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4 Nov 2010 : Column 375WH—continued

It cannot make sense to have people on the dole. We all know that longer dole queues mean a higher benefits bill, which cuts across the very principles of what the Government are doing. So, the Government are only continuing in part what we were doing. There are significant
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differences. Yes, we introduced conditionality, but the sanctions were backed up by guarantees, the youth guarantee and the future jobs fund. Yet one of the first actions of the Government in power was to abolish them. That is a colossal error for anyone committed to welfare reform. As I said earlier, it would appear that the Secretary of State is persuaded of the case for meaningful reform. However, it seems that he has not persuaded his Cabinet colleagues that such reform needs to be supported more systematically.

We were told earlier this afternoon-I am sure that I shall be told again in a moment-that the level of unemployment is unavoidable, and that what is happening in the economy is the result of our actions. Like my hon. Friend the Member for Aberdeen South, I am old enough to remember the last Tory Government. They said then that unemployment was unavoidable, but they were wrong then and I believe that they are wrong now.

For the record, between 2007 and 2009, and before the global crisis, the UK had the second lowest level of debt among the G7 countries at 36.5%. Labour reduced the debt that we inherited from the previous Tory Government, when it stood at 42.5%. It was the global economic crisis of 2008 and the resultant need to bail out the banks that caused the deficit that we have today.

Damian Hinds: Does the hon. Lady accept the existence of a structural deficit, quite separate from the cyclical part, and will she accept some responsibility on behalf of her party for that?

Margaret Curran: When looking back at the Budgets of Labour Governments, the hon. Gentleman's own Prime Minister said that we were not bold enough with our spending plans. The hon. Gentleman cannot get away with his argument, and I hope not to hear it again. It was a global crisis that created the problems that we faced, and we had to respond to it.

Damian Hinds: Will the hon. Lady give way?

Margaret Curran: No. I hope that the Minister does not repeat that argument, because in tackling the crisis we decided not to do what had been done during previous recessions, when the unemployed paid the price. We kept people in their homes and in jobs. That was the right thing to do. If we were still in Government, we would not be making our children and our families pay more than we would make the banks pay. Even the Government's own Office for Budget Responsibility declares that there will be substantial job losses as a direct result of the Government's decision to slash the deficit as quickly and as steeply as they can. I repeat-this goes to the core of what we are trying to tackle-that we all know that high unemployment will mean a higher welfare bill and a bigger deficit in the long run, and will defeat genuine and well-meant efforts at reform.

I am sure that the debate may change emphasis with the publication of the White Paper. However, the benchmarks of fairness, proportionality and effectiveness in getting people back to work will be the test that we use. When the Government meet that test, we will happily work with them.

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5.12 pm

The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller): It is a great pleasure to serve under your chairmanship, Mr Turner; it is the first time that I have done so, and you helped to ensure a most productive debate. I also thank the hon. Member for Colchester (Bob Russell), who is absent, and the hon. Member for Stretford and Urmston (Kate Green), for enabling the debate to take place.

The quality of debate showed how important these matters are, and how important it is for them to be discussed. To a certain extent, it has allowed us to put some facts on the table. With the exception of the most economically illiterate, or a few ostriches that might still exist, few serious commentators doubt the urgent need to tackle the financial mess left by the previous Administration.

I have a slight divergence of opinion with the hon. Member for Glasgow East (Margaret Curran), who spoke for the Opposition. She cannot ignore the fact that we are dealing with a major structural deficit, and unless we get that under control, we will continue to have to pay the most astronomical levels of interest and run the risk of seeing rates rise and the consequent economic chaos that we have seen in some European countries.

We should not forget that we are paying £43 billion in interest payments; that is £120 million a day. To put it another way, it is the equivalent of the annual budget for the Department for Education. These are not small amounts of money. It is a structural problem. We have to deal with the fiscal mess that we inherited from the previous Government. After years of throwing public money at a bloated welfare system, the previous Administration also left us with a legacy of dependency, which was mentioned in many contributions to the debate.

The facts tell their own story. Nearly 5 million people live in households in which someone is on an out-of-work benefit, despite record levels of spending; it was £35 billion in 2008-09. We still have 2.8 million children living in poverty.

Kate Green: Will the Minister give way?

Maria Miller: I cannot accept interventions, Mr Turner, as we are short of time and I know that you want a short wind-up at the end of the debate. I want as much time as possible to answer the points raised during the debate, including by the hon. Member for Stretford and Urmston.

