to talk about pensioners working for longer. Fortunately, many people in their 60s are fitter and healthier than those of the previous generation. We all understand the demographics, but I am enormously worried about those who reach retirement age, having saved and planned for it and having worked hard all their life, who find that there is not much choice about whether to give up work at the state retirement age. Psychologically, there is a huge difference between someone who is giving up full-time work and looking to do something slightly less onerous—I count myself among those, as I shall be standing down at the next election—and someone who reaches retirement age and knows that they have to work because the money they had counted on having is just not there. That will surely lead to a deterioration in people’s health, and it goes without saying that people who get to their mid-60s often do not know how good their health will be. It is a bit of a lottery, but we often take it for granted.

It is not too late. Following this Budget debate, there will be a Finance Bill, and I ask the Financial Secretary to consider the matter seriously. If the Government do not make changes to the aspects of the 2007 Budget that will have such an impact, we can only assume that that impact was their intention. Surely it cannot have arisen because they ommitted to consider the effects on that particularly disadvantaged group of people.

We have heard much about savings, including from my right hon. Friend the Member for North-West Hampshire (Sir George Young). As disposable incomes decline, people are less likely to have any money to put aside or save for the future. That leaves them feeling exposed and vulnerable. It does not make for an inclusive society in which people feel that they can look forward to old age; instead, it makes them fearful, and that is not good.

Let us consider small businesses. As a former member of the Federation of Small Businesses, I read its press release after the Budget with some amusement. Its headline reads “FSB welcomes a Budget speech with no nasty surprises”. The Minister of State,
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Department for Work and Pensions, the right hon. Member for East Ham (Mr. Timms), nods in approval, but he should reflect a tad and realise that that is not much of a compliment. The organisation is saying, “It’s pretty bad but we were expecting the worst and it’s not as bad as it might have been.” I emphasise that that is not a compliment. The Minister should be cautious about taking it as such, especially when he reads the FSB’s poll of small businesses on whether they have confidence in the Government.

Mr. Heald: My hon. Friend may have noticed that I left the Chamber for a few minutes. I was lobbied by the FSB, which is not happy. It says that 2,000 local shops close each year, that there will be no independent retailers in the UK by 2015 and that it expects 50,000 business to close. Perhaps its opinions are catching up.

Angela Browning: My hon. Friend is right, so the Minister should not take comfort from the headline. We hear much about employment figures, but an economy that is genuinely growing creates jobs. Small businesses usually create those jobs and, if that sector fails, there will be fewer genuine jobs—people doing real things that create real wealth for the rest of the economy. The Government should not ignore that serious trend.

I am about to say something nice, which was jolly hard to find, about yesterday’s Budget. The announcement that the Government intend to defer the plans for income-shifting rules, which are incredibly complex, is welcome. I know from the lobbying that I have had, especially from family firms, that those rules were deemed to be bureaucratic and a genuine burden on business. The Government said yesterday that they would defer them. I hope that the Financial Secretary will go further and say that they are off the back burner altogether. She shakes her head. Here we go—another burden on business.

That leads me nicely to my final point, which is not only for those on the Treasury Bench but for my Front-Bench colleagues. Yesterday’s Budget was boring. I think it was meant to be boring, and it will probably count as the most boring Budget speech ever, but it could have been livened up, even without money to spend. Although he is in debt and has overspent, the Chancellor could have come up with some innovative ideas which would have made people outside, especially taxpayers, feel that the Government were on their side. I want to present—

Mr. Charles Walker (Broxbourne) (Con): The alternative Budget.

Angela Browning: No, I would not presume to do that. I want to present an idea that I hope the Government will take up. If they do not, I hope that a Conservative Government will do so in a year or two.

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