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5.45 pm
That was right at the end of the Minister's remarks, and he then sat down, not giving Members the opportunity to press him on when that measure would come in or how it was to be funded. I took the opportunity afterwards to press him with some written questions, and he confirmed that it would not come into force until 2011-12, a year later than had been indicated in earlier written answers. The Government had not committed to introducing it in 2010-11, but they suggested that that would be the earliest available opportunity.
In a written answer about funding the measure, the Minister said:
"We are confident that by the date of its introduction the Department will have re-prioritised annually managed expenditure to ensure that funding is available."-[ Official Report, 23 March 2009; Vol. 490, c. 83W.]
Putting that together with his previous answer, he was effectively saying that he would take the money away from some other benefit to fund the change. He had not really found the money at all, he was just saying that by 2011 he would have worked out some way of paying for it. I can see why he did not particularly want to be pressed on the matter, and it is important that we put that on the record.
In answer to the question that the hon. Member for Northavon (Steve Webb) asked, in thinking about the future I have had some conversations with my hon. Friend the shadow Chief Secretary to the Treasury. I can confirm that if-subject to the voters-we were in government in 2011, we would indeed bring that measure forward and fund it from within the departmental budget. It will therefore go forward whatever the result of the general election.
Steve Webb: That obviously invites the same question that the hon. Gentleman has just put to the Minister. Would that be a net increase in overall spending, and if not, does he already know what he would cut to pay for it?
Mr. Harper:
I will not outline our excellent policies in great detail, because that would be straying away from the amendments, but the hon. Gentleman will know the
impressive proposals that we have published in our work programme, such as getting people back to work and investing the savings that result. I am therefore confident that within the budgets that we have available, we will be able to fund that measure without having to cut any other programmes. I am pleased that people with a visual impairment can rest assured that this welcome measure can be introduced regardless of the result of the general election.
The Minister of State suggested that Lords amendment 23 might be of interest, and the hon. Member for Northavon has already mentioned it. It is about the power to uprate benefits following a review in the tax year 2009-10. It is an interesting amendment that prompts a number of questions. When Lord McKenzie introduced it in the other place, he made it clear that it was
"intended to give the Government the flexibility to uprate the basic state pension by the commitment of 2.5 per cent. and to uprate other social security benefits as the Secretary of State thinks fit, even though the level of prices, as measured by the retail prices index, has not increased."-[ Official Report, House of Lords, 22 October 2009; Vol. 713, c. 918.]
That prompts a number of questions, because the former Minister of State, the right hon. Member for Harrow, East (Mr. McNulty), said in the House of Commons on 11 December 2008, when he was making the annual benefits uprating statement:
"We enshrined a 2.5 per cent. floor in the Pensions Act 2008, so if inflation goes down to zero, as some anticipate, there will always be at least that 2.5 per cent."-[ Official Report, 11 December 2008; Vol. 485, c. 700.]
I was not aware of that change, so I consulted the Library, which does not believe that either the Pensions Act 2008 or the Pensions Act 2007 has been changed to give effect to that statement. It thinks that it was a non-statutory Government commitment. What the right hon. Member for Harrow, East said in the House does not seem consistent with Lord McKenzie's comments. Will the Minister confirm whether his colleague, the former Minister, may have inadvertently misled the House about the basis for the 2.5 per cent. uprating in cases where the retail prices index has not risen? If the provision is already in the Pensions Act, it is not needed to uprate the basic state pension, which is the main reason that Lord McKenzie gave for introducing it. I think that that was the basis of the point that the hon. Member for Northavon made.
The hon. Member for Northavon wondered why the change was a one-off, which would take effect for only the coming financial year. Lords amendment 23 is very specific. It is a new clause, entitled "Power to up-rate benefits following review in tax year 2009-10"-the current tax year. It provides that if
"the general level of prices is no greater at the end of the period...than it was at the beginning",
the Secretary of State will have the power, looking at the national economic situation, to make changes to benefits in the following year. Of course, that is the year of the general election. That raises the question of whether we are considering a pre-election ploy or gimmick. Now that we have established that the general level of prices could fall or be zero, I cannot understand why no permanent change is being made to the Social Security Administration Act 1992, providing the power for the
Secretary of State to make the judgment on an ongoing basis. I cannot understand why the decision is for one year only.
