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27 Jan 2009 : Column 196

James Purnell: No, I do not accept that. People have to wait for a year to receive treatment because the Scottish Government will not invest enough money, and they oppose these proposals. I hope that members of the Scottish National party will support them tonight. It appears that, as always, they are sitting on the fence. However, I think that they should learn from what is working down south, and ensure that they do support proposals to reduce the amount of drug dependency throughout the United Kingdom.

This is about a welfare state that is active. This is about a welfare state that changes lives. This is about a party that is serious about welfare reform, and about one that wants to posture and is not serious. I hope that we shall see a third U-turn from the right hon. Member for Maidenhead.

5.20 pm

Mrs. Theresa May (Maidenhead) (Con): I thank the Secretary of State for his welcome. I do indeed look forward to debating with him over the coming months, and I hope we can work together to find practical and sustainable solutions to some of the difficult issues that face us today. I particularly hope that we shall be able to agree on policies that will make a real difference to people’s lives, especially as those people struggle to come to terms with the impact of recession.

The Secretary of State may remember that I have shadowed the employment brief in the past. I am delighted to return to it, particularly as at that time, too, I was dealing with welfare reform. It has taken the Government some time to get here, but I welcome their conversion to the need for reform of our welfare system.

Before I comment specifically on the Bill, let me pay tribute to my hon. Friend the Member for Epsom and Ewell (Chris Grayling). When he shadowed this brief, his work was radical and daring. Not only has that work informed Conservative policy, but it can be traced to the Bill. I am grateful to my hon. Friend for developing such a strong foundation of work that not only can we build on it further, but the Government have clearly taken it on board as well. Certainly a change of personnel does not mean, in any sense, a change of direction or commitment.

I recall that on 21 July last year, the Secretary of State said to my hon. Friend the Member for Epsom and Ewell:

On welfare reform, we will help the Government to achieve what we believe is right for the country—possibly, I suspect, in the face of opposition from some Members on the Secretary of State’s own Benches. We believe that welfare reform is right for the country, and also right for people who find themselves out of work and relying on support from the state.

We know that in Britain today nearly 5 million people are claiming out-of-work benefits, almost 2 million of whom have been claiming for five years or more. As we saw from the unemployment figures last week, that overall number is now rising quickly, and unemployment is at its highest level since 1997. But, of course, behind the numbers the human story is even starker. There are families in which generational worklessness is the norm.
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There are people who live their whole lives dependent on handouts from the state, and for whom benefit income is the only kind of income that they will ever experience. Work is not just a way of bringing in money; it is about giving people dignity and purpose, and it is also the best route out of poverty.

As I have said, the Government are right to tackle this issue. Indeed, I thank them for the compliment that they paid us in drafting the Bill. It is refreshing to see so many of our own ideas being enacted. It will therefore come as no surprise to the Government when I say that we broadly welcome the direction that they are taking, and will support the Bill today. There are areas of concern which I want to raise with the Secretary of State, but first I wish to dwell on another issue, which no doubt the Secretary of State has had to face down and to which, indeed, he referred in his speech: the whole question of whether the Government are right to tackle welfare reform now, during a time of recession.

I believe that it is right to press on with reforms. They have been needed for over a decade, and the Secretary of State’s predecessors in the role have failed, often at the first hurdle. I am delighted to observe that the Secretary of State is not so faint of heart. His determination is, I believe, even more necessary now than it has been in the past 12 years of Labour government, precisely because we are experiencing an economic downturn.

In view of the figures published last week showing that the number of unemployed has now hit 1.92 million—not including, of course, the redundancies announced in December and so far this month—providing better-targeted support for the unemployed is particularly necessary. There is a separate argument to be had about what Government should be doing to encourage the creation of more jobs and to protect those that remain, but that is not for our debate today. Today we welcome the Government’s commitment to welfare reform, and, while regretting their failure to act earlier, recognise that given the greater number of people who will be relying on the welfare state in the months to come, improving and strengthening it are urgent tasks.

There are some parts of the Bill that we welcome wholesale—for example, the measures on the right for disabled people to control the provision of services. The Government’s own evidence from previous pilots of individual budgets shows that they give people more control over the care that they receive and lead to better outcomes. The Government need to ensure that this is made a real priority so that the many disabled people who could benefit from more personalised services are not made to wait any longer.

However, there are other areas where I am disappointed that the Government have not gone as far as is needed with the reform of the welfare system. The right hon. Gentleman may like to be seen as progressive and determined. I fear he may be a lonely, dissenting voice among the ranks amassed on the Labour Benches. Perhaps that is why his rhetoric is stronger than his Government’s actions. Nowhere is that more clear than in the lack of support these reforms are offering to people on incapacity benefit to return to work.

