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Earl Russell: My Lords, I thank the Minister for repeating the Statement. I am sorry to learn that she has had to do so at personal inconvenience. I hope it is not too great.

The Minister has invited a wide-ranging debate. I shall respond to that invitation in a moment but, first, I must welcome the basic fact of the uprating, though like the noble Lord, Lord Higgins, I have a suspicious mind. I, too, would like to know what is meant by the

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words "most benefits". No doubt an answer will be forthcoming. I should particularly like to give a warm welcome to the news that the shared residence requirement on housing benefit for the over-25s is not going forward. I should like to repeat the thanks I have already given to the Minister personally for her part in that story, by which I am delighted. I should like to know, though, why nothing has been done towards closing the gap, on which the Minister and I have both detained the House in the past, between the rates of income support for over and under-25s.

I know that this point is not technically part of the Statement, but it relates so closely to it that I believe I am entitled to ask. Has there been any uprating of the youth training allowance and the youth training bridging allowance? The noble Baroness may perhaps remember that I ask this question every year. I hope that this Government are better at knowing the answer than the last one, as I have never before found a Minister who had an answer to that question when the time came.

There have been rumours in the press recently about possible changes to the national insurance lower earnings limit due to the effects of the poverty trap. I see nothing of that in the Statement. That may possibly be because it is being left for the Taylor review, which prompts the question of whether we have any indication when that review is likely to report. Most of the Statement is a report on the Government's objectives, and I listened to it with considerable interest. However, what we know is limited because it has been said that this Government have hit the ground reviewing, and while the reviews are still revolving we do not exactly know what the outcome will be. I am glad to say that I can agree with a considerable amount of the general framework of the objectives that have been set out.

I share the concern about the social security budget. We must all hope that we can find reasonable ways to reduce it. I agree with the factual observation about the failure to reduce poverty. I say to the Minister that the department should not be too self-abasing in taking responsibility for that failure to reduce poverty. That failure is essentially a failure of the amount of work in the economy and of the excessive flexibility, from the department's point of view, of that work. As I understand it, it is not a failure of the welfare system. It would be an improper act of self-abasement if the department were to take responsibility for it.

I am a little concerned about the straitjacket set by spending limits. I listened with interest to the questions of the noble Lord, Lord Higgins, on that aspect. I gave notice that I would ask why the Government have committed themselves to the previous government's spending limits and have done so with links of iron tougher than the previous government ever used.

The Statement refers to a mandate, but I remind the Minister of the opinion poll which appeared in the middle of the election campaign showing that 56 per cent. of those intending to vote Labour simply did not believe that it intended to observe these restraints. They believed, in the memorable words of

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Polly Toynbee, "Trust them--they are liars". I have never been one of those people, but when we talk about mandates we should not forget their existence.

I agree entirely with all that is said about the need for the opportunity to work. That is an analysis that I have been putting forward on this Bench ever since 1989. I am glad to see a government in place which shares it. But that again is not primarily a welfare issue. I do not believe, in any straightforward sense, that it is a fault of the welfare system that there is so little work. It has much more to do with the fashion for downsizing in industry. In a way, downsizing is freeloading on the public purse in just the same way as it would be if the public purse was asked to bear the cost of warehousing industry's unused raw materials. So, again, I do not believe that the department should be too self-abasing.

I agree about the importance of the principle that work should pay. I welcome the publication of the minimum wage Bill. I am extremely glad that it contains fewer exceptions than was feared at one stage. But I want to know why it is being argued that there should be a lower minimum wage for the under-25s. For reasons with which I am sure the Minister is familiar, I am not at all happy about that.

I become a little more worried when the Statement moves on from opportunities for work, with which I agree, to the desire to root out worklessness. That is a very curious phrase. It is at one and the same time utopian and draconian. It is remarkable how frequently those two concepts go together. We all want to reduce worklessness. If they were to root it out they would be the first government in recorded history to have done so. Indeed, I am reminded of the passage in 1066 And All That about the abolition of villains. Richard II was petitioned to abolish villains. He agreed and then put them all to death on the ground that they were villains. If one roots out worklessness it is going to take something like that to do it.

