Oral Answers to Questions

Damian Hinds Excerpts

Monday 28th March 2011 Commons Chamber

[Chris Grayling]

The hon. Gentleman is absolutely right to highlight the flaws in the system we inherited from his party when it was in government. We have taken steps to improve the process. The Harrington review was designed to ensure that we have a better and more just process, with fewer appeals being made. I agree with the hon. Gentleman about wanting to see the number of appeals reduced significantly, but it is the right of the individual claimant to appeal if they so choose.

[Damian Hinds (East Hampshire) (Con)]

7. What assessment he has made of the potential effects on incentives to work of implementation of the provisions of the Welfare Reform Bill.

[Nick de Bois (Enfield North) (Con)]

8. What assessment he has made of the potential effects on incentives to work of implementation of the provisions of the Welfare Reform Bill.

[Damian Hinds]

Casual work and temporary work are important routes into employment, but many people are put off them, not only by benefit loss but by the complexities they will face. How will my right hon. Friend’s welfare reform programme help to address that disincentive?

[Mr Duncan Smith]

One of the complexities that most people face is the fact that two Departments administer what are, in essence, benefits: the working tax credit and the Department’s own benefits system. One of the problems that occurs is that people in difficulty often find it difficult and stressful to figure out who they are supposed to notify of the changes taking place in their lives, their working hours and so on, and they have to go to two Departments to deal with two sets of figures. That will all be sorted out as we bring those together under one benefit. First, these people will not have to notify so many people, and secondly, universal credit will pick up a great deal of that through the real-time system.

Welfare Reform Bill

Damian Hinds Excerpts

Wednesday 9th March 2011 Commons Chamber

[Damian Hinds (East Hampshire) (Con)]

As some hon. Members are still waiting to speak, I shall strive for brevity. We are, of course, debating the principle of the Bill, which I am very proud to support, and we will vote on whether we get the chance to discuss in Committee many of the important issues that hon. Members on both sides of the House have rightly raised. We will also vote on whether to progress with the Bill’s central reform: the universal credit, which is ambitious, bold and compassionate.

I am sure that we have all had discussions with our constituents in which they say, “Why can’t we just have a benefits system that means that you are always better off in work than out of work? Why can’t we have a system where everybody who can work does work and where we provide proper support to those who can’t? Why can’t we just simplify the whole system so that people understand it and we do not spend so much money on bureaucracy?” This Government answer those questions by saying, “Actually, we can.”

This welfare package contains many elements. Hon. Members have focused on different ones, but I wish to focus briefly on the social fund. It contains many diverse elements but, as the hon. Member for Belfast East (Naomi Long) identified, it is the crisis loans that have been growing most recently. In the past year, there were 2.7 million loans to 1.1 million people. Although the number of people taking crisis loans has grown rapidly—it has doubled over four years—the number of individual loans has grown even faster. That, in itself, has driven a big increase in the administration costs of the scheme, which have risen from £70 million in 2007 to £120 million last year. Of course it is right that we provide extra support for people in times of personal crisis, but it is also right to question those rates of growth.

There are many other problems with the social fund: a lack of awareness, particularly about community care grants; the long processing times that sometimes occur; and, on occasion, perverse incentives. One such incentive results in families applying for loans for cookers and beds because they are “priority items”, even if they are not actually the things that are most needed at the time.

It is right to devolve these programmes to a local level, where the authorities know their areas more and are better able to put families in touch with other local services that can help them. Work can be done with, for example, citizens advice bureaux on referrals, and with food banks and furniture recycling programmes, such as Furniture Helpline, in Bordon, in my constituency. Credit unions can also play an enhanced role, although we must recognise the limits to that, both in terms of geographical coverage and the client groups they are geared up to serve. I wish to thank the Department for Work and Pensions for another announcement last week on support for credit unions. An extra £73 million is being provided for capitalisation and for the development of something that many hon. Members on both sides of the House have requested for a long time: a robust back-office system that will enable credit unions to work more closely with post offices. That, combined with the imminent legislative reform order, which will allow credit unions to grow more, will mean that they will be able to fulfil an even more important role in providing responsible, affordable financial services to some of the poorest people in this country.

The reforms to the social fund are just one part of a large and radical package of measures. Some issues still need extra attention, as Ministers acknowledged today. The position of cancer sufferers is one such issue, as is the mobility component of disability living allowance, but I suspect that, deep in their hearts, many Opposition Members support the principles behind this ambitious, bold and compassionate Bill, and I urge them to vote with us to move forward on those central themes.

Youth Unemployment

Damian Hinds Excerpts

Wednesday 16th February 2011 Commons Chamber

[Mr Byrne]

My right hon. Friend is right. Unless we hear something of substance from the Minister, I am afraid that her prediction is all too likely to pan out.

When the squeeze on living standards is about to get tougher and tougher, one would expect action from the Government to help. In fact, more than half the welfare cut will hit working families, and by the end of the Parliament £3.4 billion will be taken off benefits for children—far more than the amount being taken off bankers. Putting aside the question of what kind of Government take more money off children than off bankers, if the Chancellor had done what he should have done, and implemented a proper bonus tax on the banks, he would have about £3.5 billion to invest in jobs and growth, including in jobs for young people. That must be the substance of our debate this afternoon.

[Damian Hinds (East Hampshire) (Con)]

On the simple numbers, will the right hon. Gentleman confirm whether youth unemployment was higher or lower at the end of Labour’s term in office, despite the golden economic inheritance that it had?

[Mr Byrne]

Let me respond to that point in substance in a moment, and I will invite the hon. Gentleman to intervene again. Right hon. and hon. Members on both sides of the House will want to ensure that we draw the right lessons from the past 13 years, as they have a critical bearing on the programme that we want the Government to put in place for the future.

