Welfare Reform Bill
Malcolm Wicks Excerpts(12 years, 3 months ago)
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Maria Miller
As Mr Speaker has indicated, Lords amendments 1, 2, 3, 4, 26 and 73 impinge on the financial privileges of the House of Commons. In disagreeing to the amendments, I will ask the Reasons Committee to ascribe financial privilege as the reason to the House of Lords. Notwithstanding that, however, the House of Commons has an opportunity to debate the substance of the amendments, and to provide the Government’s full rationale for rejecting them,
Lords amendment 1 concerns elements for disabled children. Let us be clear about the impact of the amendment. It would force the Government to reduce support for severely disabled children and, moreover, would go against our commitment to increase support for such children to £77. I believe that our original policy, as agreed in this House, is the right one, because it targets support for disabled people not on age but on need, and removes the cliff edge of financial support that is currently faced by young adults and their families.
In these difficult times, we must make tough choices about where to target our limited resources. The choice that the Government have made is to protect the money that is available to support disabled people in universal credit, and to use it more effectively to ensure that the people who face the biggest challenge are given more support. I repeat that all the money is recycled to support disabled people. What we are doing is thinking about the whole life of an individual, and removing the current artificial division between childhood and adulthood. I hope that that reassures my right hon. Friend the Member for Wokingham (Mr Redwood), who spoke earlier about the importance of supporting disabled people. We have ensured that we can protect the money that is so important to them.
As we have reiterated throughout our debates on the Bill, we are overhauling existing support. It does not really make sense to look at any one aspect of universal credit in isolation: it provides families with a new package of support to meet a range of needs, and for that reason we need to consider the overall impact of the offer rather than concentrating on any of its individual components.
A parent with a disabled child and who is working 20 hours a week on the minimum wage is likely to be £73 better off in work under universal credit, rather than only £13 better off under tax credits. About 30,000 more families with a disabled child are in work than are out of work, so it is right for us to target support in a way that helps working families. An out-of-work family with a disabled child can receive just over £8,000 a year in benefits for their child once universal credit has been introduced. That compares with just over £4,000 for an out-of-work family with a non-disabled child, and about £1,000 for a family who only receive child benefit. Our impact assessments and modelling demonstrate that, overall, families are more likely to be better off on universal credit, and that there will be no significant change for disabled children living in poverty.
As all Members know, increasing spending is not an option. We simply cannot maintain the existing rates for disabled children if we are to increase the rates for severely disabled adults. That would cost £200 million, which we simply cannot afford. This is a critical point. If the amendment were agreed to, it would not be possible to increase the addition for the most severely disabled people to £77. Let us be clear: the decision to be made is whether we should maintain rates for moderately disabled children at the expense of raising the limits for severely disabled people. We strongly believe that the fairest approach is to align support between children and adults. We take an holistic view of an individual’s life. In summary, what is fair and right is to simplify benefits within universal credit, and to focus limited resources on the basis of need, not age.
Let me now turn to the amendments that deal with child maintenance:
“we should use every lever at our disposal to make reaching a voluntary agreement more attractive than coming into the Child-Maintenance Enforcement Commission.”
Those are not my words, but those of the former Secretary of State for Work and Pensions, now Lord, Hutton, to a Select Committee of this House in 2006.
Let me make four brief points to put the debate in context. Conflict when families break down is bad for children, as we all know from our constituency casework, and we all know that all too often that conflict can be embedded and entrenched as a result of problems to do with the Child Support Agency.
The role of the Child Maintenance and Enforcement Commission has changed fundamentally. It is no longer about recovering, pound for pound, the benefits payments made to lone parents. Instead we have a benefits system that gives more than £6.5 billion in welfare payments directly to lone parents, both those in work and those not in work. In the past, change has been piecemeal. That has created the current failing system, which costs taxpayers £500 million every year; has nil-assessed more than 250,000 people, some of whom really should be receiving support; and has 100,000 clerical cases. It would not be putting it too strongly to say that we have inherited a real mess from the Labour party. The reform that we are undertaking is long overdue.
My concern is that the amendment from the other place is not about improving the situation; if anything, it would make the situation worse. It is about attempting to divide parents into those who deserve to be charged, and those who do not. Our reforms are about creating a behavioural change for the benefit of children, and about helping parents to work together. The amendment from the other place would make that approach unworkable.
Malcolm Wicks (Croydon North) (Lab)
I have been listening carefully to what the Minister has to say. This is complex territory that has bewildered previous Conservative Governments and, frankly, the Labour Government. Will she tell the House how many parents with care do not receive any child maintenance from the other party?
Maria Miller
I can tell the right hon. Gentleman how many children do not receive any maintenance from the other party. Given that we spend £500 million a year on a child maintenance system, I think that it will shock the House to learn that for half of children living in separated families, there is no support in place. It is clear for everybody to see that the present system simply does not work, and the reason why it does not work is that it does not support families in coming together.
Malcolm Wicks
It is a pleasure to follow the hon. Member for Brigg and Goole (Andrew Percy), and I shall echo some of his remarks on the child maintenance charge.
I have been privileged to be a Member for 20 years, and I have noted that the issue of child maintenance and child support has been a running controversy and a running sore through Parliament and Government during that whole period. I shall briefly remind the House of the background. While there have, of course, always been children in this and similar countries brought up by only one parent—war widows after the first world war would be an obvious example—it is nevertheless true that in the post-war period there has been a kind of social revolution whereby very significant numbers of children spend either a proportion or all of their childhoods living—usually with their mum but sometimes, in a minority of cases, with their father—in so-called one-parent families. That is about divorce, which remains at a high level; it is about separation—and cohabitation is more likely to lead to separation than marriage; it is about the fact that many children are born “out of wedlock”, to use a quaint term, and live with a single mother.
This has been a major contributory cause to what we call child poverty, which interfaces with economic insecurity. I think that Parliaments and Governments have found it more difficult to grapple with and honestly discuss family insecurity than economic insecurity caused by low wages or unemployment. As I say, Governments have found it difficult. The old maintenance system, which was run by the courts, did not work: it delivered low levels of maintenance or no maintenance to many mothers and children.
The previous Conservative Government established the Child Support Agency—I think they were right to do so—but many former Conservative Ministers bear the scars of trying to make it work. They did not make it work effectively for all children. That was not because of incompetence—there were computer problems and the rest—but because this is one of the most difficult areas of government. It is the state—perfectly properly, in my judgment—trying to mediate during the pain, anger and passions of family breakdown, when issues of access and custody are also present. Although the old Child Support Agency had some successes, it never succeeded in getting maintenance from those fathers—yes, I know, sometimes mothers, but I am going to talk about fathers—who absolutely refused to fulfil their parental obligation and support their own children.
The last Labour Government tried to improve the situation and they might have done to some extent, but if we are honest about this—I am not normally one who tries to take the politics out of politics; otherwise I would have to join the Liberal Democrat party—some humility is justified in this case. For getting on for 20 years, Governments of left and right have failed to tackle this issue adequately. We really need to point again at the sheer scandal of there being too many parents out there who refuse to support their own children financially. That is the reality.
