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Lord Skelmersdale: My Lords, the House will appreciate the Minister repeating what is usually the most routine, and therefore boring, Statement of the year—one, indeed, that we often do not bother with in your Lordships' House as the uprating of benefits that it contains is done automatically, fixed at September's inflation rate, more or less.

This year, however, the situation is rather different, and the second half of the Statement, on which there is quite a lot to congratulate the Government, describes not so much uprating as what has been done for people generally in the realm of welfare. I am delighted, for example, at the Government's record on disability. I am delighted that they have persuaded more people to achieve what many years ago I described as the "dignity of work". That is exactly the right approach and what we would expect from any responsible government.

I go back to the beginning of the Statement. This year, it stands or falls even more than usual behind the Chancellor's anticipation of growth, which only yesterday he was forced to admit would fall from his expectation of annual growth in March of 3.5 per cent to an anticipated 1.75 per cent. That is a cut of exactly one half—close, indeed, to what members of my party have been anticipating for months.

What is the anticipated inflation rate for this time next year? In a sense, of course, that does not matter to benefit, as benefits remain the same in real terms. However, it matters to those people who exist on a fixed income, mainly pensioners and people on benefit; the point being whether today's fix will see them through until April 2007. Will prices in the shops rise by more than the weekly income that can be covered throughout the year? Or will the Chancellor's cure for the economy be to spend his way out of fiscal trouble, as has been suggested in the papers over this weekend? Instead of inflation being 2.7 per cent, will we be seeing inflation of, say, 4 per cent, as we currently see in the United States, or the 6 per cent or more that we see in the health service? Billions of pounds are being ploughed into the health service, and productivity in no way matches them—productivity which, I remind the Minister, the Chancellor believes, or believed in 1998, is a fundamental yardstick of economic performance.

Naturally, we are glad to see that pensioners' winter heating allowance of £200 will be maintained for the lifetime of this Parliament. Again, however, what will
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it be worth in real terms come the election in four years or so? These little gifts to pensioners are all very well, but what of another one which was announced earlier this year: the council tax allowance? I hope your Lordships do not think I am being unduly cynical—cynical, certainly, but not unduly—but was this not a bribe to keep pensioners onside during the election? It may even have worked, although the fact is that fewer and fewer people are voting in general election after general election. For the first time, a majority government in Britain were elected by fewer people than those who could not be bothered to vote: 36 per cent who voted, compared to 39 per cent who did not make it to the polling stations.

Talking of fixes, both the Chancellor and the Minister believe in credits of various sorts, saying that they are best thing since sliced bread for lifting people out of poverty. Indeed, the Statement spends a long time saying so. They must know, in their heart of hearts, that such credits are not sustainable in the long term, and a much more generous upgrading of basic benefits is needed to obviate their necessity. Only last week, the Minister was at it again in our brief discussion of the Turner report. I am glad that the Statement again praises the Turner report, and that the Secretary of State has asked the pensions industry to work up a series of non-government, low-cost pensions. That was one of the things I asked for last week, although I did so—unusually for me—in coded terms. The last thing that I want is another quango.

The Government introduced pension credit in October 2003, when nearly 1.8 million households were getting the minimum income guarantee—almost exactly the same number of pensioners that the Government have estimated are not getting the pension credit they are entitled to. As of now, it is expected not only that 70 per cent of pensioners will be getting it by 2050, but that it will cost £39 billion by then, equivalent to 13 pence on income tax. You can get out of this problem over a period by increasing the state pension by earnings, as the Pensions Commission and my party have suggested, rather than the Government's solution of increasing it by price inflation, or 2.5 per cent, whichever is the higher.