There are real differences between Government and Opposition about the macro-economic approach that we should take. We also share some values. Many of us share a passion to attack poverty in all its manifestations. We believe that the poverty of some impoverishes us all, not only because it affects the chances of many to lead the life that they would choose, but because it denies many the chances, opportunities, free range and scope to contribute to our country’s progress. I happen to think that the Secretary of State shares that belief, about which I feel passionately, as my constituency has the second highest unemployment in the country and, as this morning’s figures confirm, the highest youth unemployment. I do not have to go far to see wasted talent—I see it, and think about it, when I go to work every day. That inspires the passion with which many of us think carefully about the programme that the country needs to get youth unemployment back down.

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[Mr Byrne]

The facts speak for themselves. Between 1997 and the start of the financial crisis the number of young people on the claimant count fell by 40%. Because of the changes we put in place, the number of young people coming off JSA within six months was about three quarters of the number going on. That is why Lord Freud—the Government’s own welfare reform Minister—was right to say that the progress we have made was “remarkable”.

[Damian Hinds]

I am sure the right hon. Gentleman recognises the value of international comparisons as well as time series comparisons, so does he acknowledge that in years before the onset of the global financial crisis, such as 2005, the number of young people not in employment, education or training in this country was higher than the OECD average, higher than the EU average, higher than in France, higher than in Germany and higher than in the United States?

[Mr Byrne]

The number of young people not in education, employment or training was lower, not higher, when Labour left office than when we came to office. Far too often, Conservative Members pray in aid that number—a number that is pretty static—but fail to acknowledge that the number of young people in our country increased by 1 million between 2000 and 2009.

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[Damian Hinds (East Hampshire) (Con)]

It is good to strike a bipartisan note in our debates, even on an Opposition day motion, and I am happy to concur with what a number of Opposition Members, including the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), have said about the scourge of youth unemployment and that these are things we cannot wait to tackle. I am pleased and proud to speak in favour of one of the key clauses in the motion—the bit that says,

“urgent action is now required to stop…young people being lost to worklessness”.

I think we can all agree on that but I suspect we might differ on something that I firmly believe—that the change of management in this country in May 2010 was an important first step towards doing that.

The right hon. Gentleman’s Government left one in five young people out of work. The sharp rise in unemployment started in March 2008, but the sad truth is that there was double digit unemployment among young people according to the standard International Labour Organisation measure even in the good years—the years when the Government were borrowing to the hilt and spending money like it was going out of fashion. In an earlier intervention, I presented the right hon. Gentleman with the international comparisons that he declined to comment on in detail, but perhaps he will do so later.

Of course, Government programmes play a part in all this. I do not think that anyone in the House is suggesting there should be no Government intervention on youth unemployment—of course not. However, I say to the hon. Member for Vale of Clwyd (Chris Ruane), who I am delighted has just returned to the Chamber, that the piece of analysis that he presented concerned entirely the wrong question. We should not ask whether turning around a young person’s life is worth £6,500—of course it is. It is worth that and a whole lot more.

[Chris Ruane]

Well do it then!

[Damian Hinds]

The hon. Gentleman displays—I shall not go on.

The important thing to ask is whether that £6,500 is better spent on the fund or on something else that will achieve the same result. It is vital to ask that question at any time, but particularly at a time when the Government and the country not only have no money, but have minus money.

There are examples of the future jobs fund working well. We have heard about what has been happening in Birmingham and Merseyside and I am sure there are many other examples, but we have to examine whether it was doing its job properly across the piece. I think there were three main problems with the future jobs fund—the future problem, the jobs problem and the fund problem. For the future, it was not sufficiently focused on people’s personal development; the jobs involved were not the private sector jobs needed to drive the recovery; and its funding was simply not the most cost-effective way of spending money. Those problems are quite apart from the onerous application procedures, which were partly why so many of the jobs were in the public sector.

I welcome the new Government’s Work programme, which will be more flexible, centred on the individual and, because of the payment by results element, will result in better value for money. As the Prime Minister said a few hours ago in Prime Minister’s questions, it has often been asked why we cannot use the money that will be saved in future and spend it on those interventions now. That is exactly what the Work programme does.

The expansion of apprenticeships is very welcome. Many hon. Members have mentioned that so I shall not say any more on it, but I do want to talk about the new enterprise allowance, which seems to be based on the best features of the Prince’s Trust work mentoring scheme, which I know a little about having formerly been a Prince’s Trust business mentor. That fantastic programme gives young people who are starting businesses access not only to finance but to support, mentoring and coaching to help see things through. I am delighted that the Government are taking such a programme forward. I hope that we will also see more development of microfinance through community development financial institutions and credit unions once the relevant legislative reform order is brought through.

Welfare reform is also vital to the whole picture—not just the ambition but the intention and the plan to make sure that work will always pay in future. Programmes are only ever a part of all this, and I am glad that my hon. Friend the Member for Enfield North (Nick de Bois) mentioned that we need to broaden the debate. The most important thing of all for youth unemployment—indeed, any unemployment—is the state of the economy and our ability as a nation to take advantage of opportunities. We need a healthy physical and, just as importantly, human infrastructure.

There are three key elements to any overarching programme, which are interrelated. The first is having a buoyant private sector, the second is ensuring that the incentives are there to hire and invest in home-grown workers and the third is ensuring that we have the right skills and capabilities across the economy to take advantage of key growth markets.