When I intervened on the Minister—it was good of her to give me the statistics—she said that among these families half, fully half, are not receiving child maintenance. What does that mean? It means either that the children are living in relative poverty and/or that other mums and dads in the community, whom we call taxpayers, are being asked in difficult economic circumstances to support not only their own children but other people’s children as well. What I am leading up to is to ask whether the idea of a charge to be able to use the system helps or hinders that process.
I do not think I am against a charge per se. Given that taxpayers have a stake in this, as well as, usually, the mother or “the parent with care” to use the awful jargon, and the child—they are the parties that have an interest in this—I am not against the taxpayer in a sense benefiting through proper payment of maintenance. We could discuss how that might come about; but if there is to be a charge, as was argued by my right hon. Friend the Member for Birkenhead (Mr Field), why should it not be levied when the flows of maintenance are coming to the mother and benefiting the child? Why should a fee be charged immediately rather than later in the process? I think that many Members would agree with that, but perhaps the Minister would like to comment.
Maria Miller
I thank the right hon. Gentleman for allowing me to answer his question. Fees and charges have been inherent in the child maintenance system from the start, since 1991. As he knows, his own party advocated the use of fees when it was in government, as indeed did Sir David Henshaw. Why? Because charging fees is a way of trying to get people to take responsibility. If that is done up front before an individual gets into the system, we are more likely to effect the behavioural change that I think is so important.
Malcolm Wicks
In general, it is the mothers of Britain—sometimes it is the fathers with care, but it is generally the mothers—who have taken on huge responsibilities. It is the parent who does not pay who is the irresponsible party, and who reneges on his duty to care for his own children. I want a system that can be tough-minded about the fathers who refuse to pay. They are often self-employed, and have become deliberately self-employed. The mothers often know where they live. A mother will have heard about the new person in the father’s life, about the fancy car outside the house, about the foreign holidays—yet the system has failed to make those fathers pay. Let me put the question to the Minister again. Will a charge help in those circumstances?
Many mums will know that the Child Support Agency, or whatever we choose to call it, does not work. We want to make it work, but people say, “My friends didn’t get anywhere.” Only recently I discussed with the Secretary of State the case of one of my constituents who, throughout the lifetime of four children, never received any maintenance. That person thinks that the system does not work. I want it to work, but if some mothers are deterred from using the system, it will be a failure.
This should not be a big party issue, and I hope that the Department will reflect again on when the charge might be levied.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
I support my hon. Friend the Minister on the issue of the Child Support Agency, but I want to make a brief observation on the housing benefit issue. My constituency might be wholly different from those of the Members who have spoke so far, but the overwhelming majority of the cases I deal with at my surgery involve people who want additional rooms because they have growing families or families who are becoming older. If this charge causes some people to want to downsize, that will help to strike a balance, but at present I do not encounter people who want to downsize.
Pensions Bill [Lords]
Malcolm Wicks Excerpts(12 years, 7 months ago)
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Jenny Willott
The hon. Gentleman tempts me into an area into which I will not follow him. That is an issue for another day, although my position is probably not too dissimilar from his.
Given the financial circumstances and the constraints that the Government face, the deal proposed today is a good one. The Government’s amendments substantially mitigate the worst problems, and we should bear it in mind that £1 billion is a huge amount of money.
I hope the Minister can now concentrate on introducing a flat-rate pension for those whose retirement age is increased. That would make a massive difference to the amount that people get from their basic state pension when they retire, and it will benefit women in particular. Will he confirm that he still plans to introduce a flat-rate pension for 2016, so that women who are affected by the state pension age increase that we are discussing will be the first, or among the first, beneficiaries? In that way, although they retire later, they will do so on a significantly enhanced state pension, which would mitigate some of the financial implications of the Bill.
I commend the Minister and his colleagues in the Department for Work and Pensions for their efforts, and for their achievement of parting £1 billion from the Treasury to make the changes better, so that the effects are mitigated for those who are hardest hit. I hope that he continues to work to improve retirement income for both men and women.
Malcolm Wicks (Croydon North) (Lab)
It is a pleasure to follow the hon. Member for Cardiff Central (Jenny Willott). I may touch on some of her themes as I make progress.
The Minister will forgive me for repeating some of the issues that I have raised before, not least in Committee. My main point is this: pension policy in Britain has always been at its best when it goes with the grain of how our society works and of how our people work and live. It is also at its best when we have the courage for long-term planning, with time scales and periods of notice that enable men and women to plan their lives and their retirement properly.
This Parliament first legislated for old age pensions more than 100 years ago, because it started to understand the extraordinary fact that, for the first time in broad numbers, working people were outliving their working lives: hence the need for an income in old age. We then had the great national insurance reforms, which the Liberal party should have much credit for introducing, including particularly those in the great report by the Liberal reformer, William Beveridge.
Malcolm Wicks
Not at the moment, because I want to set out the three assumptions before I deal with the hon. Gentleman’s false—or possibly accurate—assumptions.
The second assumption is that British people live and work in similar ways. It is assumed that we start work and retire at more or less the same. The third assumption is that if we increase—as it appears we will—the pension age and the age of retirement, work will somehow be available. If people do not retire until 66 or 67, it is suggested that this Government’s extraordinarily brilliant economic and employment policies will deliver labour for the people. It is those three assumptions that I wish to question.
Stephen Metcalfe
Longevity and extended life expectancy are key to this argument. You point out that longevity is not necessarily equally spread across society. Are you saying that certain sectors of society have benefited from improved longevity more than others, and that for some, life expectancy has not risen at all?
Malcolm Wicks
Certainly for some people it has not, but broadly speaking it is my understanding that it has risen for all socio-economic groups. My assumption is that it will continue to increase, but it is the differences by social class that the hon. Gentleman’s question enables me to tease out—
Malcolm Wicks
With respect, I think that what I have to say will be helpful to the hon. Gentleman, and I am sure that he will tell me where I get it wrong, if I do.
I want to analyse mortality by social class. I shall talk about men in particular, although there is a class difference among women too. People in social class 7 tend to be in routine occupations. For example, they might be labourers, van drivers, packers or cleaners; many women would be cleaners. We hear a lot about longevity and how we will all live to 100: the Minister keeps telling us—he issues a press notice every few months—that one fifth or one sixth of us will live to 100. It might surprise the House, therefore, that 19%—almost one fifth—of men from social class 7 die before the age of 65. Almost one fifth of these hard-working working-class people in tough jobs—no doubt they have had tough lives too—die before 65.
I put that point to the Minister and the House because, before glibly raising the pension age to 66 or 67, we need to recognise that many of our fellow citizens do not live to 65. Furthermore, 10% of women in social class 7 die before the age of 60, while among the professional classes, that figure is only 4%. I should have said earlier that, in contrast to the 19% figure, the proportion of men in the professional classes who die before the age of 65 is 7%. So there is a huge social class differential, and if we are not careful—we need to do the arithmetic very carefully—and if we glibly increase the pension age, we might rule out more and more people from ever getting their old age pension.
Steve Webb
The right hon. Gentleman raises some important issues. I do not think that he was Pensions Minister at the time, but he will be aware that it was the Pensions Act 2007 that ultimately raised the state pension age to 68. Why did he support that, given the points that he is making now?