When the Secretary of State published the Government’s White Paper in December, he declared it was based on

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If only that were the case with the Government’s approach to existing incapacity benefit claimants, because all 2.6 million of them will be left behind by these proposals.

What is the Government’s radical plan to help these people back into work? It is an interview in the jobcentre. That is all the support that the Government will offer to the 1.2 million incapacity benefit claimants who are over 50. The other 1.4 million IB claimants will get three interviews at the jobcentre. The right hon. Gentleman’s idea of support may be different from mine, but a plan to offer people who have been out of work for some years—decades, for some—an interview at a jobcentre is not radical or fair. It is no use saying that support will be available on a voluntary basis because, as the Secretary of State himself said, the take-up of voluntary schemes is very limited. The Government have admitted that only 5 per cent. of people on incapacity benefit take up such support already.

James Purnell: Just to clarify, that is not the proposal. The proposal is that the Freud pilots will apply to 20 per cent. of people on incapacity benefit. The proposals we are bringing forward for pilots with people who are new claimants will apply to 20 per cent. Everybody else will get at least the three interviews if they are under 50 and they can do more if they want to. That compares with the situation under her Government, where they got nothing. If the right hon. Lady says that there should be more, she needs to say where the extra money would come from, given that she is committed to cutting nearly £2 billion. There will be less support under her party, not more.

Mrs. May: I suggest that the Secretary of State actually looks at the publications to which he has put his name. Page 96 of the White Paper says that

That means that those 1.2 million people on incapacity benefit aged over 50 are effectively being written off.

James Purnell: The right hon. Lady is wrong. Twenty per cent. of the stock will be getting the Freud pilots. When we roll that out, it will apply to the whole stock of people on incapacity benefit. They got nothing under her Government. It is only this Government who are bringing in support for people. She is simply wrong.

Mrs. May: The Secretary of State has just hinted at precisely why he is not able now to offer the greater support that those 1.2 million people over 50 on incapacity benefit need. The reason is that the Government are being too timid in another area of reform, which is the issue of funding for the additional back to work places that will be needed following the assessments of those on incapacity benefit. By not fully implementing the changes to the Treasury rules to allow money saved in, and here we get into the jargon, the annually managed expenditure budget to be spent on the departmental expenditure limit budget—the so-called DEL-AME switch; put simply, it means taking the savings from taking people off benefits and into work and enabling them to be used to provide the programmes that support that process—the Government have limited what they can do on welfare reform. They have limited themselves to pilot projects in five areas without any chance of expansion until 2013. There is where the problem lies with what the Secretary of State is proposing.

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Miss Begg: I would accept what the right hon. Lady says if this were the first piece of welfare reform legislation that the Government had introduced, but it is not. It is building on existing provision such as pathways to work and other things that have made sure that people have come off incapacity benefit already and gone into work. Those are still operating in my area and throughout the country. This is not year zero; the Bill builds on what already exists.

Mrs. May: I thank the hon. Lady for her intervention. All I would say in response is that 2.6 million people are still on incapacity benefit, 70 per cent. of whom started their claims under this Government. I refer her to the blog posted by her party colleague the hon. Member for Glasgow, South (Mr. Harris), who says:

Let me move on to another area of concern. After so many years in which the Government have failed to produce welfare reform, many of their proposals remain unclear, unfinished and undecided. One example of that is the social fund. In November, the Government published a consultation on the social fund in which they proposed charging interest rates of up to 27 per cent. on loans to some of society’s most vulnerable households. Unsurprisingly, these plans caused outcry, and the Government quickly backtracked, yet the Bill includes plans to press ahead with these reforms as set out in the consultation. Ministers have been saying that they have no intention of charging interest on these loans, but if that really is the case, why on earth does it not say so in the Bill? This Bill leaves open the possibility that external providers will be able to charge interest on social fund loans.

Mr. Frank Field: Leaving aside for the moment the interest rate question—although I should say that some of my constituents who deal with backstreet moneylenders would willingly settle for 27 per cent., given what they are currently asked to pay—is there not something of real significance in the Government’s idea that we should move away from the ration-book, centrally decided issuing of loans or grants to a system that is much more community based? Is that not something that the right hon. Lady’s leader, the right hon. Member for Witney (Mr. Cameron), greatly supports?