[Chris Leslie]

In the city of Nottingham at this time last year, youth unemployment fell for five months continuously, but this year it has been rising. The hon. Gentleman talks about growth and how central it is, but does not he have some doubts that his Government are not doing quite enough on the growth strategy? Could he elaborate on that?

[Damian Hinds]

I do not have such doubts. I cannot comment in detail on Nottingham’s figures over the past few years, but as we have been examining in this debate, the problem of youth unemployment has not started in the past few months: it has been with us for a long time and we have a structural issue.

I was talking about the buoyancy that is needed in the private sector. That starts with investment because when there is investment, businesses grow and take on workers, including young workers. To encourage investment, we need to keep interest rates low. To keep interest rates low, we need a Government who take the nation’s finances seriously. We also need to ensure that lending is happening, and I am pleased that the Government are taking a very robust approach with the banks on that. Something that we need to work on more, but which will take some time, is ensuring that British firms are not bogged down in regulation, dead-weight administration and an enormously complicated tax system.

As well as a buoyant private sector, we need to make sure that we have the right skills to take advantage of the opportunities in the market, both generally and targeted at specific sectors. When we talk about productivity, we tend to focus on manufacturing, but the service sector now accounts for two thirds of the private sector and for much of the productivity gap that we have in relation to other leading nations. Services will continue to be important in future and we need to build up the skills base of our young people—not just their craft skills but their interpersonal and communication skills.

It is also right to have a targeted approach—a strategy for Great Britain plc. Our record on picking winners is not unblemished, but we do need a strategy. We will never again make T-shirts cheaper than China, but there are sectors in which we can excel. The trick is to find sectors in which there is the coincidence of a high-value, attractive growth market and something that Britain is uniquely well-placed to take advantage of, such as advanced manufacturing, pharmaceuticals, the creative industries, financial services, higher education and tourism.

Let me say a word on tourism, because my background is in the hospitality, leisure and tourism sector. [Hon. Members: “Ah!”] I do not know why people are saying “Ah.” That market is in long-term growth and remains a great export opportunity for this country. We are well-placed to take advantage of that market because of our great heritage, our vibrant cities and our beautiful countryside. In that regard, I must say, on a local level, that I am delighted that the South Downs national park will be opening its doors in a few weeks’ time.

When it comes to tourism at Great Britain plc, the marketing department is very good but I am afraid that the human resources department still needs some work.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

This is about the future jobs fund.

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[Damian Hinds]

Actually, this is about unemployment and creating a vibrant economy in which people can be employed. If the hon. Gentleman reads every clause of the motion, he will discover that I am correct.

In the hospitality sector we find that at entry level, kids who have grown up in this country do not have the same skill sets as some of their rivals from other countries. It is not just about being able to make the best eggs benedict: it is about having the interpersonal skills I was talking about—greeting the customer, making eye contact, smiling, offering to help and owning the problem of the customer. Those are the sorts of skills that we need to build up. It is because of some of those gaps that some employers, sadly, actively prefer to take on young people who have not been educated in this country. That is a huge shame.

I am running out of time. I hugely welcome the Work programme, the enterprise allowance and the expansion in apprenticeships. I equally welcome the review of vocational education and training and the fresh look we are taking at the national curriculum and our commitment to improving education and benchmarking it against the very best in the world. I also welcome the fact that the Government are getting a grip on immigration, which is related to this, and the radical welfare reform. Most of all, I welcome the fact that the Government are living up to their responsibilities to eliminate the structural deficit, to keep interest rates low, to get businesses investing and to grow the economy and create jobs.

Benefits Uprating

Damian Hinds Excerpts

Wednesday 8th December 2010 Commons Chamber

[Steve Webb]

No, it is not. Each year the Secretary of State has a duty to assess the general increase in prices; that is what the law requires him to do. If the law required him to link state pensions, for example, to RPI, that would be a different matter, but that is not the duty. The duty is to assess inflation fairly, which is what we are doing. I also announced today that, when companies have RPI written into their rules and no provision for changing those rules, the Government will not allow schemes to change them, precisely for the sorts of reasons that the hon. Gentleman mentions.

[Damian Hinds (East Hampshire) (Con)]

My hon. Friend rightly identified in his statement that the upratings policy forms part of a much wider review of social security policy, which will include major investment in the radical universal credit. Which elements of the Government’s programme does he think will have the most impact on people of working age?

[Steve Webb]

I am grateful to my hon. Friend for stressing that, as well as setting benefit rates, the Department, led by my right hon. Friend the Secretary of State, is looking at major structural reform to ensure that work pays. The hon. Member for Leeds West asked about making sure work pays, and we need to ensure that the move into work is seamless, people know what they will get and there are not the complexities of multiple withdrawal rates. I think that history will judge this Department and my right hon. Friend’s record very favourably for putting in place the structural reform that has been overdue for far too long.

Work and Pensions (CSR)

Damian Hinds Excerpts

Thursday 4th November 2010 Westminster Hall

[Miss Begg]

I thank my hon. Friend for her intervention. Certainly I recognise the 15% figure. We are not talking only about benefits for those of working age. I was briefed this morning that if occupational pensions—both private and public pensions—are to be linked to CPI, the figure of 15% is not unrealistic. In fact, people on an average occupational pension could lose the equivalent of three years’ worth of their pension if they were to live for the average time from retirement, which is 24 years.

The switch from RPI to CPI will, in the long term, mean that the amount of money that people on benefits receive is reduced. Let me explain what I find particularly perverse about the housing benefit changes. The difference between RPI and CPI is that CPI does not take account of housing costs. Again, perhaps the Minister can explain the rationale for why the CPI measure is being used for housing benefit when it does not take into account housing inflation, which runs at a higher level than consumer inflation.