Malcolm Wicks
I recognised the logic of demography and longevity and the need to raise pension ages, but since ceasing to be a Minister of any kind, I have had more opportunity to think about this and to study it—[Laughter.] The Minister might try thinking independently. It is not a bad idea. I would not giggle at the idea that we rethink our positions from time to time. I have rethought my position on this, not least because the Government are going helter-skelter towards raising the pension age in ways that the Labour Government never foresaw.
Stephen Metcalfe
I am grateful to you for giving way for a second time. You said that 19% of men in social class 7 die before they reach 65. Of those, how many were in work at the time? Is this a social problem relating to health, or is it caused by the nature of the work that they have done? I ask because I am concerned that we are saying that we cannot raise the pension age because of this particular group, when in fact everyone’s life expectancy, regardless of how tough a life you have, has increased over the past 20 or 50 years.
Madam Deputy Speaker (Dawn Primarolo)
Order. May I help the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe)? I follow closely the question of women’s pension age and longevity, but he should not be addressing me—which is what he is doing when he says “you”—he should be addressing the rest of the Members in the Chamber. He has used that term several times now, and I gently ask him to observe the convention.
Malcolm Wicks
I cannot tell the hon. Gentleman how many of those people were still working when they died—although I want to say something later about the circumstances of that group of people.
Richard Graham
The right hon. Gentleman has much experience in these matters. However, may I put it to him that the reason why he voted in 2007 for the increase in the pension age was simply that the statistics to which he referred had changed so much? In 1911, when the first pensions were introduced—to be paid at 65—the average life expectancy of a male in the United Kingdom was 66. He made the point that some people today still die before the age of 65. Back in 1911, the vast majority of males died before that age. Life expectancy today is now 87 for the average male. Does he not agree that the changes in the state pension age reflect a huge change in longevity, and that the pension age has actually risen very slowly?
Malcolm Wicks
I am bound to say that life expectancy is not 87. On average, a girl born in the UK will live to 82 and a boy to 77. Obviously, however, once they have survived to the age of 65 many people are likely to live into their 80s, so I understand the broad point being made.
I shall conclude later by talking about a sensitivity that we could introduce into the system that might meet some of those problems, although the Minister has so far resisted it. However, now I want to refer to the association between social class and location, which various colleagues are interested in and knowledgeable about. This is not just about the broad difference between living in Kensington and living in parts of Glasgow; even within many of our big cities there are huge class differences in mortality. Across Sheffield, for example, there is a difference in life expectancy of more than 14 years between different parts of the city, and even in Kensington and Chelsea—the borough with the highest life expectancy—there is a difference of eight years between the most and the least deprived wards—which, for those of us who know Kensington, is not so surprising. Those differences and unfairnesses are reflected in terms of where people live in our cities.
Before I mention the idea that I have been trying to persuade the Minister to accept, I want to apply some pressure elsewhere: where will the jobs come from? We are living through a period of rising unemployment, and many people, including graduates with good degrees, in their 20s, 30s and 40s, cannot get jobs. Are we confident that if we make these accelerated changes—as the Minister knows, the acceleration is the difference between what the Labour Government did and what the coalition Government are doing—the work will be available?
Now 39% of 62-year-old men and 52% of 64-year-old men are not working, which means that huge proportions of men approaching what is meant to be their retirement are effectively retired from the labour market already. Furthermore, 36% of 58-year-old women are not working. I fear that we will be extending a kind of benefit twilight zone, in which people who are ineligible for their state pension—because we are raising the pension age—will jog along on incapacity or other benefits, with no one in the jobcentre pretending that those folks will get work—even the Minister will not be able to pretend that they will—and a huge army of people living in a state of desperation in that twilight zone.
Jim Shannon (Strangford) (DUP)
I am sure that the right hon. Gentleman will share our concerns about last week’s unemployment figures, which showed an increase among young people and women. Is there not a concern that unemployment levels for women are rising, and does that concern not need to be expressed tonight in the House?
Malcolm Wicks
That is the concern. Ironically, we are having this debate while the spectre of mass unemployment—as Liberals will remember, William Beveridge called it the giant evil of idleness—rears its ugly head, yet we are accelerating the increase in the age at which people will get their retirement pension.
Hywel Williams
The geographical variation is extremely gross if one adds in people who are economically inactive. The proportion of people who are economically inactive varies from place to place. Merthyr Tydfil is an obvious example in Wales. Last time I looked, the constituency of Witney had three economically inactive people searching for each job, while in the Rhondda that number was 154. That is a gross variation, and is not something to be disregarded.
Malcolm Wicks
That is an extraordinary variation, and one of the implications is that in order to make good policy and ensure good practice in pensions and other areas, we in this Parliament—including those on the Government Benches—need to have some understanding of how people work, and not just think of our own circumstances.
Sammy Wilson (East Antrim) (DUP)
The right hon. Gentleman is making a powerful point given the current economic circumstances, but we do not know what the employment circumstances will be in 2016 or 2020. Does he agree that the more essential point is that because people see investing in their pensions as a long-term decision, it is the short-term way in which these changes are being introduced that is creating all the unfairness? People had certain expectations and had made contributions, but the benefit from those contributions is now being denied them.
Malcolm Wicks
Yes, hence my introduction, when I argued that pensions policy in this country has always been at its best when it goes with the grain of how people live and makes long-term decisions that individuals can plan around. It is the acceleration of the process that we are now discussing. It is extraordinary that, having taken so much money out of the pensions system, the Conservatives—and, I suppose I have to say, the Liberals—now want credit for putting some of it back. That is a bit of Tory arithmetic that I am not terribly impressed by.
Harriett Baldwin
Does the right hon. Gentleman not welcome, as I do, the additional £25 billion going into the triple lock of the state pension, which, as of today, will protect pensioners from the rise in inflation?
Malcolm Wicks
That issue—how the shift from the retail prices index to the consumer prices index will affect the real value of pensions in future—is a subject for another day, although colleagues might want to touch on it today. My guess is that that shift, which seems quite dry and technical, will become the big pensions swindle of the 21st century. I am therefore not quite as impressed by the triple lock as the loyalist hon. Lady is.
Harriett Baldwin
Does the right hon. Gentleman not acknowledge that whereas his proposal was to uprate the state pension in line with average earnings, which would mean an increase of 1.8%, the triple lock chooses the best of the three? That is an incredibly important reinforcement of our state pension.
Malcolm Wicks
Yes, but I hope that the hon. Lady will consider my point about CPI and RPI, because we are talking about billions of pounds that could be lost to British pensioners when that change is implemented over coming decades.
Let me reach my conclusion. We suffer from over-generalisations in this field. I am fed up with macho commentators, often from the political, professional and business class, who somehow assume that everyone will live to a ripe old age and that those in their 60s will have portfolios full of all sorts of opportunities—a directorship here, writing a book or doing a television programme there. Many people, not least those on the Government Benches, talk about a world of that kind—I do not want to get the hon. Lady over-excited: she has had many chances to respond, but she knows who I am talking about. Given the typical life cycles for the late 20th and early 21st centuries, more and more of our children and grandchildren will effectively not get started in their careers until their early 20s or even their mid-20s. With the rise of university education, the pattern of many people’s working lives will be like that.