We still have 1.9 million children living in workless households. Instead of burying our heads in the sand, which has been the approach of too many Opposition Members, and potentially leaving our children to pick up the bill-that is the legacy of this huge debt-the Government are taking action now, and making tough choices. We are tackling the root causes of poverty, not just treating the symptoms.

The failure of the last Government is the reason why we need the toughest round of spending since 1976. Inevitably, the Department for Work and Pensions will have to shoulder its share of the burden, along with other Departments. I believe that we successfully secured the third best settlement in Whitehall. As a result the
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Department will see a modest rise in spending in real terms, although we do not underestimate the challenge that lies ahead.

The Government will not cheese-pare or salami-slice the budgets that we have in place; we are taking the opportunity to rethink not only what we do but how we do it. That is why we are introducing universal credit. It will beat the benefit trap, and it will make work pay for the poorest. We are launching the new Work programme to help those who can to escape a life on long-term benefit. That is why we are working hard to support families, especially children, with an above-indexation increase for the child element of tax credits; launching the £7 billion fairness premium, which will give some of the poorest children a better start at school; and giving most disadvantaged two-year-olds access to 15 hours a week of pre-school education. Those and many other support measures will make a real difference to families and to poverty levels.

In my role as Minister for disabled people, I shall ensure that we have in place more support than ever for disabled people to help them get back into employment, and continuing, unconditional support for those who are unable to work.

Many important points were made this afternoon, and I shall try to answer them all. Those that I am unable to answer today I shall answer in writing; I shall write to hon. Members individually.

I welcome the tone of the contribution of the hon. Member for Glasgow East; it was important, and I welcome her emphasis on working together and her understanding of our desire to put in place real and genuine reforms. I reassure her that we are working closely with disabled people and disabled people's charities in reforming those programmes. The hon. Lady mentioned equality impact assessments. I assure her that all the measures in the Budget and the spending review will have equality impact assessments in place; they will be published at the same time as the welfare reform Bill, and will accompany any uprating order.

Thoughtful contributions were made by my hon. Friends the Members for East Hampshire (Damian Hinds) and for Bermondsey and Old Southwark (Simon Hughes). They included comments about housing. I might roll together my responses, given the time constraint. Changes to do with people's homes will obviously cause a great deal of concern.

My hon. Friend the Member for Bermondsey and Old Southwark rightly said that it is about ensuring that we have secure and stable communities. We believe that the local housing rates in place at the moment are simply too high, and not sustainable. We have seen them outstrip earnings since local housing measures were put in place in 2008, and we want to phase in the overall package of measures to give people the time to adjust to a different regime and a different way of dealing with matters. However, we still need to legislate for the changes through secondary legislation, so there will be an opportunity to debate the measures further. Indeed, I am sure that we shall do so.

What is important is that the Government have an important role in the private rental sector. Some 40% of people in that sector are in receipt of housing benefits, so we are part of the market-making, and we must recognise that. We cannot stand back and let the market
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control the sector, as the Opposition did when they were in government. We must take action and, at the same time, protect the sort of people in the constituency of my hon. Friend the Member for Nuneaton (Mr Jones) who he mentioned. That is why we have put in place £140 million transitional relief to ensure that the support is there if it is needed. That problem was anticipated by the previous Government and it was in Labour's manifesto. I find it astonishing that Labour-at least some Members of its Back Bench-now seem to be trying to row back from that. I sense that the hon. Member for Glasgow East has a deeper understanding of the need for reform in this area, and I hope that we can work together on this matter.

My other hon. Friends made some stirring contributions, particularly my hon. Friend the Member for Gloucester (Richard Graham), and I welcome his support for the Government's policy. He is right to say that this is a radical and ambitious new approach. We cannot simply stand back and let the welfare system continue to fail so many thousands of people, as it has done for the past 10 years.

My hon. Friend the Member for Brentford and Isleworth (Mary Macleod) talked eloquently about the work that is going on in her constituency. Helping people fulfil their potential is exactly what we want to do with the Work programme. People are not statistics; they are individuals and need individual programmes of support. Her idea of encouraging local organisations to be involved in such work is absolutely right.

All hon. Members will agree that my hon. Friend the Member for North East Hertfordshire (Mr Heald) made an extremely important contribution. As for the timing of universal credit, we will have a White Paper coming out shortly, and the transition to universal credit will start in 18 months' time. Such a move will happen soon and not way into the future. Some 50% of people will be transferred on to universal credit by the end of the spending review period. We will give priority to the people who need the help the most and ensure that there will be no losers when the transfer takes place, which reflects the importance of making this change.

My hon. Friend is right to say that in the past, employment programmes have been fragmented. We will use Jobcentre Plus as a lynchpin to ensure that we smooth out the transition process between old programmes and the new Work programme.