As my hon. Friend the Member for Stretford and Urmston suggested, the change in uprating will also affect levels of child benefit, income support, jobseeker’s allowance and incapacity benefit, as well as the employment and support allowance and the carer’s allowance. The value of all the benefits in payment will diminish with the changing of the linking rules or the indexation to which they are subject.

There will also be reductions in what can be claimed in such things as the child care element of the working tax credits, as well as changes to the eligibility rules for the working tax credits. Some of those changes would also appear to fly in the face of the perfectly correct cause being espoused by the Government—to ensure that those who can work do work. However, some of the changes might put barriers in the way of getting people into work.

The second way that the Department can reduce spending on benefits is by changing the criteria, to prevent many people who would have previously qualified for the benefit from qualifying in future. We shall see people who have been on jobseeker’s allowance for a year losing 10% of their housing benefit, or people in residential homes no longer qualifying for the mobility component of the disability living allowance. I am glad that it is the Minister responsible for disabled people who will be winding up for the Government, because of a phrase in the CSR attached to the announcement about the mobility component of the DLA for people in residential homes being cut:

“where such costs are already met from public funds”.

Can the Minister explain what that means?

Does that phrase mean that some people in residential homes will keep the mobility DLA, if their costs of travel and transport, presumably, are not being met from public funds? However, I am not aware of any residential homes that have a travel budget. I am not aware that public funds are available. Some people in residential homes might get a taxi card, for instance, but like, I suspect, many others, my local authority is tightening its criteria: Aberdeen has decided that someone on the upper rate mobility DLA does not get a taxi card. Anything that I can think of that might be the provision of travel from public funds does not, I think, apply to people in residential care.

On the issue of residential care, it is worth remembering that, generally, people in residential care who are on the mobility DLA will be a younger cohort, because people do not qualify for a DLA once they are over 65. Many of them might be in work—their care needs might require them to be in a residential home, but they might have work or go out daily to day centres or whatever. Without the DLA, they would not be able to get out of the confines of the residential home. Sometimes there is a perception that someone who lives in a residential home is elderly and not able to lead a fulfilling life, but nothing could be further from the truth. I would welcome some clarification from the Minister on that point.

Probably the best example of the Government’s changing the criteria to exclude previous claimants is the move from incapacity benefit to employment and support allowance. This migration was always on the cards—it was introduced by the previous Government—but I get a sense that some of it is being accelerated. The other thing that is different is the numbers involved. The number of those whom the previous Government thought might lose out as a result of the migration appears to be quite different in reality, certainly in regard to the new benefits. At the moment, we do not know the actual figures for the number of people currently receiving IB who will no longer qualify for the new employment and support allowance. The first trials of the migration are taking place in Aberdeen and Burnley, and it will be at least a couple of months before we have any robust figures and find out how many people are not getting through the new gateway.

The Government expect somewhere between 30% and 40% of IB claimants will not qualify and will therefore end up on jobseeker’s allowance. For those individuals, that is a loss of £20 a week. What makes me doubt whether that is the final figure is that we know that the number of new claimants qualifying for employment and support allowance is much less than the previous Government were projecting. While they thought that 20% might end up on the support element of the ESA, the figure is much lower, at around 4 to 6%, and it looks as though around 60% will not be getting ESA at all, because either they have dropped out of the system or they have been awarded jobseeker’s allowance. As many as 60% of those who are currently on incapacity benefit might not qualify for the new ESA, therefore, but, as I said, the trials are going on in Aberdeen and Burnley, and we will have the figures in a couple of months’ time.

[Damian Hinds (East Hampshire) (Con)]

Does the hon. Lady think that the change in those numbers is as a result of a change of Government or of the experience of having run the pilots?

[Miss Begg]

The original numbers I gave were those projected by the previous Government for new claimants, but they did not work out in practice—even for the previous Government. In other words, the work capability assessment, which is the test acting as the gateway to getting the benefit, is turning out to be much tighter than either the previous Government or, I suspect, this Government were expecting.

The figures are quite different from what the previous Government expected. I do not have any evidence to suggest that the new Government were expecting anything different. However, the reality is that many fewer people than expected are getting through the gateway of the work capability assessment, and they are accessing either the support element or the work-related element of the ESA.

There has been a lot of criticism of, and a lot of research has been done by organisations such as Citizens Advice—nationally and in Scotland—about the operation of the work capability assessment. At the moment, I am not sure that it, as an assessment tool intended to look at employability, is very effective in determining who is fit for work and who is not.

I was not going to go into the issue, because it is probably a debate for another day, but part of the problem is that illness and disability are being mixed up. So, people who are ill at the moment are being declared fully fit for work when, clearly, they cannot work—but that is not to say that they would not be able to work in the future. The assessment also does not take into account the employability of an individual—because the end of the whole process is to get people into work, if they are not employable and employers will not employ them, then the process will have failed.

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[Damian Hinds (East Hampshire) (Con)]

I congratulate the Backbench Business Committee on a continuing series of important debates. I congratulate, too, the hon. Member for Stretford and Urmston (Kate Green) and the hon. Member for Colchester (Bob Russell) on their role in securing it, as well as the hon. Member for Aberdeen South (Miss Begg) on laying out the issues as she did. As she said, behind the statistics are real people and real lives, and there are concerns about many of the issues. Many hon. Members will have had correspondence about, for example, the mobility component of disability living allowance. It will be interesting to hear the Minister’s comments, and I hope we shall receive reassurance about some of those things.

Although the debate is about the effect of the CSR on the Department for Work and Pensions, I suggest that, given the bold programme of reform that is being undertaken, it is not practical fully to separate the impact of the spending review and the deficit from what I accept is theoretically a different question—that of reforming benefits for the long term. There is also a distinction to be drawn between the direct and indirect impacts of the CSR on the DWP.