In fact, we have here something very like the language of Tudor economic policy--the distinction between the able-bodied poor who are to be whipped back to their parish and the aged and impotent poor for whom relief may be provided. The Minister knows as well as I do that that was a very difficult distinction to apply. It did not work very well.

The Statement talks about the fact that opportunities bring responsibilities. I agree profoundly with that if we take it as a rule of personal moral conduct. If we take it as a rule whereby moral judgment is passed over to the state and it decides which opportunities it is our duty to undertake, for me that is a very different matter indeed. People are very different from each other: they cannot all be moulded like plasticine into a particular social form. If the state attempts to do that for us it will inflict much unconscious cruelty and achieve a great deal less than it intends.

As regards the issue of single parents, I have asked the Minister before whether she can give an undertaking that single parents will not be compelled to work. I know that the Minister said on 3rd June that she does not favour any such policy, but I am becoming

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increasingly suspicious that the reduction of benefits, together with that being used, as Mr. Darling put it on "The World This Weekend" on Sunday, as an encouragement to work, means that we are getting somewhere very close indeed to compulsion by the back door. "Thou shalt not kill, but needst not strive officiously to keep alive". That concerns me very deeply.

The Minister knows that I am strongly in favour of the opportunity for single parents to work if they want to and if they are satisfied with the childcare arrangements available. But the right of parents to stay at home, particularly with young children, is a human fundamental. I would view with very great gravity anything that appeared to me to threaten that. I believe that the adequacy of childcare for a particular child--it must be for a particular child and not abstract--is something that parents must be left to judge for themselves. So if I begin to suspect that the deprivation is being used as a back-door compulsion my opposition will become much deeper than it has been up till now.

I have similar anxieties about the review of disability benefits and I would be very glad to be told that they are misplaced, because they may be. I entirely agree that it is a good thing that disabled people should work when they can. I agree that far more of them are able to work than we can give the opportunity to do so. I shall not soon forget one Greek island where a person unable to walk had been given the monopoly of selling cigarettes on the island and made himself an extremely good living. That is an individual fit of opportunity to person. Where one can achieve that, I like it. However, turning the pressure to work into something which comes close to conscription worries me considerably.

When talking about rooting out worklessness, one should not forget the problems of transport. The Minister knows that I have touched on this point many times previously, but if she looks in today's Guardian she will find a report from the Rural Development Commission which states that three out of four rural parishes in England have no daily bus and that 99 per cent. have no jobcentre or benefit office. That makes rooting out worklessness rather difficult.

Where one is asking people to do what they want to do, that is a proper use of the power of the state. Where one is helping them to achieve their own self-respect, that is a proper use of the power of the state. However, where one is undertaking a scheme of social engineering to fit people into a particular mould, that, like Plato's republic, is a world that may be beautiful to read about, but in which one would not want to live.

7 p.m.

Baroness Hollis of Heigham: My Lords, I welcome the comments of the two noble Lords who have spoken. I shall do my best to answer their questions. If, on checking the record, I find that I have inadvertently left any question unanswered--I hope that it will be inadvertence rather than any other reason--I shall write to them.

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Perhaps I may respond first to the noble Lord, Lord Higgins. The noble Lord asked first about the future timing, given the "green" Budget. This is a matter for the Chancellor, but I am told that we shall be debating the uprating order in February in the usual way.

Secondly, the noble Lord asked about the quoted statistic that nine out of 10 lone parents would work if only they had childcare. That information comes from research with which I am familiar, conducted by Bradshaw and Miller in 1990. The noble Lord has a point in suggesting that it has been slightly abbreviated, but it showed that lone parents wished to have the opportunity to enter work when their children were old enough or the childcare was in place. I repeat that that figure came from the 1990 research although later research subsequently reaffirmed it.