My hon. Friend the Member for Stroud (Neil Carmichael) provided us with a great insight into the matter today, particularly by raising the issue of the Harrington report. He made it clear that there will be annual reviews of the work capability assessment for the next five years.

Let me clear up the point about the appeals processes. The ESA has a 5% appeal rate, so 5% of the total number of applications have had their decision overturned on appeal. That is not a massive problem and it does not indicate that there is an unacceptable level of inaccuracy, so we must keep such things in proportion. Of course all of us want to see a 0% appeal rate, but that would be difficult to achieve.

My hon. Friend the Member for Nuneaton was very much the voice of reason in this debate. I cannot agree with him more that it did feel like we were inheriting an economic car crash when we came into Government in
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May. He talked about those who spend prolonged periods on benefits, the negative effect that that can have and inter-generational worklessness.

Picking up on the point about variable conditions, let me say that that is exactly the sort of thing that Professor Harrington will be considering, and concern over the matter has been voiced to us.

The Chairman of the Select Committee raised a number of points today. I am sure that I will not do justice to the questions that she asked, but I will have a quick go in the two minutes that I have left. We have made the changes to the council tax because the present system is complex, and it has rigid rules in place. The changes that we have proposed are in line with the overall theme of this Government, which is of localism and of giving local people more flexibility to react to the circumstances in their community. It is that local flexibility that will help us to deliver more value for the amount of money that we are investing in measures such as the council tax and council tax relief.

The hon. Lady asked why we are raising housing benefits by the consumer prices index. Let me remind her that housing awards have grown faster than earnings since 2008 when the new measures were introduced to support those on private rentals. We want to take control of the amount of money that is going into housing benefits, which is in line with out strategy to integrate housing support with the rest of the benefit system that will also be uprated by CPI.

The hon. Lady raised some issues about care homes. In particular, she mentioned the measure that we are taking with regards to mobility. Just to be clear, local authority contracts with care homes mean that care homes are providing services to meet all the needs of their residents, and that includes those with mobility needs. Our commitment to increase the uptake of personal benefits through personalisation will give people more choice and more control over the money that is available to them. The local authority duty exists to meet the needs of people who are living in residential homes and to provide the services. We have removed an overlapping benefit and tried to ensure that the money can be used effectively elsewhere.

The hon. Lady also raised another matter with regard to lone parents, but time will escape me, so I will have to write to her on that. The hon. Member for Streatham (Mr Umunna) asked about the success of the future jobs fund. I want to make it clear that that fund is one of the most expensive employment programmes in place at the moment. We have honoured the offers of places on the future jobs fund that were made before we came into Government, but it is not good value for money and it does not provide the long-term employment that we know that people need. That is why we are not rolling that forward, and it is a really good and valid reason for not doing so.

The hon. Member for Stretford and Urmston raised a number of issues, but I will pick up on just one of them-the benefit cap. I do not accept that such a measure will increase child poverty. Putting in place a cap will effectively stop anybody receiving benefits that would translate into a salary of £35,000 a year. That will not increase child poverty. What it will do is ensure that work will pay for more families. We know that enabling families to get into work by, for example, not
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creating a disincentive is one of the most important things that we can do to alleviate poverty in the long term.

I draw to a close now, and apologise if I have not addressed all the points that hon. Members have raised. I will try to do so later.

5.28 pm

Miss Begg: Let me thank the Backbench Business Committee. I have sat in your seat, Mr Turner, on many Thursday afternoons with only three people in the Chamber. Today, however, we have had many contributions from a large number of people, which reflects the importance of this excellent debate. The subject transcends party politics, because the issues discussed today will affect thousands and thousands of our own constituents. I hope that the Government see those of us on the Opposition Benches as critical friends. We want the Government to get this right because it is our constituents who will suffer if they do not. I hope that this debate has been constructive and helpful.

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There has been a problem with housing benefit. The debate was skewed by concentrating on the cap. Serious concerns were raised about the 30th percentile and the JSA sanction. I hope that the Minister understands that transitional arrangements will be required on a range of issues. I refer in particular to those issues on which the new Government's policy is not yet in place and those policies introduced under the previous Government that have already stopped. There is a clear need for transitional arrangements.

All in all, this has been an excellent debate. I look forward to the White Paper, which is to be published shortly. We may be back here having another debate on these issues in a couple of months' time. If today's debate is anything to go by, it will also be a good and well-humoured debate. I thank everyone who has turned up this afternoon.

Question put and agreed to.

5.29 pm

Sitting adjourned.

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