When the hon. Member for Northavon pressed the Minister, he gave a reply, but it did not answer the question. He said that he could not pre-empt the Chancellor's announcements in the pre-Budget report, but the hon. Gentleman had not asked him to do that. I might try to tempt him to do it-I know he will not go there-but the hon. Gentleman was not asking about rates of increase; he simply asked why the change was not permanent. As things stand, if by next September the general level of prices has not increased and inflation remains negative, and a Government nevertheless wish to increase the basic state pension or other benefits, it would be necessary to change primary legislation again. I do not therefore understand why the Government have not made the change permanent, and it would be helpful if the Minister explained.
I do not wish to tempt the Minister to go beyond his brief and say what other benefits the Chancellor might change in the pre-Budget report, but it might be useful if he gave the House some idea of what factors may be taken into account when setting those benefit rates. In the outside world, people who work have experienced a growth of only 1.6 per cent. in average earnings in the year to August-a reduction from 1.8 per cent. to July. In the private sector, pay growth is just 1.2 per cent., compared with 3.2 per cent. in the public sector. Those who have to go out and earn a living will expect that to be taken into account when Ministers set benefit levels.
The Minister mentioned council tax benefit and the change in the name, which we greatly welcome. I can do no better than repeat the words of my noble Friend Lord Freud, who said in the other place:
"we welcome the government amendment."-[ Official Report, House of Lords, Vol. 713, c.1108.]
He rightly paid tribute to the campaign that the Royal British Legion highlighted to focus on the fact that the benefit was really a rebate, and that if the language were changed, it would make a significant difference to pensioners' attitude to taking up what they are rightfully owed. He made the point that my right hon. Friend the Leader of the Opposition had pledged to support the change, and supported the amendment on behalf of our party in the other place. As the Minister rightly said, that amendment has cross-party support.
On Third Reading in the Lords, the Government accepted the amendment tabled by Baroness Turner of Camden to strengthen the change slightly by replacing "may" with "shall", and that toughened up the provision. I recognise that there are some significant challenges of detail to face, and I simply emphasise what I am sure is this House's wish that the process should get under way as quickly as possible so that the change can be made as soon as possible.
I conclude with an observation. In the debate on the previous group, I think that the Minister established a new parliamentary convention, which we may wish to call the Knight convention, whereby he set out the Government's approach of putting sticks in primary legislation and carrots in secondary legislation, with the special twist that carrots might now be introduced in primary legislation. I have no idea whether that will catch on and be put in "Erskine May" in due course, but
it may be something that the right hon. Gentleman will leave behind for us all to enjoy in this House in the future.
Joan Ryan (Enfield, North) (Lab): I want to speak about Lords amendments 29 and 51. I join my right hon. Friend the Minister in paying tribute to the Royal British Legion and its work on changing the name of council tax benefit to council tax rebate. I, too, praise the work of Baroness Turner in the other place. I welcome the Government's clear commitment today to rename council tax benefit council tax rebate.
I heard what was said about cross-party support-and there has been such support-but without the Government's willingness to act and to accept the amendment, the Secretary of State's willingness to meet Chris Simpkins, director general of the Royal British Legion, and me, and the work of former Ministers, we would not be in this position today. I therefore thank the Government for their action today.
In the past year, I have worked with the Royal British Legion to get more veterans help with their council tax bills. We are considering dignity and respect in old age. We found that pensioners, especially many of our veterans, did not want to claim something called "benefit." They fought for their country, they have worked all their lives and they have paid their taxes, but now many forgo money that is rightly theirs simply because of the word "benefit." Words matter, and I am glad that the Minister acknowledges and understands that so well. It is not a subsidy, handout or benefit, but a rebate, and we needed to change the name.
I am delighted that the Government have given a clear commitment to changing the name of council tax "benefit" to council tax "rebate". That may sound like a small change, but it will make a big difference to tens of thousands of veterans and hundreds of thousands of pensioners. In my constituency alone, as many as 3,000 pensioners could be up to £600 a year better off-£12 a week. That may not sound like a fortune, but for someone living on £130 a week, another £12 makes a big difference. We need to do all we can to ensure that our veterans and our pensioners get the extra help as soon as possible.