Among the things that strike those of us who are new to the public sector are the crazy names that get bandied about. One is “annually managed expenditure”. It is crazy because that is precisely the expenditure that cannot be managed on an annual basis—at least not from within Departments. The key focus of the CSR, ultimately, is to build a sustainable recovery, and then steady growth, keeping interest rates low, which encourages investment and in turn creates the right atmosphere for job creation. That focus on growth could ultimately deliver the biggest single impact of the CSR on the bills that the DWP must foot; because as the hon. Member for Aberdeen South said, the best way to bring welfare bills down is for fewer people to be out of work.

The deficit that the new Government inherited requires economies. I know that the Opposition would like the running up of the deficit to be yesterday’s story, and the debate to move on to the cuts and how terrible they are; but they are not different stories. They are two sides of the same coin. If the Opposition do not like the cuts that must be made, fine, but they should tell us the alternative—not “Oh, maybe we could do it a little more slowly, or the bankers could pay a bit more” or talk of 10 or 20%. Let us see the 100%. Where are their £44 billion of cuts?

That is the last party political thing I intend to say. From now on I want to strike a more consensual tone. There are four key issues on which the Conservatives and Liberals in the coalition, and Labour—or at least new Labour—find considerable common cause. First, with an ageing population, and relatively low levels of retirement savings, too many citizens in our country have been facing old age without the security that they should be able to look forward to. Secondly, certain working age benefits have gone out of control—particularly housing benefit, the cost of which has risen from £14 billion to £21 billion in a decade.

Thirdly, a lazy approach from the state has abandoned too many people, who get reclassified as being unable to work and therefore—coincidentally, of course—are removed from the headline unemployment statistics, leaving them without practical help, support or encouragement.

Finally in my list of four factors, as a nation we have allowed a benefits system to build up that overall simply does not do enough to incentivise work. Along with other factors, that leads to pockets of multigenerational unemployment and homes where children grow up never seeing an adult go out to do a day’s work. Too easily, of course, those children can then slip into what we used to call “youth unemployment” but now, thanks to another fantastic rebranding exercise, they are called NEETS—those “not in education, employment or training”.

All of that is happening at a time when policy makers and business men bemoan their inability to find people to fill their existing vacancies, not only at the highly skilled end but at the low-skilled end. Instead, they have been looking and continue to look for people from abroad to fill those vacancies.

These issues are truly pressing because they are long-term structural issues which are quite apart from the structural deficit, although they have of course contributed to that deficit.

I am pleased to say that there is less of a partisan divide on these issues than one might imagine from reading The Guardian’s Society section since May. As I said earlier, I want to strike a bipartisan note in this debate and I am sure that Opposition Members will want to follow that approach. I know that they will want to join me in paying tribute to the spiritual fathers of these welfare reforms. Of course, I refer to the Secretary of State for Work and Pensions, my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), alongside the Opposition Members’ own erstwhile colleagues, Mr John Hutton and Mr James Purnell.

On pensions, it was the Turner report, which was commissioned by Labour, that was indeed the turning point in the debate. Automatic enrolment, increasing the rate of growth of the state pension and raising the retirement age are all changes whose origins came on the watch of the last Government and, of course, enjoyed support across the House. The new Government are moving faster and I welcome that.

Then there is the case of the retirement age. Sadly but necessarily, given that there is still increasing life expectancy—to be clear, increasing life expectancy is itself a good thing, of course—and the triple hurdle for the formula for the uprating of the state pension, the coalition is now finally starting us on what will be a long road to providing a basic state pension, with less reliance on means-testing.

On housing benefit, the 2010 Labour manifesto read:

“Housing benefit will be reformed so we do not subsidise people to live in private sector accommodation on rents that working families could not afford.”

As I do not think that I can improve on that sentence, I will not try to do so.

Of course, there will be some hard cases and that fact is recognised; indeed, it would be foolish to pretend otherwise. No one welcomes the difficult situations that some families will find themselves in, and I am also glad the Government have made extra money available in discretionary housing payments.

However, we must also recognise—even if the most extreme projections about what will happen fail to materialise —that with a change to housing benefit as extensive as this one, all the economic logic suggests that there will be downward pressure on rents.

[Alison Seabeck]

I just want to know exactly where the hon. Gentleman gets his evidence from, because the National Landlords Association, residential landlords and London Councils, which is not a Labour body, all say that there is no evidence of such a downward pressure, partly because the private rented sector is already being squeezed on account of would-be young home owners who would like to own homes but who cannot afford them moving into that sector. There is not the evidence that the Government would hope for.

[Damian Hinds]

I am grateful to the hon. Lady for that intervention and for the opportunity to comment on it. I did not talk about evidence from various bodies or organisations. I said that “all the economic logic” suggests that with a change this extensive, there will be downward pressure on rents—it does suggest that.

[Mr Heald]

According to evidence to the Work and Pensions Committee from the landlords’ bodies about 30% of landlords would reduce their rents; London Councils said that about 40% of landlords would reduce rents, and, in discussions in the Select Committee, members of the Committee were doing their arithmetic on the basis that 50% of landlords would reduce rents. So there is a body of evidence that a very significant number of landlords will negotiate lower rents.

[Damian Hinds]

I am grateful to my hon. Friend for clarifying that matter for us.