However, that pattern is not at all typical of everyone in our society. When we recall the question that the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe) asked about the mortality of those people, let us remember that there are still many working people coming up to retirement who started their working lives as 15 or 16-year-olds. They are the packers, the cleaners, the van drivers, the heavy manual workers and the care workers. By the time they reach retirement they are worn out. They are physically knackered, if I am allowed to use those words. They are tired, they are exhausted and what they need, in an old-fashioned sense, is a rest. They need to retire. They are not people like the hon. Gentleman, who I suspect will still be sprightly in his late 60s and 70s, with his portfolios and all the rest of it; they are physically worn out. They have been working since they were children, and they need a rest.
Stephen Metcalfe
I am grateful to the right hon. Gentleman for giving way. He is making a powerful argument and some interesting points, but they relate to increasing the state pension age, full stop. This is not an argument about the escalation of that process; it is an argument about whether we should change the age at which people can claim their state pensions, which is separate from the debate that we are currently having.
Malcolm Wicks
My argument is that it is wrong to treat someone who starts work at 15 or 16 equally to someone who starts their first proper job at 21 or, with post-graduate qualifications, 23, 24 or 25. People who start earlier have often been in the labour market doing tough manual work—tougher work than any of us have ever done—for 10 more years than the likes of us. My argument is that we should reconstitute our national insurance system to recognise the contributions that they have made, so that anyone in work for, say, 49 years and paying contributions throughout that time should at the very least be able to take not an early pension, but a pension at a more reasonable age. If that brings about a difference between when they take their pension and when their grandchildren who went to university take theirs, that would be fair.
If we do not start to understand some of these social, employment and class sensitivities as we helter-skelter towards higher state pension ages, we will make mistakes and, with great unfairness and injustice, and leave people behind. Many of those people will never get their pensions, because they will be dead before they qualify for them. That is not a sign of a decent British pensions system that understands how our society is evolving.
Pat Glass (North West Durham) (Lab)
I rise to speak on behalf of the hundreds and possibly thousands of women who have contacted me on this matter. I also speak as a woman who is directly and personally affected by the Government’s changes, so I am in a position to tell the Government what is happening to women of a certain age when it comes to pensions.
The women who have contacted me have told me that they expected changes in the pension age. They know that we are all living longer—or rather, that some of us are—that we need to plan for our retirement better and over a longer period, that we need to pay more for our pensions and that there needs to be some equalisation between when men and women access their pensions. They understand and recognise all that. However, it is the speed at which the changes are being implemented that is causing anxiety and fear among women who no longer have time to plan and save for their future.
Malcolm Wicks
I am interested in the arithmetic that the Minister has just presented on how his savings have been adjusted, because some people will not be in work. Given that many people in the year or two before retirement are not in work, will he publish the detailed figures so that the House can scrutinise them?
Steve Webb
As a former Minister, the right hon. Gentleman will know that the figures were published with the Bill in May: they are from the impact assessment.
We have had a number of contributions, and in the short time available to me I shall refer to some of the points that have been made. As I have said, the hon. Member for Cumbernauld stated that his £11 billion should be spent and regarded it as a small sum, because he took the annual equivalent, divided that by the national debt and came up with a small fraction, as though somehow one can make £11 billion disappear. Well, the Labour party did make £11 billion disappear regularly, so he is keeping up that tradition, I suppose.
My hon. Friend the Member for Cardiff Central (Jenny Willott) asked where state pension reform fits into the measures before us, and I am pleased to tell her that we remain entirely committed to such reform, but one irony of all this is that the very group of women whom we are most concerned about, and whom we have heard most about in this debate, are probably the single group who will most benefit from our ideas on state pension reform.
In particular, many women who spent time bringing up children, before either home responsibilities protection came in or the state second pension introduced crediting, would benefit substantially from such reform. So, yes, their pension age will rise, but as our reforms take hold such women will benefit substantially, and my long-term commitment to pensions justice for women will be delivered. That is certainly my goal.
The right hon. Member for Croydon North (Malcolm Wicks) made the point that he has made before about differences in life expectancy and about people who leave school earlier, but his proposal for starting the national insurance clock running at different ages would create different anomalies. He says that somebody who leaves school and goes into a manual job could get their pension earlier, but someone who leaves school and goes to a desk job would also get their pension earlier, and people would then say, “Is that fair?” There are anomalies whichever way we do it.
The right hon. Gentleman did, however, raise the issue of people in the lowest socio-economic groups, but I remind him that over a 20-year period to 2002 men in the routine class, the lowest—as it were—socio-economic group, saw life expectancy at 65 years old increase by 2.5 years, and, given that the Bill increases the state pension age for men by only one year, the improvement in life expectancy for men, even in the group whom he is most concerned about, is running ahead of our proposed increase in the state pension age.
I repeat to the right hon. Gentleman that his points about the differences between groups are an argument for doing nothing. He supported the Pensions Act 2007, which will raise the state pension age to 68 years old, and we need to address health and occupational inequalities, rather than do nothing while we wait. That is the Opposition’s counsel—let us wait another decade—but the trouble is that we have already waited a century to move the state pensions ages, so how long is long enough?
My hon. Friend the Member for Gloucester (Richard Graham) quite properly raised the important issue of notifying people of any changes, so I shall share with the House our plans. I very much welcome the fact that, subject to the House approving the Bill tonight and their lordships approving it in due course, we will be able to write directly to those affected to tell them exactly how they stand, thereby ending a period of uncertainty.
We will write to those women born between April and December 1953, just over 250,000 of them, early in the new year; to those born between December 1953 and April 1954, another 250,000 people, in February; and to another 250,000, born between April 1954 and April 1955, in March. The last group covers all women who would have been affected by the original equalisation timetable.
Pensions Bill [Lords]
Malcolm Wicks Excerpts(12 years, 11 months ago)
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Mr Duncan Smith
I know that the right hon. Gentleman and the right hon. Member for Croydon North (Malcolm Wicks) have raised the issue in the past. I recognise their background, great experience and genuine sense of a need to try to figure out a solution. I am always willing to listen to argument and debate that, but my concerns are twofold: first, I am not certain that we have the data going back far enough to be able to make the calculation, although I might be wrong; and, secondly, I return to the point that in the past we have not done things in that way, because it is very difficult to set out differential pension retirement ages for different groups. We are going to equalise provision for women and men, but now the debate is about breaking them apart, and that would lead us into all sorts of debates about unequal retirement ages.
Malcolm Wicks
I am encouraged by the Secretary of State’s thoughtfulness on the matter, to which I hope we will return in Committee. According to the Office for National Statistics, almost one fifth, or 19%, of men in routine occupations—manual workers, labourers and van drivers—die before they receive their state pension. As my right hon. Friend the Member for Birkenhead (Mr Field) has implied, those people have probably worked since they were 14, 15 or 16 years old—very different from those of us who did not start in the labour market until our early 20s. Some sensitivity about when people who have worked for 49 or so years can draw their pension is a matter well worth pursuing.
