Welfare Reform and Incapacity Benefit
4:32 pm

Photo of Michael Lord

Michael Lord (Deputy Speaker)

We now come to the debate on welfare reform and incapacity benefit. I must tell the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.

4:36 pm
Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

I beg to move,

That this House
is extremely concerned that the Government is failing to tackle welfare reform despite promises to do so;
recognises that the pensions system is in crisis;
notes that the Prime Minister believes the Child Support Agency is not suited to carry out the task that it has been given;
believes that the New Deal has failed to deliver;
notes that 116,000 more people are claiming incapacity benefit than in 1997 despite the Government's pledge to reduce the number;
is deeply disturbed that the Incapacity Benefit Green Paper, which was due to be published in the summer and then the autumn, will not now be published until January;
believes that this is due to continuing conflict between the Prime Minister and the Department for Work and Pensions on the desired content of the Paper;
and calls on the Government finally to deal with the increasingly urgent need for welfare reform, for the benefit of users of the system and all taxpayers.

My first, and very pleasant, duty is to welcome the new Secretary of State to his responsibilities. I am getting rather good at this, as only six months ago I welcomed his predecessor, Mr. Blunkett. The right hon. Gentleman is no less than the fourth person to occupy the role in just over 12 months. The Prime Minister had better get careful: to lose one Secretary of State is a misfortune, to lose two is clearly carelessness, but to lose three suggests a degree of serial incompetence in 10 Downing street. In part, that explains some of the incoherence that we are experiencing in welfare policy.

Of course, we wish the new Secretary of State well. I hope that he will not mind if I borrow a phrase from pension language and say that he will find his Department rather difficult to handle, with very few direct benefits for him. He will expect to make most of the contributions and will find that a difficult task. One of the questions on which we will judge his performance is whether he can live up to his predecessor, the right hon. Member for Sheffield, Brightside. Despite his other failings, he was a big beast and could hold out against 10 Downing street when that was appropriate. The Secretary of State does not yet have that reputation, and we wait with interest to see whether he can earn it.

Welfare reform is an appropriate subject for debate today. When they first came to office in 1997, the Government chose to adopt it as one of the major issues on which they would be judged. It was one of the great themes of that election, but the Prime Minister essentially fell at the first hurdle. Mr. Field was appointed as the Minister in charge of welfare and invited to think the unthinkable. However, he was out of government within a year, and never emerged again.

That was our first evidence that, on welfare reform and many other issues, the Prime Minister is very powerful when it comes to rhetoric, but very poor when it comes to delivery.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

I will in a moment. The Prime Minister likes to give the impression that he leads from the front but, on a great many issues, he prefers to go for public opinion when the going gets tough. In effect, he tells people, "Tell me where you wish to go, in order that I might lead you."

Photo of Edward Balls

Edward Balls (Normanton, Labour)

In 1997, the Government introduced the new deal, which has reduced unemployment in my constituency by 80 per cent. and helped 550 single parents into work. Why does the right hon. and learned Gentleman want to abolish the new deal? Is that a coherent policy?

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

Like the hon. Gentleman, we know that most jobs offered under the new deal are not permanent. It has not had the impact that had been hoped for, and a powerful argument for using the private and voluntary sectors to find jobs is that they tend to offer long-term or permanent employment.

Photo of Huw Irranca-Davies

Huw Irranca-Davies (PPS (Rt Hon Tessa Jowell, Secretary of State), Department for Culture, Media & Sport; Ogmore, Labour)

Will the right hon. and learned Gentleman give way?

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

I hope that the House will forgive me, but I intend to make my speech. I will accept interventions, but this debate is about the incoherence of the Government's welfare policy. That is what we shall concentrate on.