Mrs. May: The right hon. Gentleman is, I think, referring obliquely to credit unions, which do a very good job in certain parts of the country. I support the concept of credit unions, as they play an important role. For those on low incomes, there is a role for properly community-based loans at low rates of interest, but we are talking here about loans that will be available under the social fund, and as the right hon. Gentleman knows, some people are not in a position to pay them back at interest rates of up to 27 per cent. The Government must think very carefully before they allow external providers to charge such rates to some of the most vulnerable people in our country and to those who find themselves in the greatest financial difficulty. The issue is not simply that under the Government’s proposals it
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will be possible for such interest rates to be charged on these loans, but that the Secretary of State is seeking powers to remove social fund provision from areas where external provider loans are available. So in some parts of the country, people will be able to get social fund loans only from these external providers.

The Secretary of State may not want to listen to what I have to say on this issue, but perhaps he will listen to some of the groups that work with some of our most vulnerable families every day. Gingerbread has said:

The Child Poverty Action Group has described the consultation as “hasty and botched” and Barnardo’s has expressed concern that these proposals will lead to a “postcode lottery” for claimants, with those covered by external providers having to pay interest on their loans.

James Purnell: It is impossible to charge interest under this Bill. That would require further primary legislation.

Mrs. May: First, the consultation paper makes it absolutely clear:

I also say to the Secretary of State that I have read the Bill. It does not say that interest cannot be charged; what it says is that the Secretary of State will bring forward regulations on the terms and conditions under which these loans can be made available. I shall come on to the further point about the sorts of regulations the Secretary of State will make under the Bill, but why did he put those words in his consultation paper if he does not believe that interest should be charged by external providers on these loans, and why has he not expressly put that in the Bill?

James Purnell: Because what the right hon. Lady describes is legally impossible, and I hope that she will not repeat her mistake.

Mrs. May: If the Secretary of State thought it was legally impossible, why has he admitted that there is a possibility that interest will be charged on these loans by putting it in his consultation paper? There will be further discussion on this issue when the Bill reaches Committee, but our position is clear: we believe that the Government should not be creating a two-tier approach to these social fund loans and he should not potentially be charging such rates of interest to some of the poorest people in society, who need access to the money.

Another area of concern for many people—this was raised by one of the Secretary of State’s Labour colleagues a little earlier—is the Government’s planned changes for lone parents. Our green paper published last year proposed that lone parents should be transferred to jobseeker’s allowance and required to seek work actively once their youngest child turns seven. The Government initially agreed with us, but their proposals now go further. [Interruption.] The Secretary of State puts up his hands and says “Five”, but when we published our green paper we said seven—he could go back and check
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that. The Government would now demand that parents with younger children engage in what is described as “work-related activity”.

We will want to probe the Government on exactly what they mean by that. How much of a commitment in both time and activity will they demand from lone parents with very young children? The Government say that the activity plans will be drawn up in partnership with lone parents, yet they want the power to direct them to do activities to which they have not agreed under that partnership. How will child care be provided? In many areas up and down the country good-quality, affordable child care is not available to these parents.

The Secretary of State says that he wants to introduce new conditions for lone parents who have children aged three to six, but I fear that he may go even further—down to lone parents with children as young as one. As he told The Times last year:

Crucially, what sort of sanctions do the Government intend to impose on lone parents who do not comply? If the sanctions are to be financial, I would remind the Secretary of State that these families are often among the poorest in society. If the penalties are to be paid in time, I would ask how the child care will be provided and funded. Understandably, clarification of the detail behind this proposal is needed. Although my party and I agree that parents should be supported to get back into the workplace, it is crucial that parents of very young children are given the freedom and support to determine how they manage that choice.

Another issue on which we will be seeking clarity from the Government in Committee—the Secretary of State referred to this matter earlier—is that of sanctions against absent parents who are not paying their child maintenance. The sanctions are to be in the form of taking away passports and driving licences. He and his Ministers have been keen to use this provision as a media hook, but, as I said, it was a Minister in the House of Lords who on the Report stage of the Child Maintenance and Other Payments Bill agreed that the power should remain with the courts. All parents have a responsibility to support their children, no matter what their family circumstances. Although I welcome measures to aid that, I shall seek more detail from the Government on how this provision would work in practice, particularly as regards an effective and efficient appeals system.

Mr. Russell Brown: This is a vital part of the Bill, and if I manage to catch Mr. Deputy Speaker’s eye later, I hope to pass comment on it. Does the right hon. Lady support the removal of someone’s driving licence and passport, especially in cases where the non-resident parent appears to be living way beyond their means?

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