Mr Duncan Smith
As I said to the right hon. Member for Birkenhead (Mr Field) and repeat to the right hon. Member for Croydon North, I am always willing to look and to think carefully about what proposals there are—not for the purposes of this Bill, obviously, but in the future. I know that he has written—
Jonathan Evans
Indeed, and one of the difficulties in this regard is to do with the first change, to which almost all e-mails refer: that women were getting the pension at 60 and that that is now gradually being moved up to 65. The right hon. Member for Birmingham, Hodge Hill referred to his family being affected. Well, my wife is affected by these changes, but we in this House were aware of them because we legislated for them in 1995. [Interruption.] Yes, we have known about them, but we have known about them only here, because there has not been much dissemination of this information outside the Chamber to the rest of the public. [Interruption.] I am grateful to the hon. Member for Slough (Fiona Mactaggart) for indicating that that is so. The idea that the retirement age might then be moved up to 66 is not new. It was debated in this House back in 2007, and legislation was put on to the statute book. What we are doing now is moving the first of these dates forward, and in my view that is necessary. It is perfectly clear that a significant saving will be made.
The Secretary of State made a typically sensitive address, which was well received on both sides of the House, and not only because he said he was prepared to listen. I am staggered that any Minister who says they are prepared to listen to an argument is treated with contempt from the Opposition Benches. [Interruption.] Absolutely: it is an indication of what Labour Members were used to when their party was in government. I commend my right hon. Friend on his approach, however, and I am impressed by the sum of £30 billion.
The Opposition propose that we should not take these steps for a while, and that we should instead return to a 2020 or 2022 timetable. The argument that everything the Government do is being done too fast is a familiar Opposition refrain. It in effect suggests that we can somehow just pass the responsibility on to succeeding generations and not grasp it ourselves. I think we must grasp it ourselves, but that does not mean I am unsympathetic to the arguments about that specific cohort of women who are affected in a particularly negative way.
I know there were debates on these measures in the other place, but I am not persuaded that we must defer taking them to beyond 2020. I am not going to talk about the implications of the equality legislation so often supported by Opposition Members, even though that may have led to a situation whereby what was stated in the coalition agreement cannot now be put into effect. However, what I am certainly uncomfortable about is any woman having to wait more than an additional year. My right hon. Friend the Secretary of State will be aware that Sally Greengross—Baroness Greengross, a Cross Bencher widely respected in this area—put forward a compromise proposal that has much merit, based as it is on the idea that no woman waits for more than a year. The restriction was limited in that way, and the measure was exceptionally intelligently crafted.
I have read Lord Freud’s responses to this debate. He said that the proposal would cost not £10 billion, as the Opposition suggest, but only £2 billion. Given that I want to husband public resources—and that we apparently have the Opposition’s support for shifting retirement ages forward from 2034 and 2044 to dates that are significantly earlier, saving perhaps £2 billion—I am much more attracted to the idea of matching that saving and making far greater savings elsewhere.
Lord Freud responded to the debate by pointing out the gender equality legislation—the equality provisions of European law—that might make this a difficult proposition. However, I am not persuaded that my right hon. Friend the Secretary of State’s Department lacks minds sufficiently sharp to overcome this difficulty. [Interruption.] Yes, I am absolutely sure that the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), could draft the legislation required; but if not, he has all the necessary skill within his Department.
I am very happy to tell all of my constituents who have written to me on this issue that, because of what is happening with longevity, it is fair, if we are asking men to wait a further year, to ask women to wait another year. There are those who say it is a double whammy because we are also seeing equalisation from the age of 60, but that is already a part of the architecture and cannot be taken into account. I am certainly prepared to argue that case.
I want to make two final points that are connected not with this issue but with other aspects of the Bill. In it, adjustments are made to the financial assistance scheme. Many of my constituents have been affected by the collapse of Allied Steel and Wire. On the question of the general attitude of Labour toward pensioners, many of ASW’s pensioners know the “assistance” they got from Labour: none whatsoever. That is the reality. However, the truth is that, under the financial assistance scheme, many people are not even going to get the 90% that was flagged up as their likely reimbursement. I hope we get opportunities to address that issue. I am looking across at my hon. Friend the Member for Arfon (Hywel Williams)—I do not know whether I should call him my hon. Friend; he might be offended by that. My hon. colleague and I have discussed this issue, and it is important that we return to it to address some of the injustices in the operation of the financial assistance scheme as it affects ASW pensioners.
Malcolm Wicks
Will the hon. Gentleman at least acknowledge, in fairness, that it was the last Labour Government who set up both the financial assistance scheme and the pension protection fund, which, whatever the difficulties, have helped many tens of thousands of people who were going to lose their pensions?
Jonathan Evans
The right hon. Gentleman and I have known each other for many years and he knows I have the highest respect for him. I certainly accept that we eventually ended up with that legislation, but it took a long time to get there. However, he was material in trying to achieve that.
Let me also say a word about the effects of auto-enrolment. I was staggered to hear the right hon. Member for Birmingham, Hodge Hill tell us that he does not like the proposals on auto-enrolment. I have to say that I am concerned about the impact of our continually increasing the personal allowance—as I understand it, that is going to be part of our policy—if we are just going to link the personal allowance figure to the level at which auto-enrolment kicks in. I am reassured by what my right hon. Friend the Secretary of State says about keeping this under review, but the movement from £5,000 to £7,000 is not, as described by the right hon. Member for Birmingham, Hodge Hill, an attack on poorer workers. The reality, on the information that we have, is that those people would be worse off if they were within the scheme.
Malcolm Wicks (Croydon North) (Lab)
Back in the 1940s, Aneurin Bevan referred to the ageing of our population as the “peculiar problem” of the era. When one thinks of the controversies just of the last few weeks over the national health service, the quality or lack of it in our care homes, and now the pension age, one can see how prescient the Bevanite analysis was.
I will argue that pensions policy is at its best when it has an understanding of the pace and grain of people’s lives and of the society—an understanding of how people work, their employment patterns, care patterns and family patterns. Looking back, one can see examples of that. Lloyd George—a reminder that there were once great Liberal reformers—was urged to introduce the first old-age pension, albeit at a slightly measly 70 years old, because working people were, rather peculiarly and in a sense for the first time, outliving their working lives, so it was asked where their incomes would come from. Thus occurred the birth, more than 100 years ago in this Parliament, of the first old-age pension. Much more recently, around the 1970s, Barbara Castle and other Secretaries of State realised that the national insurance system was inadequate when it came to women’s caring responsibilities, and credits started to be built into it.
My question is whether, by introducing uniform state pension ages—I listened with great care to what the hon. Member for Ipswich (Ben Gummer) said on the matter—we are now fashioning a policy that makes sense given the different life cycles of people in this country depending on their occupation and social class.
I think about my own family’s experience. My dad and my mum left school at 14 to work, and my dad had jobs in the market in Islington long before that age. At that time, the vast majority of people left school at that type of age. If they worked through to 65 or so, they would have been working for half a century or more. I did not get my first proper job until I was 21. I remember my nan from Islington—Hansard must record “nan” not “nanny”, because I do not want to excite Conservative Members—saying to me when I was 16, “Malcolm, why haven’t you got a job yet?” She just could not understand why I was not yet working.