The noble Lord then referred to our debate in February 1997 in which I denounced the possibility of lone parents not being able to carry the higher rate of child benefit into work. The noble Lord asked whether there had been a U-turn. I am happy to assure him that there has been no U-turn because lone parents now on income support who enter work and go on to family credit will be able to take the higher rate of child benefit with them even if they are not currently claiming it because it has been subsumed within their income support level. If I may put it this way, they will be able to make a fresh claim after April 1998. Therefore, no such disincentive applies. Like the noble Lord, I should be worried if it did. I repeat that there has been no U-turn.

However, where there has been a change since the script of the previous Government, if I may put it that way, is that for the first time lone parents now have the opportunity of a New Deal. They are getting opportunities presented by a major expansion of childcare facilities--not just through the New Deal but through the announcement in the "green" Budget of £300 million which will allow not just the 35,000 children to enjoy after-school clubs as at present, but 1 million children in future. Too often when we talk of childcare, we focus on the nought to fives, but I am sure that we all recognise that childcare is also a real issue for those with children between the ages of five and 12 or 13. This is a major expansion; and, importantly, the minimum wage is also to come. All of those changes will serve to benefit lone parents and make the move into work an attractive possibility for her--it is usually a "her". Those are the changes since the previous government's strategy.

The noble Lord also asked how the sums work. If I understood him correctly, my answer is this: there has been a reduction of £400 million over the three years proposed in lone parent benefits. So far, that is being offset by the £200 million in the New Deal and the one-off strategy, mainly funded by lottery money, of £300 million in childcare under the "green" Budget. If I have misunderstood the noble Lord's point, I shall return to him to amplify my answer.

The noble Lord also asked about the £600 million. Again if I understood him correctly, he was asking how we balance the extra cost of inflation against staying

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within the spending limits. Clearly, estimates of future government spending are always subject to assumptions about the rate of inflation for the forthcoming year. As I understand it, if that assumption is wildly wrong-- I defer to the noble Lord on this because I suspect that he knows much more about it than I do--the reserve is designed specifically to address those circumstances where there is a shortfall between forecast and outturn. I have no reason to think that that would not apply here, as elsewhere.

Like the noble Earl, Lord Russell, the noble Lord, Lord Higgins, went on to ask which national insurance benefits were not being uprated because the word used was "most" rather than "all". One now expects suspicious minds on the Opposition Benches, unlike previously. We were far less suspicious and far less cynical of the government's words! As I understand it, all national insurance benefits have been uprated except the Christmas bonus. However, the Chancellor has announced extra payments this winter which go beyond simple uprating. I refer, for example, to the money for the heating proposals.

The noble Lord asked about control of public expenditure and whether we are still reasserting our previous statement that we propose to stay within the spending limits of the previous government. Yes, we do so intend.

The noble Lord then asked a series of questions about pensioners and said that their position collectively, if I may put it that way, has improved in relation to that of the population as a whole. We have seen inequality widening within the pensioner group, but it is true that pensioners have been displaced in the lowest two deciles of households with below-average incomes. The reason that they have been displaced is good news for pensioners, but bad news for others. Pensioners have been displaced by workless households and, to some extent, lone parents. That is one reason why pensioners, relative to the rest of the population, have improved their position not only absolutely but also relatively. That is because, as we know, workless households have fallen well behind in terms of the growth in prosperity of the rest of the country. The noble Lord will understand that that is why we are so determined to expand opportunities for work for lone parents, disabled people and workless households alike. We know that it is their only path into prosperity.

Pensioners in real poverty remain those who are either on income support or, more to the point, who are entitled to income support but do not claim it. That is why we insisted, as I explained in the Statement, on undertaking research to find out exactly why some pensioners do not claim the benefits to which they are entitled and which would passport them on to other benefits. We need to know the number involved.

I shall have to write to the noble Lord on his point about PEPs. As I understand it, existing PEP holders will not be affected, but I shall have to write to the noble Lord because this is a Treasury matter and I shall need to check the position.