I want to turn to the coalition’s reforms of incapacity benefit. Of course, the genesis of those reforms also began in the last Government’s time in office, when Tony Blair managed to tempt Sir David Freud out of retirement and Sir David found a kindred spirit in James Purnell. In May 2009, Mr Purnell said:

“It is very important tor us to provide people with help to get back into work, and to improve the incentives for getting back into work. That is why we are re-testing everybody on incapacity benefit to make sure that they are on the right benefit. That is why we have tightened the gateway, to make sure that only the right people get on to the benefit, and that is why we will require everybody for whom it is appropriate to have back-to-work support.”—[Official Report, 11 May 2009; Vol. 492, c. 531.]

Again, I am not sure that that description of what needs to be done can be bettered and so, once again, I will not try to do so.

It is right that no targets have been set for the numbers of people who will go into the three different groups, because the programme has to be about identifying what is right for each individual, whether that is helping them directly into work, helping them to prepare for the world of work or offering them long-term and unconditional financial support at a rate that will be, of course, higher than the one that pertains today.

Clearly, there are some issues related to the early workings of the work capability assessment, as has been outlined by my hon. Friend the Member for North East Hertfordshire (Mr. Heald) and others, including issues about intermittent conditions and certain mental health conditions. Of course, it is good that there was a pilot phase, so that these issues can be studied and tackled. I know that Ministers are conscious of the need to tackle them and I welcome the Harrington review, which was referred to by my hon. Friend the Member for Stroud (Neil Carmichael), and the consultation with mental health charities.

The biggest issue of all is ensuring that work pays for everybody. It is not a new issue; it has been around for an awful long time. There is a difficult trade-off between, on the one hand, having a decent living standard for those who cannot find work and, on the other, incentives for those who can find work, and if there were a “third hand” it would be about avoiding the sort of sky-high marginal withdrawal rates, which are effectively tax rates, that create cliff-edges in terms of certain numbers of hours of work in a week or that completely discourage people from taking on some form of work. Of course, we must also try to keep the whole system simple and low-cost to administer. So it is an enormous challenge.

Twenty years ago, when I was an undergraduate and we were talking about these issues, people used to talk about the 97% effective marginal tax rates at their peak and sometimes, in extreme cases, rates that were effectively more than 100%, once the additional costs of going to work and so on had been factored in. Of course, that situation existed under a Conservative Government, so I am not making a party political point. However, not enough has changed since then.

The problem is that if we want to change that state of affairs, mathematically we either have to reduce benefits to levels that just would not be acceptable or withdraw benefits more slowly as people’s incomes rise. That second route is, of course, much more attractive but it is also extremely expensive, at least in the short term. So I am delighted that the Government, despite what has been a very difficult trade-off for them over the summer, have managed to find the £2 billion that is necessary to fund the universal credit. As hon. Members know, that new integrated benefit seeks to simplify the system, improve incentives, smooth transitions into work, reduce in-work poverty and cut back on fraud and error. I believe that that £2 billion is money very well spent.

Taken together, the reforms to incapacity arrangements and the plans to make work pay are, of course, complemented by the Work programme, which was also referred to by my hon. Friend the Member for North East Hertfordshire. That programme will treat everyone as an individual in a very practical way, while continuing the “Purnellian” principle of using non-state institutions to help people into the world of work and indeed into lasting jobs.

Collectively these measures, enabled by the comprehensive spending review and some of the difficult trade-offs that have to be made, can have an enormous impact on the DWP. That is because, as we have said already, the single biggest variable factor is the number of people who are in work compared with the number of people who are not in work. With these measures, we can encourage and help many more of our fellow citizens into work and in so doing we can create a more fulfilling future for them, a more cohesive future for our society and a much more sustainable future for our economy.

--- Later in debate ---

[Margaret Curran (Glasgow East) (Lab)]

Like the hon. Member for Stroud (Neil Carmichael), I am a new Member and might struggle with constituency names, so any help will be gratefully received—please feel free to help me out.

I congratulate the Backbench Business Committee on securing this terribly important debate about the impact of the comprehensive spending review on the Department for Work and Pensions. Of course, the changes announced will shape the levels of poverty and employment in this country for years to come and it is right that we have the opportunity today to examine them in detail and to understand the impact that they will have on our welfare system and, as has been said, on communities throughout the country.

This has been an interesting debate and later I will rise to the challenge of some of the political temptations put before me, but first I want to say that welfare reform and the work undertaken in this area in the DWP has been centre-stage in the work of the new Government, so the debate on how we reform welfare and get more people into work will continue for the immediate and foreseeable future. I am sure that we shall have many discussions. Of course, that is as it should be, as the proposals announced so far will impact on the lives of so many people in great need. What may appear to be a technical point in our consideration represents in many cases a major shift in the living circumstances of a family or an individual. That should always be at the forefront of our minds and any of our discussions.

Whatever our disagreements—I will come to them—there are some starting points, as the hon. Member for Stroud said, on which we can agree. On behalf of the Opposition, I make that clear. It has been said before that we are prepared to work alongside the Government to consider the challenge of welfare reform, because we do need to reform the welfare state to face the challenges of the 21st century: an ageing population, more people in need of care and the need for a stronger work force, less dependent on benefits. As the hon. Member for Bermondsey and Old Southwark (Simon Hughes) said, if we could create a more equal society, of course we would all be up for that.

The Secretary of State has made strong commitments and promised to deliver a welfare system that will make work pay. He has acknowledged, in doing so, that he is continuing the work of the previous, Labour Government—some hon. Members referred to that—particularly by moving people from incapacity benefit to the new employment and support allowance, but there have been many other dimensions to that, too. As I understand it, there is a history of our working together when we have recognised challenges in the past. I think that the previous Government worked closely with the Opposition on pensions reform. I hope we can build on that.