My own three children were fortunate enough to go to university and then do some postgraduate qualifications—one of them very ably taught, by the way, by a young lecturer at Bath university, whose name I temporarily forget. I often wonder what happened to him. I refer, of course, to the Minister of State, the hon. Member for Thornbury and Yate (Steve Webb). My children did not get their first proper jobs, rather than holiday jobs, until their early to mid-20s. That is a pattern among certain middle class and professional families.
Today, some people coming up to claiming their state pension will have left school at 15 or 16, but some will not have got their jobs until their late teens, early 20s or even mid-20s. Are we being sensible when we say that people who have worked in hard, tough manual jobs for a very long time should be able to claim their state pension only at the same time as those of us from cosier professional and middle-class backgrounds? That is the issue that I wish to explore today.
The proposals in the Bill are based on certain assumptions, and two in particular. One is that the generalisation about life expectancy is true for all social groups. Others have questioned that assumption. I had an opportunity to intervene on the Secretary of State about it earlier, and I want to question it in a little more detail. The Minister of State and the House have heard my argument before. Alongside the gender issue, which is hugely important, there is the social class dimension, which the data show mainly affects men. It needs some airing and some debate, and I would argue that it also needs some solution. There is the assumption about life expectancy, which is broadly true but with some important qualifications, and also the assumption that if we keep raising the state pension age—and occupational pension ages, by the way, although I know that is another debate—the market will respond and jobs will be available. I want to question that assumption, too.
Mr Denis MacShane (Rotherham) (Lab)
I was shocked when a constituent of mine, Mrs G. E. Smith, came in to see my at my last surgery. She will be 60 next month, and she was hoping to retire. She works in an exhausting cleaning job in a sawmill. I think Ministers have no idea what life in hard manual work is. She is shattered and wants to retire, but she has been told that she now has to go on another year, which will be injurious to her health. The Government have no idea of how what we used to call the working class suffer.
Malcolm Wicks
I imagine that that woman might have been categorised by the Office for National Statistics, rather inelegantly, as being part of the social class of “routine occupations”. That includes many women who are cleaners, and men who are manual labourers, van drivers or packers—heavily demanding work. Can they all look forward to living to 80 or, as the Minister likes to remind us periodically, to 100? Actually, they cannot.
The class differences are most pronounced for men, but they also exist for women. Here are the ONS statistics. Almost one fifth of men from the lowest social class—19%—die before reaching the existing pension age of 65. We talk about pension ages, but sadly a lot of these guys are already dead by that point. That 19% figure compares with just 7% from social class 1. For women, the respective figures are not so stark, but 10% in routine occupations die before the current pension age of 60—not like my right hon. Friend’s constituent, I hope, but with that type of job—while the figure is just 4% for those from the professional classes.
Malcolm Wicks
I am pleased that the Minister wants to intervene, but may I add another statistic? I have given him a lot of notice of this point, and a wonderful briefing paper has been presented, so I hope there might be some solutions. An additional pension penalty is paid by the poorest groups. Whereas the great majority survive to get the state pension, they then draw it for fewer years than people from the top social classes, because of earlier mortality. Life expectancy at 65 is 18.3 years for men from social class 1, which is professionals, but it is only 14.1 years for those from social class 5. That four-year difference is the same for women. A double pension whammy affects people from the poorest social classes, and that should at least raise a question in the Minister’s mind about whether the general policy that he is pursuing—to be fair, it is the general policy that my party’s Government were pursuing—is on the right track.
Steve Webb
The right hon. Gentleman is making a characteristically fascinating contribution. He is citing different social groups, but does he accept that the sizes of those groups are changing? His idea would have been brilliant in 1975, but in designing a pensions system for the 21st century and beyond, is he not trying to solve a problem that is diminishing with every passing year?
Malcolm Wicks
I was solving many other problems in 1975—they were so numerous that I cannot think of an example. I believe that there are solutions to the problems. They might be complex, but if the Minister will bear with me I will come on to them.
I first wish to make my other contrarian point about the general assumption that it will be all right if we keep raising the state pension age—and indeed the occupational pension age. It is about employment patterns. At the moment it is not the case that 90%-odd of men and women are working until they are 65 and 60 respectively, and that if we keep increasing the pension age by a year or two there will be jobs available. That is not the situation at all. Labour force survey data show that almost a quarter of men aged 50 to 64, and more than a quarter of women aged 50 to 59, are classed as economically inactive. Many of them are not working at the moment. Why do we assume that there will be jobs for them if they have to work for a few more years? More specifically, 39% of men aged 62 are currently not working. By the age of 64, the figure is 52%. Among women aged 58, two years before their current state pension age, 36% are not working. The assumption that general life expectancy increases will benefit everyone and the at least implicit assumption that jobs are available are at least partly illusory.
I am not challenging the demographic logic, or the fact the state pension ages—and, may I say in a reasoned way, occupational pension ages—have to increase. Of course they do. That is the logic of demography, and it helps us safeguard our welfare state system. I ask, however, whether the situation is right for a man or woman who left school at 15 or 16. They may have had caring responsibilities or periods of unemployment, but they will have essentially worked for 49 or so years. They currently get their pension at 65, in the case of men. Is it right that they should be on the same playing field as the professional person who left university and did not do the type of job that my right hon. Friend the Member for Rotherham (Mr MacShane) described, as a packer, cleaner, steelworker or miner, but who is from the professional classes, rather like many of us who are currently in this room? Is it right that the same state pension age should apply to both groups? I do not think that that is a state pension system that is in line with, or goes with the grain of, people’s lives. It does not seem fair to many people.
I meet many people from professional classes—politicians, business people, think tankers and broadcasters—who dread retirement. They want to keep working. They are hale and hearty and often at the top of their game. They want to carry on working, and that is a good thing. [Interruption.] My right hon. Friend the Member for Rotherham gives an important example. In 10 years, he will constitute another important example.
That is right and proper, but people who have done physically demanding work are literally worn out in an old-fashioned sense. Some of the steelworkers I met when we set up the Pension Protection Fund were physically worn out. They do not want to keep working for another couple of years. They want to retire to have a well deserved rest.
What is the answer? I think that we should try to calculate the records of those who left school at 15 or 16. I know that it is a challenge for the civil service. I have not got the briefing paper—the Minister has it and I am sure that he has read it. Given national insurance records, employment records and perhaps income tax records, should not we be able to calculate that people who have worked for 49 years can retire at the age of 65—for men and women in due course—rather than assume that they can carry on working? It is a big issue for social administration and it needs a bright Minister to tackle it. The Minister should give it rather more attention than I think he has given it so far.
Steve Webb
If it had been self-evidently not possible, I think that the right hon. Gentleman would have pointed it out in the past 12 months, but I have not heard him do so.