The noble Lord referred finally to the "purse to wallet" transfer behind the working family tax credit. He asked whether women would be disadvantaged as a

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result. We believe that women, like men, want and are entitled to enjoy access to work. Increasingly, as the married women's stamp comes through, so married women are able to enjoy the same opportunities as working men. It is worth reminding ourselves that something like 60 per cent. of all lower income households in work--that is, those enjoying family credit--are headed by a woman. The basic structural question of how such tax credits may be devised has yet to be determined, should the Chancellor accept the recommendations. As I have said, most lower-income households in work are headed by a woman and she would therefore be the recipient of any such tax credit in the future.

Perhaps I may move now to the points raised by the noble Earl, Lord Russell. The noble Earl referred to the dividing line of the age of 25 for differing rates of benefit, as he has over many years and I well understand where he is coming from. It applies in relation to benefits such as housing benefit, JSA and income support. It is an existing line and I am sure that the noble Earl will continue to be unhappy about it. In the past criticisms have been made of it. The presumption is that it reflects in a rough and ready way the difference between the replacement earnings lost and the costs incurred by people over and beyond that line. That is the explanation for it. I am also sorry to disappoint the noble Earl in that, like all my predecessors at this Dispatch Box, I do not know whether youth training will be uprated. However, unlike my predecessors, I assure the noble Earl that he will receive a written answer. If in future I am in the same position dealing with an uprating Statement I promise him faithfully that I shall know the answer.

The noble Earl also asked about the date of the Taylor review. As I understand it, it will inform the Spring Budget. The noble Earl dealt with the wider point about the failure of the welfare system and questioned whether the growth in social security expenditure damned the welfare system as such. I share his concerns and I wish that we had time to debate it more fully. In 1979 one penny in five of government expenditure went on social security; today it is one penny in three--more than is collected in income tax. The figure is £72 billion. Yet, one household in five is workless and the benefit system is disliked not only by those who pay for it but by those who receive it.

It is clear that much of the growth in expenditure since 1979 has been due to the failure of economic and social policies, such that even when employment figures improve many people who have low educational qualifications, those who are long-term unemployed, the disabled, lone parents and so on, remain beached because the tide has not floated them off the rocks of worklessness. That is why we need to renew and reform the welfare state based on opportunities for those who can, should and wish to re-enter work.

That takes me to some of the questions raised by the noble Earl about those who would do so. For example, he asked whether there would be a lower minimum wage for those below 25 and, if so, he would deplore it. No decisions have been made on that. The Low Pay

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Commission will make recommendations which will inform the Government's thinking in the spring. Like him, I would deplore the Tudor as I deplore the 1834 Poor Law. I rather sympathise with Speenhamland and in-work benefits. The reform of the welfare state under this Government could be said to be revisiting the justices of Speenhamland and Berkshire in a "read-across" way for the nation as a whole.

The noble Earl asked why we remained committed to the previous government's spending limits. The simple answer is that it was a manifesto commitment. The noble Earl said that 56 per cent of those who voted Labour did not believe that it would keep its manifesto commitments in that regard. We hope to prove that 56 per cent. of the population wrong by keeping our manifesto commitments and, as a result, restoring faith in the democratic process and going some way to meet head on the cynicism that affects voters when they enter the polling booth. For example, people believe that politicians are all alike; that politicians say what they need to say to get elected but do not keep their promises. That is not the view of the Prime Minister. I believe that in future we shall see very different policies from this Government.

The noble Earl went on to ask about lone parents. He asked that I give an undertaking that they would not be compelled to work. Compulsion is not the issue. Like him, I believe that parenting, whatever the age of the children, is as worthwhile and important a social contribution as working for wages in any economic situation. He pressed me about disability benefits and was also concerned about compulsion. The problem faced by disabled people is not one of compulsion but the current denial of opportunities that they experience. We know, because they tell us, that about 1 million disabled people wish to work but cannot do so for three reasons. The first reason is in part their poor health. That means that they cannot work a steady 35 hours a week. However, I hope that the labour market with its demand for flexible labour will be on their side so that with help they can re-enter the labour market.

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