The Secretary of State is familiar with Easterhouse, in my constituency. I think that visits to that area persuaded him of the need for reform. He is on record as saying that his aim in the reform is to improve the lives of others and not to reduce standards of living—that test will be centre stage as we progress with our discussions.

I pay tribute to my hon. Friend the Member for Aberdeen South (Miss Begg), the distinguished Chair of the Select Committee. I have known my hon. Friend for many years and pay tribute to her authority in this field and the respect that she commands. In her contribution, she gave a strategic outline of some of the challenges that we are facing. Unfortunately, I cannot cover all the points made in the debate, but I will refer to a few of them in my brief contribution.

One point highlighted by my hon. Friend was the depth of concern about the change in the rating, which will take place when we shift from RPI to CPI. I listened to the arguments in favour, but it is incumbent on us to understand the real impact that the change will have on the standards of living of the people that we seem to care most about. I am not terribly sure that the impact is appreciated yet, but the shift does not rest easily with a commitment to let no one’s living standards change as a result of the acts of the Government and to protect everyone. If we look at the evidence from a number of organisations, they would say, “Actually, this reflects an effective and a real cut in benefits.”

Not surprisingly, the universal credit has been mentioned by just about everyone contributing to the debate—my hon. Friend the Member for Stretford and Urmston (Kate Green) made some telling reflections. It is important that we recognise that of course there is a move to support universal credit and to simplify the benefits system, and we would support anything possible that would make work pay and encourage and incentivise people to work. However, the theme that seems to be emerging in the debate is that, while the Government genuinely seem to be driving reform in that way—I have to say that of the Minister and her colleagues—that is undercut by their other actions. I ask the Government to think about that seriously.

The hon. Member for Bermondsey and Old Southwark mentioned the changes in the council tax benefit—apart from reducing it by 10%, which alone could cause some difficulty, the very nature of devolving its decision making immediately cuts across the drive to simplicity. The change will have an impact on housing benefit, income support and jobseeker’s allowance. I am told by those involved that it is, by all definitions, very complicated—on the one hand, we have a drive to simplicity, on the other an action that complicates it.

Not surprisingly, housing benefit has concentrated a lot of minds this afternoon. There are many detailed discussions to be had. My hon. Friend the Member for Stretford and Urmston, with a notable and highly acclaimed record on child poverty, as she amply demonstrated this afternoon, spoke about some of those complications, as did my hon. Friend the Member for Plymouth, Moor View (Alison Seabeck), when she was present.

We can have our debates about the impact on different parts of the country—I willingly acknowledge that the impact might be slightly different in my part of the country from what it would be in London—but we have to listen to the outside organisations, such as Shelter and Crisis, which are telling us that we need to think about it in great depth. Perhaps most tellingly, they are asking, “Do we need to rush at this?” There might be a principle that we need to discuss and grapple with, but let us not do it with undue haste—there might be implications that the Government do not intend. Thinking about that is important.

I wish to highlight one issue that has particular resonance for me and my constituency, to which reference has been made—the intention to reduce housing benefit by 10% for those on jobseeker’s allowance for more than one year. The Government need to acknowledge that this is one of the most contentious proposals, and one that is causing deep concern throughout the country.

Anyone with a knowledge of Easterhouse or an understanding of the regeneration within such communities will realise that housing associations are often the drivers of change. If we reduce the benefit for many people who, genuinely, cannot find work because it is not readily available, we give the housing agencies two choices—to give just one example of the problems with the proposal. Either the housing agencies can evict people, which would cause enormous difficulties and create cost in other ways, or their business plans are undercut because they cannot reap the necessary benefits, so undermining our efforts.

That illustrates, again, that what I think are genuine attempts by the Government to reform welfare are being undercut by other actions—actions by the Treasury, undercutting actions by the DWP.

I do not have much time to go into the reform of disability benefits, but I make one request of the Minister. She has indicated that she will work with disability organisations on the disability living allowance and other changes. Will she acknowledge that it is vital that we engage with the disability movement in tackling any such changes?

I want to refer to child poverty, which was mentioned by a number of hon. Members in the debate. I am so tempted to roll up my sleeves and fight for the record of the previous Labour Government, but we could continue like that for some time. Let me just say that, according to the statistics and briefings mentioned, from Barnardo’s and Save the Children, the Labour Government lifted 600,000 children out of relative poverty and made substantial progress on absolute poverty. Those organisations recognised that as a substantial achievement, which made significant progress in improving the lives of so many people.

There are real challenges in what the Government are doing across the board to tackle child poverty—that was well articulated in the debate—in particular when looking at the child care element of the working tax credit, which will now only cover 70% of child care costs rather than the previous 80%. We know that child care presents an important barrier to people returning to work, so the change again seems to contradict efforts to reform and improve the move to get people back to work.

The Institute for Fiscal Studies report, produced after the Budget, outlined how many of the measures disproportionately affected the poorest families. A number of organisations are now saying to the Government, “When you look at the impact you are having on the poorest families and at the timing of when some of your commitments will come through, particularly two, three or four years down the line, how can you possibly say that child poverty figures will be protected?”

Added to that is recent research by the House of Commons Library on the impact of the Budget on women—to which, again, reference has been made. The fact is that the cuts announced in the comprehensive spending review will hit women twice as hard as they hit men. There are big cuts in support paid directly to mothers, including cuts in child care, child benefit and tax credits. Also, the significant cuts to the public sector will, disproportionately, hit women hard—in employment and in the services they need to support families, which are vital in tackling poverty. There is much concern about that.

The Minister has already put on the record that her Department will issue an equality impact assessment of the cuts on women and, indeed, disabled people. Can she indicate when we might get that report?