The right hon. Member for Croydon North (Malcolm Wicks) made a characteristically thoughtful speech and I hope that he is on the Public Bill Committee. That would lengthen our proceedings, but in a very nice way. He raised the important issue of the entitlement of people with long years of national insurance payments to a national insurance pension. He generously referred to the fact that I taught his daughter at university; I hope that I contributed in some way to her social mobility as a result. He raised the serious issue of using long periods of national insurance records. As my right hon. Friend the Secretary of State pointed out, the records before 1975 are a mess, which the right hon. Gentleman will know as he is one of my many predecessors. Our ability to use those records is very limited and one of my concerns about his proposal, which I am happy to discuss with him in a genuinely open way, is the position of women, because they would have to be credited for times when they were not in paid work. Some of that paid work will have been before home responsibilities protection was introduced and so we simply would not know who to credit. That is only one of the issues, but as I have said, we are happy to engage with him in the spirit of openness.
Malcolm Wicks
I am grateful for that. My point was that those who have been working since the age of 15 or 16 in manual occupations are often physically worn out and need to retire earlier than Governments have proposed. If the objections or concerns are technical, that suggests that if there is a technical way forward, we could arrive at it—could we not?
Steve Webb
As I have said, I am happy to engage with the right hon. Gentleman in an open and constructive way. I suspect that wishing away the technical problems might be more difficult than he imagines, but I am happy to have that dialogue with him.
My hon. Friend the Member for Gloucester (Richard Graham) who chairs the all-party group on occupational pensions—
State Pension Reform
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Steve Webb
My right hon. Friend puts me on the spot, but I am glad to respond positively. I have noted his comments down as being the first response to my consultation, making it 1-0 for the single-tier option—I will keep score as we go. He is right that the restoration of the earnings link after 30 years of breaking it is an historic event, although it has been rather overshadowed by other events in the world. We think someone retiring this year will, over the years, get an extra £15,000 in basic state pension through the restoration of the link. That is a real firm foundation for today’s pensioners as well as reform for tomorrow’s. I am grateful to my right hon. Friend in respect of the liberal heritage and to my right hon. Friends the Secretary of State and the Chancellor for their encouragement for the proposal to move forward.
Malcolm Wicks (Croydon North) (Lab)
It is humbling to follow a question from a “for ever” Member of Parliament.
May I ask about the mechanism for determining future changes to state pension age? Could this mechanism please allow for occupational and social class differences in terms of life expectancy? If we look at men who work in what are called routine occupations, such as van drivers, cleaners and labourers, we see that almost a fifth of them—19%, I believe—die before they receive the state pension at 65. If we keep raising the state pension age without allowing for those people who have been working since they were 15 or 16, we will certainly bring insensitivity into the system.
Steve Webb
I am grateful to the right hon. Gentleman, who brings great knowledge of these issues to the House. He raises a vital point. Although it is true that life expectancy across the social classes has been improving, which is entirely to be welcomed, there are still very significant differences. One suggested option in the Green Paper is that the review mechanism should take account of a wide range of factors of the very sort that he mentioned. It is possible to have a too formulaic or automatic approach, but the right hon. Gentleman will have noted that the Chancellor referred in the Budget to a “more automatic” approach, taking systematic account of increases in life expectancy, but potentially of other factors such as those that he mentioned.
Welfare Reform Bill
Malcolm Wicks Excerpts(13 years, 2 months ago)
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Malcolm Wicks (Croydon North) (Lab)
It is a pleasure to follow my Blairite colleague on the Government Benches. May I say, by way of introduction, that I judge, as many of us would, that wise social security policy seeks to relate the issues of benefits to the issue of employment? I would argue that we should start the discussion with work. I wish to analyse the Bill and some of its proposals in that important context, because surely for those able to work the best social security policy is a job—things start from there.
I often quote William Beveridge at this stage, partly because it reminds us that there was once an era of great Liberal reform. In his famous 1942 report, he talked about the giants of want, disease, ignorance, squalor and idleness standing in the way of social reconstruction once peace had come. He said that the giant of idleness, by which he meant unemployment, was the largest and fiercest of the giants and that if we did not overcome it all the other social goals of peacetime reconstruction would be out of reach. If one thinks about the implications for health and education, one sees exactly and empirically what he meant, so that is my starting point.
Skipping forward 65 years from the great Attlee reforms that implemented the Beveridge recommendations and many others to the present day, it seems to me that there are three issues or obstacles that we must address or overcome if we are to get right the balance and relationship between what I still prefer to call social security—I find the term “welfare” pejorative—and work.
The first issue is employment policy. Where is the Government’s full employment policy? Is it their ambition to move back towards full employment? In my Croydon constituency, literally hundreds of job losses have just been announced at the Home Office’s Border and Immigration Agency. In addition, the council will contribute hundreds of job losses and there will be job losses in the health service with the reform of primary care trusts. That is just the start in an area that is very dependent on public sector work. What we are seeing is not ambition for full employment but a move towards further unemployment, which concerns me greatly.
One of the great tragedies is that many of our fine young people leaving school and getting vocational qualifications and degrees are finding that no jobs are available. We must all think long and hard in the short, medium and longer term about whether we can somehow move towards a job guarantee for our young people, many of whom do so well in education and skills. We will betray a generation if we cannot soon offer them work that suits their skills, creativity and qualifications.
On the contentious issue of immigration, it is clear to me, from a London perspective, that eastern European immigration has made it more difficult for people on the margins of the labour market to get jobs. It is a simple matter: if an employer is presented with a British person of whatever ethnic group who is not job-ready, as opposed to someone from Lithuania or Poland who is clearly eager to work and will probably turn up on time, who will they employ? How, in those circumstances, can we enable British people to get the work that our country owes them?
Stephen Lloyd
That is an important point. Does the right hon. Gentleman agree that a key area in the Bill—within the black box that was discussed earlier—is the fact that the Department will pay providers upwards of £14,000 to help into work people who have been away from work for a while and to sustain them in work over a couple of years? Does he agree that that is a positive step?
Malcolm Wicks
Of course, which is why the Labour Government, under the former Secretary of State for Work and Pensions, my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), established such policies with Jobcentre Plus. Of course that is the right thing to do.
The second of the three issues I mentioned is wage levels. I recall from my history that the Speenhamland system was created in the late 18th century. As far as historians can judge, that was the first direct wage subsidy in Britain. Since then, we have had a number of policies, starting with family income supplement, tax credits and so on that could be said to subsidise low wages. I am proud that a Labour Government introduced the minimum wage, but Conservative Members will not be so proud that their party vehemently opposed it. As we move back towards economic growth and greater affluence, should we be talking about not just a minimum wage but a living, or adequate, wage, not least for people who are employed by multinationals that make large profits? Otherwise, the social security system will continue to subsidise low and sometimes exploitative wages.
The third issue is the work ethic, on which my hon. Friend the Member for Sunderland Central (Julie Elliott) touched. I believe the work ethic is alive and well in many parts of Britain. I also recognise that because of the de-industrialisation during the Thatcher years the work ethic among some individuals in some communities had the stuffing knocked out of it, and there are now communities where three generations of people have been nowhere near a job for a very long time. We need to think through the implications of that.