I note that the Statement says that if we had instead merely increased the basic state pension in line with earnings, just over a quarter of that extra spending would have gone to the poorest third, who would have been £30 a week worse off than they are under these measures. Yes, but that is only for a year. We must remember that these things are cumulative. It would be interesting to know how long it would take to get back to normal in the Government's estimation. When will the Government grasp this nettle, especially as it has led to the percentage of pensioners with persistent low income increasing rather than decreasing over the lifetime of this Government? Even that does not deflect from my criticisms of the basic state pension or of pension credit, which it is true to say is indeed increased by earnings. How much longer, though? In a leaked letter to the noble Lord, Lord Turner, the other day, we learnt that the Chancellor cannot guarantee that this will continue. When will it cease?
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The fact that millions of people are not claiming the benefits which are theirs by right helps to balance the books. For instance, in 2002–03, the last year for which the Government have released figures, the Minister's own department estimated that between £880,000 and £1.2 billion in council tax benefit went unclaimed, meaning that between 1.87 million and 2.44 million people missed out on the council tax benefit, again, to which they were entitled.

The DWP publication, Income Related Benefits; Estimates of Take Up, produced this year, is a mine of information. I am sure that I shall return to it in future debates time after time after time. But, for now, that information proves the previous Secretary of State's statement that the benefits section is "crackers". That is the understatement of the year. The fact is that this Statement does nothing to correct the cat's cradle of chaos and confusion that is today's benefits system.

4.16 pm

Lord Addington: My Lords, I thank the Minister for repeating the Statement, although, by the end, I was beginning to wonder as the list of statistics came at us. Like the noble Lord, Lord Skelmersdale, we thank the Government for upgrading the benefit every year and are pleased that they do. However, the devil will be in the detail and there will be many occasions when we will be able to debate it in slightly more depth. Today I shall draw attention to just a few basic points.

I deal first with the provision on which we will probably find the most agreement; the improvement of the delivery systems and the inclusion of disability support. I acknowledge that we have made considerable progress through disability rights and so forth, but we must remember that the process began more than 10 years ago. The whole of Parliament has been pushing for the change for a long time and the whole machinery of government has taken a considerable degree of pushing and occasional kicking to get us where we are now. Well done, but we could have got here quicker.

Will the Government give us some idea of how they propose to monitor the system as it goes through? The delivery of the system in this area, as in all others, is vital. Some assurances and an idea of the Government's thinking would be very helpful because disability rights is the one area in which arguments will begin: are we delivering what we say we will deliver?

Moving on to slightly more unusual ground for me, there are interesting increases in the capital disregard in housing benefit and council tax benefit and they are welcome. However, when debating these things, I always wonder why we do not have a fairer system of local taxation. I wonder who the net gainer is when there is a rise in council tax and an increase in pensions. That would be an interesting figure to have—one that we could look at and see exactly where the Government are going.

On pensions generally and the complicated cat's cradle of benefit systems and credits, it would be better if we had a bigger and better basic pension. It would be
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easier to implement, and the great problem of the non-claiming of benefit would be removed, or at least largely removed, and we would be able to go on. As to the new second pension, I hope that the Government will tell us the maximum commission that may be charged by industry. Even if only 1 per cent of the total pot goes into funding the industry, overall, the pot is there to pay out pensions in the end and it could be dramatically reduced. We could also have another fund mis-selling scandal. I suggest that some information and some idea of the Government's thinking would be beneficial to the House.

I return to means-testing. I am glad to see that the guarantee of £200 winter fuel payments has been extended. I cannot see why it cannot be extended to the severely disabled. For instance, people who cannot move properly may have difficulty in maintaining body heat through an inability to generate heat from food consumption. They would benefit from an extra heating allowance for the same reasons as the elderly, especially those of more advanced years. I cannot see why we cannot extend the payments. It seems pernickety. It is a very small group. Why are we not doing it?

To return to a point I made earlier about the delivery systems, in the past couple of days, I have heard that the new computer system is taking longer than the old system to process jobseeker's allowance claims. Indeed, they have gone back to repeating them manually. When do the Government expect to have their delivery systems in place?

Many more points could be made, but I shall end by saying that welfare reform has an unpleasant history of not being delivered because thinking the unthinkable has proved to be unthinkable. Can the Government tell us what has fundamentally changed in the past eight years?

4.22 pm

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