That brings me to the fundamental concern about the Government’s approach. Not only will they undermine their own efforts to reform welfare, but they will destabilise growth and increase unemployment across the country. The extent of the cuts to the welfare budget announced in the June Budget and in last month’s CSR seems to reflect the political ambitions of the Chancellor rather more than those of the Secretary of State for Work and Pensions. In both those announcements, we have heard too much about cuts and not enough about reform—I acknowledge that reform was the tenor of the debate today, but it is not always like that with the Government.

I have said that we will work with the Government as they intend to progress with reform, but there is a fundamental flaw in their approach so far. Their welfare reform is based on the premise that it is best to get people back to work and that work pays—so far, so good. However, it falls down with what happens when there is no work to go to.

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 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.

Oral Answers to Questions

Damian Hinds Excerpts

Monday 19th July 2010 Commons Chamber

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

9. What steps he is taking to assist disabled people to work.

[Damian Hinds (East Hampshire) (Con)]

12. What steps he is taking to assist disabled people to work.

[The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)]

Nearly half of all disabled people are already in employment. However, many more could work with the right support, and want to do so. We have announced plans to implement the Work programme, which will provide personalised help to those and other customers to return to work, and we will also ensure that there is a specialist package of provision to help the most severely disabled people.

[Maria Miller]

The work capability assessment was, of course, developed in consultation with medical experts and disability specialist groups. There will be an annual review to ensure that any problems with the assessment are dealt with, and there has already been a Department-led review dealing with some of the issues that my hon. Friend raises in connection with people with mental health problems. Modifications will be made, especially by expanding the support group to cover people with severe disability issues, to ensure that they are not inappropriately put into groups of activity.

[Damian Hinds]

My hon. Friend will be aware of the outstanding work done by Treloar college in my constituency in assisting students with very severe disabilities into work through their world of work and job coaching programmes. What can the Government do to encourage more firms to partner the college in such programmes?

[Maria Miller]

I join my hon. Friend in paying tribute to the staff who work at Treloar college and to the many volunteers throughout Hampshire—including in my constituency—who fundraise to help to support the excellent work that they do. It is an important independent specialist provider which supports people with some of the most complex and profound disabilities. Other providers can learn from Treloar’s how to work in partnership with local employers to provide youngsters with severe disabilities with skills that make them employable so that they can get into work.

Housing Benefit

Damian Hinds Excerpts

Tuesday 13th July 2010 Westminster Hall

[Damian Hinds (East Hampshire) (Con)]

Most of us agree with the hon. Member for Hackney South and Shoreditch (Meg Hillier) that there will be difficulties for some families following the changes. It would be faintly ridiculous to have a debate in which people on one side were saying that taking money from a benefit would have an impact, but people on the other side were saying that it would not. Of course there will be an impact, and not just in London, although London is particularly affected. Many other areas will be affected, including my constituency of East Hampshire.

Most of us wish that the changes were not necessary. We wish that we were not where we are—but we are. A budget of £21 billion is bound to be examined. The question is how we proceed, and the trick is not just to cut but to try to reform and redesign in a way that smoothes off the roughest edges, that does not introduce perverse incentives, and that attempts to keep rents down. The right hon. Member for Barking (Margaret Hodge) shouted out that saying that this measure will do that is an assertion, not a fact, but it is also a basic economic law. If we take a large part of the macro-market—it does not have to be the majority of the market or all of it—and impose a limit, that will have an impact on the overall price.

The point that I really want to make is somewhat broader, however. I realise that Opposition Members would like the structural deficit that they ran up to be last week’s or last month’s debate, and now want to move on to a debate about cuts and pretend that it is a different topic altogether. In the first debate, they say, “Oh yes, we did go a little bit far in running up debts, but the real problem was caused by the bankers and the global recession,” but that glosses over the fact that we were so economically ill prepared for what came. They deliberately confuse the cyclical deficit with the structural deficit and deliberately confuse the annual deficit with the accumulated debt, thus trying to discombobulate the public. By the way, they say that they had a plan to deal with the situation, but they only ever talk about the total, and never about the individual line items that make up that total.

In the second debate, Opposition Members move on to a discussion about cuts, and for every individual line item that the present Government have to cut, they find fault with that particular approach without offering a realistic alternative. We cannot have those two separate debates. They are not separate debates, because the deficit and how it is dealt with are two sides of the same coin.

Let us be clear that with a deficit of such a size, we cannot talk only about cutting unproductive programmes and waste. We will also have to cut things that we want but simply cannot afford. If people are to be able to do the things that they want to do, they have to do the things that they must do well and responsibly, yet by running up the deficit, that is precisely what the previous Government did not do.

Many hon. Members who supported the previous Government want to see the debate in terms of so-called ideological cuts. I have seen how eager they are to suggest that there is some zeal on the part of Government Members to make such cuts because we have a strange, ill-defined antipathy towards helping people. Of course, that is nonsense. The reality is that we are trying urgently to save money—money that we do not have and never had—in the best way possible.

This is rightly a sensitive subject. As I said at the start of my speech, there will be hardship and hard cases as a result of the changes, which is why I was encouraged to learn of the increase in the discretionary housing benefit fund. I hope that that will help to mitigate some of the effects. Overall, however, given the fiscal situation that the Government have been bequeathed, I think that the changes are right and that they strike about the right balance. They cannot be considered in isolation. We must remember that people throughout society are being asked—have to be asked—to make sacrifices. I think that the changes will be seen as fair. My question is this: what representations has the Minister received from Opposition Members on how else to make cuts of a similar overall quantum in the housing benefit budget?

[Several hon. Members]

rose—