Where people can work and where jobs are available, working-class people on our estates are angered by spongers and shirkers. Those people do exist and we should not ignore that fact, but in a culture in which bankers can stick two fingers up to democracy, to Parliament and to the Government and in which multinationals brag about avoiding paying tax, we have become an amoral, if not sometimes an immoral, economy. If we are to preach honesty and responsibility to the poor, as I think we must, although it can be difficult at times, then responsibility is also good enough for the rich and powerful.
Oral Answers to Questions
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Steve Webb
I am happy to look into the individual situation to which my hon. Friend refers. In general there are statutory requirements for the uprating of pensions in respect of service post-1997, but occasionally, when schemes are wound up underfunded and fall under different regimes, different indexation rules can apply. I would be very happy to receive more details and to meet my hon. Friend.
Malcolm Wicks (Croydon North) (Lab)
Given the importance of tackling social security fraud, which depends in part on promoting a sense of responsibility and honesty across the whole of society, does the Secretary of State agree that that is undermined by the widespread tax evasion by rich individuals and companies? If honesty is good enough for the poor, surely it is good enough for the rich.
Mr Duncan Smith
Of course if one defines tax evasion as doing something utterly illegal, it is quite wrong and we should bear down hard on it. That is the reality for everybody—if they do something that is beyond the law, that is wrong and we should bear down on them no matter how wealthy they are. That should be a rule for everybody, not just for the poor.
Oral Answers to Questions
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Chris Grayling
My hon. Friend will be aware that I am always extremely concerned about the employment situation in the north-east. I was therefore extremely pleased this summer to see an increase in private sector employment of 17,000 in the region. I was disappointed, however, that the number of people claiming jobseeker’s allowance barely changed, which simply underlined for me the need for the Work programme to deliver real change in that area. However, the introduction of the new enterprise allowance and some of the other measures that we are taking to support small businesses, as set out in the Budget by my right hon. Friend the Chancellor of the Exchequer, will help to continue the process of job creation in the private sector in the north-east, which is what we all want.
Malcolm Wicks (Croydon North) (Lab)
As the Secretary of State and his team develop their longer-term thinking on social security, including for state pensions, what emphasis and importance will they place on the contributory principle?
Steve Webb
I am grateful to the right hon. Gentleman for his question. We believe that a link between what people put into the system and what they get out of it is important, and we are looking at ways of modernising that principle. He will know that the contributory principle, as it currently exists, was invented in the 1940s when the assumption was that men worked and women stayed at home. We live in a modern world and need to modernise the contributory principle.
Welfare Reform
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Mr Duncan Smith
The Work programme will start well in advance of today’s proposal—we anticipate that it will start next summer. There will be a set of contracts on a regional scale that will involve the private and voluntary sectors. Organisations will run programmes against a set of outcomes, for which we will pay them, so that as they deliver and get more people back to work, they will be paid for those results. That will be carefully balanced so that we do not pay them for dead-weight costs that might otherwise have been in the system, but it will certainly be clear.
Malcolm Wicks (Croydon North) (Lab)
I welcome very strongly the strategic direction of the Secretary of State’s statement, but comparisons will inevitably be drawn with the 1940s. That should remind us of the importance of the work ethic and the fact that citizens have both rights and duties when it comes to benefits and work. It also reminds us of the importance of employment policy. I say that not in a partisan spirit, but because I think there is a real difficulty. Churchill’s coalition Government and Attlee’s Labour Government took measures to move towards full employment—with great success. When a Government take 1 million jobs out of the economy, both public and private sector, does the Secretary of State understand my concern about the chances of success of the good strategy announced today?
Mr Duncan Smith
I am grateful for the right hon. Gentleman’s words of welcome—I particularly value them because I am a huge admirer of his, as he knows. He is right to draw the parallel with the 1940s, not for anything to do with Beveridge, but simply because high withdrawal rates were possible in the system that was set up at that time because the people involved were mostly men who were either in work or out of work—there was very little part-time work in that sense, so withdrawal rates had no effect. Today, because of the nature of part-time work, withdrawal rates cause real problems for people, particularly as they go back to work.
On jobs, I simply say this: yes, as the economy grows, those jobs will be created, but let us not forget that in the past three months, over 1 million jobs went through my jobcentres, and 450,000 jobs rotate through them every week.
Oral Answers to Questions
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Maria Miller
I thank my hon. Friend for that question. She is absolutely right that this data can help particularly to ensure that individuals pay the money they are due to pay. Indeed, we will consider that under the planned revisions to the CSA’s IT system. I should like to reassure her that the Child Maintenance and Enforcement Commission is already putting in place a number of other measures to ensure that we increase enforcement actions. Indeed, as a result of those measures we have seen a significant increase in enforcement actions in the past 12 months.
Malcolm Wicks (Croydon North) (Lab)
Given that a significant cause of childhood deprivation is the failure of so-called absent parents—usually fathers, but sometimes mothers—to pay for their own children, and given that, to be blunt, both previous Governments, despite good efforts, found this a difficult nut to crack, will the Minister consider new measures to ensure that we do not just go after the easy targets, such as those on salaries and in the public services, but find new ways of getting to fathers, some of them serial fathers, who are determined to avoid paying for their own children and expect other mums and dads called taxpayers to do their job for them?
Welfare Reform
Malcolm Wicks Excerpts(13 years, 7 months ago)
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Mr Duncan Smith
I agree with my hon. Friend. I make a point of agreeing with him on many things. The changes to child benefit are exactly what they are—to help us to reduce the terrible deficit that we have and to save the poorest families in the land from suffering a terrible burden that they would have to bear in due course. As my right hon. Friend the Prime Minister made clear last week—these are not matters directly for me, but he and the Chancellor will bring forward measures in due course—the very best way to ensure that couples do not face that penalty is to ensure that they are not unfairly taxed from the outset. This is about child benefit, and we will support families who make the choices that they make.
Malcolm Wicks (Croydon North) (Lab)
When, in the mid-1970s, the decision was taken to merge the child tax allowance, which broadly benefited the wallet, with the family allowance, which broadly benefited the purse, the then Labour Government, after a bit of a kerfuffle, decided that it should become a child benefit for the mothers, for reasons which, I think, both sides of the House recognise. Does the Secretary of State realise the dismay of many people in all parts of the House and the public that he is now running a coach and horses through the principle that it is very often the mother who has to juggle the family budgets, that certainly in the south of England, salaries at the level at which he is withdrawing benefit are not extravagant, and that that is a blow to the concept that mothers are at the heart of our families in Britain?
Mr Duncan Smith
I respect the right hon. Gentleman enormously, and he knows that, but I am afraid that he is living in a time warp. The reality is that we have walked into government to find facing us the single biggest deficit on record. This country is close to being broke, thanks to his Government and how they ran the economy. So, yes, in a perfect world we might have wanted to continue with everything as it was, but in reality we cannot afford to. We make such changes on the basis of ensuring that we do not make them on the backs of the poorest people. Had we done it any other way, he would have complained quite rightly, and I must say to him that, if he does not like the proposal, and it sounds like he does not, perhaps he or his Front-Bench colleagues will tell us where they think they are going to get the money from as an alternative.