I therefore hope that my right hon. Friend the Minister will say a few words at the end of the debate about when we can expect the change to come into force. The Government's commitment is crucial and welcome, but I would like a clear indication of when they will implement it. If we agree that changing a "benefit" to a "rebate" is important, surely we also agree that it is important to effect that as soon as possible. Having asked for that information, I thank the Minister again for the commitment that he has given us today.
Steve Webb: Like the right hon. Member for Enfield, North (Joan Ryan), I welcome that small step towards trying to improve take-up of council tax benefit. It is worth while, but it is very small step on a very long journey. My understanding is that council tax benefit is the social security benefit with the worst take-up rate of any in the entire system. As she said, many hundreds of thousands of pensioners, and indeed many veterans, are missing out on serious sums.
It has always struck me as absurd that we have a grotesquely unfair local tax system, which we then attempt to ameliorate with a hopelessly ineffective means-tested benefit. Calling it a "rebate" is entirely welcome
and may encourage some who do not currently claim it to do so, and it is therefore a step in the right direction, but surely the better system would be to have a fair local tax system to begin with. If we did, we would not need council tax benefit-or indeed council tax rebate. That must be a better way to go.
6 pm
In the debate on this group of amendments, we have spoken about disability living allowance. One possible amendment is, as it were, the dog that did not bark. Will the Minister say where the Government are at on DLA reform? In another place, Ministers said that when a child is on DLA, a lone parent will not be sanctioned for not seeking work. There is some uncertainty whether that applies to people on the care component or the mobility component of DLA. We expected a Government amendment to implement that pledge, but none has been proposed. Will the Minister reiterate that when a lone parent has a child on DLA, they will not be sanctioned for not seeking work, and that that applies to both categories of DLA, not only the care component? Those who have lobbied on the issue would be grateful for a clear statement of the Government's position.
We have spoken about the RPI amendment. I must admit that I, too, am rather baffled about this. I am sure I can recall years in the recent past when Ministers have increased the state pension by more than the RPI, so it cannot be that the law-primary legislation-prohibits increases greater than that in the RPI. Therefore, current regulations cannot set a ceiling on increases. Why do we need statutory powers to go beyond a floor? As the hon. Member for Forest of Dean (Mr. Harper) said, it is confusing why the amendment is in the Bill at all.
Mr. Harper: I do not want there to be any lack of clarity. I understand why the Government needed an amendment. The Social Security Administration Act 1992 gives the Minister the power to lay an order only if there has been a general increase in prices. For the Minister to lay an order in the first place, there has to have been an increase, so if inflation is negative he does not have the power. The hon. Member for Northavon (Steve Webb) is right to say that if the Minister has the power, he makes the judgment on the level of increase, but he has to have the power in the first place.
Steve Webb: I have two concerns about that. Perhaps I asked my first question too quickly and the Minister did not understand. Why would we want to give the Minister the power only for the year starting 2010. Why would it not be a general power? The same situation might happen not next year but in a few years' time, and there may not then be a social security Act passing through the House onto which to tag the power. We are trying to give Ministers more powers and they are turning us down, which puzzles me.
Secondly, an interesting comment was made about the rate of increase. The hon. Member for Forest of Dean said, "Well, the Government have pledged 2.5 per cent. but people who earn their living will want to see benefits set taking account of the fact that average earnings increases are only 1 to 1.5 per cent. or so." He seemed to be implying-I will certainly give way to him if he was not-that the Government are going ahead with 2.5 per cent. because that is their promise, but that
people in work would want the Government to have regard to 1.5 per cent. Was he saying that 2.5 per cent. is too big an increase? Otherwise, what was the relevance of the 1.5 per cent?
Mr. Harper: I was distinguishing between the pension increase, which, as the Government have lately set out, will be 2.5 per cent., which we welcome, and other social security benefits. They have been silent about how much social security benefits might be increased by if they use the same power. I wanted the Minister to lay out the sorts of things that they would take into account. Of course he will not be able to do that today-it will be a matter for the Chancellor-but it would be helpful if he could give some indication of the Government's thinking.
Steve Webb: I am grateful for that clarification.
