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27 Oct 2009 : Column 65WH—continued
"I am past the age of retirement. Still working, and looking after grandchildren and elderly parents. I have saved for my old age, but am unable to enjoy it as my savings have gone down...so I am still working. When will my time come after working for 42 years?"
"I am a 61 year old working full-time, claiming state pension. I get taxed £5 a month which means I don't benefit from having my pension."
"to continue in full-time employment to help my son and grandchildren who spend their days"
The Government have done exceptionally well over the past 12 years in introducing changes to employment rights, pensions and benefits that have helped families not just to make do, but to prosper and to juggle the combined pressures of work and families. However, the recession has set back some of that progress, and it has created a whole new set of pressures of its own. As we come out of the recession, society will have changed substantially and many of those changes will be permanent. Women who have become used to being the breadwinner will not want to return to the kitchen. People who have seen their pension contributions disrupted by unemployment or have had to work part time will want to maintain their living standards post-retirement age, and the changes to their pension rights will be permanent.
I very much hope that in moving forward, it will be possible for the Government to consider some of the experiences of families in my constituency, and to ensure that changes to the benefits system and the taxation system support families, so that people can continue to work to support their families and to enjoy a good quality of life.
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The Parliamentary Under-Secretary of State for Work and Pensions (Helen Goodman):
I congratulate my hon. Friend the Member for Northampton, North (Ms Keeble) on securing this debate. The people of Northampton, North are exceptionally lucky to have a Member of Parliament who is so committed and so capable, and who combines the expertise that she has gained as a member of the Treasury Committee with passion for
her constituents' concerns. She has produced an excellent report on the recession's impact on families, particularly women.
The Government have responded to the recession with a number of measures. First, we have cut VAT by 2.5 per cent. for one year to benefit households by an average of £275. Secondly, we have increased tax-free allowances above the inflation rate, so 22 million basic rate taxpayers are paying £145 less tax this year. We have brought forward the planned increase of £20 a week in child benefit by three months, which benefited another 7.5 million families, and we also brought forward by one year the increase in child tax credit, which benefited 4 million families. As my hon. Friend said, we made mortgage interest support, which is paid as part of income-related benefits, more generous. The changes, which are targeted at people of working age, demonstrate the Government's commitment to provide additional support to those facing financial difficulties and to help to protect them from repossession.
My hon. Friend raised some concerns about how the benefits system operates, and what more can be done. She referred to the difficulty during the recession of families with women who must go out to work and look after their families, and who may have to work longer hours. Ensuring that parents can balance work and family life is crucial at this time, and a win-win for business, individuals and children. That is why the Government have introduced significant reforms to encourage flexible, family-friendly working.
From April this year, the right to request flexible working was extended to working parents with caring responsibilities for children aged up to 16 years. The Government plan to help more people off benefits and into work in a way that supports families. We are not in any way using the recession as an excuse to put the matter on the back burner. Only yesterday, I issued a written statement dealing with lone parents' entitlement to look for work that fits in with their children's school day, so that when they move on to jobseeker's allowance they can balance their work and family responsibilities.
My hon. Friend referred to the importance of child care. As I am sure she knows, the Government have invested more than £25 billion on early years and child care services since 1997 as part of an unprecedented expansion of provision for young children and families. In England, that has resulted in the number of child care places more than doubling since 1997. We now have more than 3,000 children's centres and more than 70 per cent. of schools offering extended services.
My hon. Friend referred to the needs of people in retirement. Overall, we do not anticipate that the current downturn will have a significant impact on future basic state pension entitlement because the rules will become much more generous from April next year. Both men and women will need only 30 years of national insurance contributions or credits to get a full basic state pension.
That change is part of the major reform that will make the state pension fairer and more generous and tackle the historical inequalities in entitlement, especially for women. As a result of the reform, about three quarters of women reaching state pension age are expected to be entitled to a full basic state pension by 2010, compared with less than half now.
My hon. Friend referred to women who work fewer than 18 hours a week, do not pay national insurance and therefore do not build up a state pension. If they earn less than the lower earnings limit and have children or are caring for someone who is ill or disabled, they should receive home responsibilities protection or, from next April, the new credits for parents and carers. Home responsibilities protection reduces the number of qualifying years that a person needs to receive the full basic state pension. Otherwise, people earning below the lower earnings limit have the option of paying voluntary NI contributions. A voluntary class 3 NI contribution costs £12 a week, but the actuarial value is £45 a week, so the contributions are good value for money for the people choosing to pay them.