On so many issues, at the first sign of difficulty, the Prime Minister tries to distance himself from the policy of his own Government. Only last week, the Prime Minister dropped broad hints at the Dispatch Box that he was enthusiastic about the suggestion that the Child Support Agency should be abolished—he knows the low esteem in which it is held by the public. But of course, soon after the Prime Minister left the Chamber, No. 10 Downing street and the Department for Work and Pensions were asked for confirmation of the policy, and we then heard the magic word, "clarification". That made it clear that there was no intent to abolish the CSA. There was no new policy on the CSA: the Prime Minister simply wished to make a short-term impact.

The same thing happened with the deal that was done between the Secretary of State for Trade and Industry and the public sector trade unions. The Prime Minister let it be known how unhappy he was with the deal that had been made, as if somehow it had nothing to do with him. His attitude was, "Forgive me, I'm only the Prime Minister. I can't be expected to be held responsible for deals made by my Government." But we know that that deal has been enormously damaged by the Government's attempt to argue that the rest of the population should work longer and retire later while simultaneously sanctioning a deal for their own employees that will take 40 years to come into effect. It is a poor situation, and the Secretary of State will have to acknowledge that.

We are discussing welfare policy as a whole today, but as the motion implies I shall concentrate specifically on incapacity benefit, which is one of the areas where the Government have most fallen down on their stated ideals since they came into office.

Photo of Huw Irranca-Davies

Huw Irranca-Davies (PPS (Rt Hon Tessa Jowell, Secretary of State), Department for Culture, Media & Sport; Ogmore, Labour)

The right hon. and learned Gentleman probably knows that areas in my constituency—Bridgend and Rhondda Cynon Taff—saw the rolling out of the pathways to work pilots. It is right to say that since the Government have been in power the number of incapacity benefit claimants has risen from 2.6 million to just over 2.7 million. However, will the right hon. and learned Gentleman confirm that if the trend established under the Conservatives had continued, the increase would have been from 2.6 million to 4 million? This Government have tightened up the system and helped people back into work under the pathways to work pilot.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

The hon. Gentleman might think that he is being logical, but he should remember that logic is the art of going wrong with confidence. He should not use that sort of nonsense argument if he wishes to impress the House.

This is a debate about incapacity benefits, which are received by many millions of our fellow citizens, the majority of whom are sick or disabled. I am proud to have been a member of a Government who introduced improvements to the financial security and wellbeing of millions of our fellow citizens who, through no fault of their own, are sick or disabled. Of course, when one introduces such improvements, there is an initial high take-up, but that should be welcomed because it improves the wellbeing of our fellow citizens. However, the Government cannot rest on that case. When they came to office in 1997, they said that the number claiming—the hon. Gentleman rightly said that it was 2.62 million—was far too high. The Prime Minister said then, and has said every year since, that 1 million of those people should be in employment and not on benefit—

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

No, I shall not give way until I have finished my point.

The Prime Minister and his colleagues should be judged by the policy on which they came to power, which—

Photo of Huw Irranca-Davies

Huw Irranca-Davies (PPS (Rt Hon Tessa Jowell, Secretary of State), Department for Culture, Media & Sport; Ogmore, Labour)

Will the right hon. and learned Gentleman give way?

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

No, I wish to develop my argument and then I will take interventions.

The starting point that we have is a Labour party which said that the number of claimants was far too high at 2.62 million and that it was an overwhelming priority of a Labour Government to reduce that figure by—it hoped—1 million. What has been achieved in the past eight years?

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

No. The hon. Gentleman does not want to be reminded of the facts, but he will be reminded that far from reducing the figure by the million that the Government sought as their target, the number of people claiming incapacity benefit has gone from 2.62 million to 2.74 million—120,000 more claimants than when the Government came into office.

The situation is even more alarming than that. The biggest increase in that overall total is in the number of people who have been claiming IB for stress or depression, subjects that by their nature are far more difficult to prove or disprove and where general practitioners have the greatest difficulty in establishing the reliability of the claim. The figure was 592,000 in 1997, but it is now more than 1 million, a 39 per cent. increase. That is the mark of the Government's failure.