The other issue in this group of amendments is the failed pilots. Actually, that description is rather uncharitable, and I do not like being uncharitable. A pilot that proves that a scheme is not a good idea is not a failed pilot, but a pilot: a scheme was trialled and tried, and proved not to be cost-effective.
I could not help musing that we have spent about an hour and a half this afternoon talking about a new sanctions regime, when we are repealing a sanction that did not work. It is great that the Government tried a sanction for offenders and discovered that it was more trouble than it was worth, and cost more than it saved. I cannot help wondering whether the Government might not learn from that experience in other areas. It is always easy to apply the rhetoric of being tough, penalising people and forcing them to do what they should do, but some sanctions can be counter-productive, and we have such a case before us this very afternoon.
In conclusion, broadly speaking, this is a very welcome group of amendments. Many outside the House would welcome clarification from Ministers on what they are doing about DLA, and whether the RPI power will be used in future-and if it will, why Ministers did not give themselves the power to do that in this legislation.
Bob Spink (Castle Point) (Ind): I rise to support this group of amendments generally and the renaming of council tax benefit as council tax rebate in particular. It is not a matter of gesture politics; it has real significance. I hope it will send a strong message to pensioners in particular to take up what is theirs by right. Hundreds of veterans and thousands of pensioners in my constituency could benefit from this refocusing, so I very much welcome it.
I join other hon. Members in pressing the Minister to state when it might come into force and urge the Government to take further action to increase pensioner take-up of income and support. For instance, take-up of pensioner tax credits is very poor, and I have run a campaign about it in my constituency twice in the past two years, but that is another debate.
The Minister is absolutely right and gracious to praise the Royal British Legion. Its campaigns have been excellent and I hope that the Government will continue to listen carefully to it. It speaks a lot of sense on a wide range of issues. I am happy to welcome this group of amendments.
Jim Knight: With the leave of the House, I shall quickly respond to the debate.
The hon. Member for Castle Point (Bob Spink) has just shown that we have genuine all-party support for the renaming of council tax benefit to council tax rebate, which I welcome.
The hon. Member for Northavon (Steve Webb) asked about DLA. We will exempt lone parents from conditionality when the child is on any rate of the care component of DLA. That will be achieved in secondary legislation. If there is a need for the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Chatham and Aylesford (Jonathan Shaw), who is no longer in the Chamber, to write to him with any more detail, I am sure he will do so, but that is the advice I have been given.
In respect of uprating, the hon. Member for Forest of Dean (Mr. Harper) is right that there is currently no power to make orders if the RPI is not positive, which is why it is necessary to make this change. We do not feel that it is necessary to give ourselves a continuing power, because ultimately we believe that the current situation of 0 per cent. RPI is exceptional, and the economic forecasts indicate that the RPI will return to positive growth next year, which would allow us the order-making powers we would need.
Mr. Harper: For the avoidance of doubt, will the Minister confirm that what his predecessor, the right hon. Member for Harrow, East (Mr. McNulty), told the House when he made the benefits uprating statement in December 2008-that the power to uprate the basic state pension by at least 2.5 per cent., even if inflation was zero, was in the Pensions Act 2008-is not correct?
Jim Knight: It is difficult for me to speak with absolute confidence in respect of what my right hon. Friend said, because I have not looked at the precise words, but he may have been referring to the reintroduction of the earnings link in the Pensions Act 2007. The 2.5 per cent. commitment is a non-statutory commitment, but it is of course carried forward in the amendment.
The hon. Member for Northavon raised some questions about failed pilot schemes. He was probably alluding to the debate on the previous group of amendments, in which we discussed the effective piloting of the lone parents sanctions regime. It is worth noting that the numbers of lone parents on lone parent benefit continue to fall, despite the recession, and that is with a more rigorous sanctions regime in place. So we have a degree of confidence that the principle of sanctions will work in this case.
I am grateful to my right hon. Friend the Member for Enfield, North (Joan Ryan) for her speech, as I am grateful for the work that she has done on campaigning for this change. She not only reinforced the importance of the campaign as a whole, but spoke up for the 3,000 of her constituents who will benefit from the change and demonstrated her continuing personal commitment to campaign for them.
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