My hon. Friend also referred to women with several jobs, each paying below £95 a week, who are not building up a state pension. If someone has more than one job, each job is treated separately for NI purposes. If the person earns less than £95 a week in each job, NI will not be deducted from their earnings, but they have the option of making voluntary NI contributions.
My hon. Friend made it clear why it is a serious concern that the Conservative party proposes to push back, on a very early timetable, the date at which women will be allowed to retire. That highlights the huge financial impact that there will be on many families.
Ms Keeble: Could my hon. Friend comment on the position of a husband and wife, or partners, who both work and who just fail to qualify? Might there be a way in which they could pool their entitlements so that the household qualifies for a pension?
Helen Goodman: We would have to consider that suggestion very thoroughly before going down that route, because obviously we do not want to move back from independent taxation of men and women.
I would like to deal with tax credits, because my hon. Friend pointed out the impact that they have. At the moment, tax credits are operating as a particularly flexible and responsive system, in that as people's incomes fall, possibly because of fewer hours or less overtime, their tax credit entitlements ramp up. That means that tax credits are an even more effective fiscal stabiliser than the traditional tax and benefits system. They are obviously helping people to weather the recession.
In March, 355,000 households whose income had fallen were receiving on average £35 a week more in tax credits. That is 55,000 more households than were receiving extra tax credits at the same time last year. Take-up of tax credits is now the highest ever for an income-related system of financial support, ranging between 81 and 92 per cent.
In talking about tax credits, my hon. Friend referred to the timing of the changes in entitlements. She made the same point in respect of the education maintenance allowance. I am a Department for Work and Pensions Minister and I cannot speak for the Treasury or my colleagues in the Department for Children, Schools and Families, which is responsible for the EMA. This is an ironic situation to be in, obviously. When the economy
was booming, everyone wanted us to stabilise people's incomes by giving long-term fixed awards and not changing tax credits frequently. Now, of course, we are in a different phase of the economy and the pressures go the other way, but notwithstanding the points that came out of my hon. Friend's research, it would not be right to return to a system of more frequent changes to tax credits entitlement, because the uncertainty that that produced for people was very problematic. I would be concerned that a more flexible approach would lead us into the administrative problems that we had in the early years of developing tax credits.
My hon. Friend referred to people who are entitled only to the contributory jobseeker's allowance and she asked whether we could extend access to that benefit to 12 months as an effective way of tackling poverty. It is not clear that extending contributory jobseeker's allowance to 12 months for one person in a couple if one or both are suffering unemployment is the most effective use of public money to reduce poverty. We can do other things that will have a better impact on that.
My hon. Friend made clear the important responsibilities that women have and are increasingly taking on in the recession. Indeed, they are often left to manage the family budget and debts, as well as to juggle work and child care, so the Government have provided impartial debt advice and money guidance in every major town and city throughout the country through an additional 500 debt advisers. We have increased access to affordable credit through the growth fund investment of nearly £100 million in credit unions. That is ensuring that nearly 200,000 people on low incomes have been able to obtain affordable loans, rather than paying the exorbitant interest rates charged by home credit companies and illegal lenders. Three quarters of the people taking those loans were women and many were mothers.
I am especially pleased to be able to announce today that the growth fund credit service is to be extended from Corby, Kettering and Wellingborough into Northampton as quickly as possible, with a further £250,000 available to ensure that the families in my hon. Friend's constituency can benefit from the service that that provides.
My hon. Friend suggested linking support for mortgage interest to tax credits. Linking help in that way would clearly be a major change, with cross-Government implications. We would need to consider that long-term option as part of a more fundamental revamp of the benefits system. We have already taken steps to support home owners who are in work and do not qualify for help towards their mortgage through the benefits system. In April, my right hon. Friend the Prime Minister announced that home owners mortgage support was available to help home owners who suffered a temporary income shock. That means that eligible home owners will be able to make smaller mortgage repayments for up to two years, without the risk of losing their homes.
To conclude, I remind everyone of the measures that the Government have introduced to help people and families to survive the recession and to come out at the other end ready to benefit from the recovery that we hope to see shortly. We have introduced Sure Start children's centres and child tax credits. We have enabled credit unions to serve another 300,000 people. We have
made loans to 200,000 poorer families who could not obtain affordable credit elsewhere. We have reduced the number of people without bank accounts from nearly 3 million to under 1 million. We have increased the number of cash machines in poorer areas by nearly 600. We have introduced 500 more face-to-face debt advisers. We have introduced a money guidance service and we
have started putting loan sharks in jail, where they belong. That shows a significant commitment to supporting families in the difficult economic situation at the moment.
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