Photo of Huw Irranca-Davies

Huw Irranca-Davies (PPS (Rt Hon Tessa Jowell, Secretary of State), Department for Culture, Media & Sport; Ogmore, Labour)

I appreciate the right hon. and learned Gentleman's generosity in giving way again on that point. He did not accept my figure of 4 million if the Conservative policy had continued, but will he accept that since 1997 the Government have succeeded in tightening up the gateway so that although people already on incapacity benefit will, as part of our policy, be increasingly well protected, the trend for people going on to incapacity benefit is downwards? That was certainly not happening under the Conservatives.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

Only the hon. Gentleman, or perhaps some of his colleagues, could claim that an increase of 120,000 is a downward trend—[Interruption.] He will be difficult to persuade because he uses a system of grammar that is not known to the rest of the human race. That is a matter on which we will have to agree to differ.

By the Government's own standards, they have failed over the past eight years. There has been a remarkable collapse. Each year, Ministers have to say the same thing. In 1997, they were saying that a million people needed to be found jobs and in 2004, after they had already been in office for seven years, there were still a million people who needed to be found jobs. Only last year, the Secretary of State's predecessor found yet another million people who still had to be found jobs, yet nothing has happened and that is typical of the Government's approach.

Photo of Anne Begg

Anne Begg (Aberdeen South, Labour)

I was interested to hear the right hon. and learned Gentleman say that he was proud to have introduced incapacity benefit. The reason for reform is that the benefit itself has put barriers in the way of disabled people who want to get back into work. How can he be proud of that?

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

I did not say that there is no case for reform. Of course there is, as there would be for any other major innovation. I am saying that the Government have completely failed to meet that case; they have completely failed to deliver the policy that is required.

At the beginning of the year the Government announced a major new strategy, launched by the right hon. Gentleman who is now Secretary of State for Trade and Industry. That was two Secretaries of State ago; it is difficult to keep up, as the current Secretary of State for Work and Pensions will appreciate. On 2 February, when the Department of Work and Pensions five-year strategy was launched, the Government announced, with the hype typical of them, that they were launching the

"biggest change in incapacity benefits since they were created".

That sounds pretty impressive, as though the Government were at long last getting to grips with the problem, yet when we looked at what it meant in practice we found three things.

First, we found that all that the Government proposed to do was to publish a Green Paper—not a White Paper. One might have thought that if they had already worked out how to implement the greatest reform in incapacity benefit it would have been followed by a White Paper, which could have gone out for consultation. But no, we were promised only a Green Paper.

Secondly, the new policy would be implemented—if it ever was—not in 2005, or even 2006 or 2007, but in 2008, three years from now. Thirdly, the most extraordinary part of the announcement, which is, I think, still Government policy, is that all the marvellous new benefits would not apply to a single one of the 2.7 million existing IB claimants but only to new claimants.

In their announcement the Government said:

"The reformed benefit will provide enhanced financial security for the most severely sick and disabled"

Very good. None the less, not one severely disabled person currently receiving the benefit will have the ghost of an opportunity to enjoy any of the new benefits. The same announcement stated that there would be

"more money than now for all those claimants who take part in work focused activity".

More money than now, but not for anybody receiving the benefit now. For some reason best known to the Government, no advantage will be obtained by the 2.7 million people currently in receipt of IB.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

I will, although I would have been happier to give way to the Secretary of State if he wanted to correct or change that policy, but as he remains silent and is on a learning curve I will give way to Michael Connarty instead.

Photo of Michael Connarty

Michael Connarty (Linlithgow and East Falkirk, Labour)

As always, the right hon. and learned Gentleman is trying to teach us all something. He tried it the last time he was here. Unfortunately, I think he has got it wrong. My understanding from people that I have talked to in the DWP is that anyone who is on incapacity benefit at the moment who believes that they can have the benefit of those extra resources will be granted them. I have asked and been told that that is the case.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

I think we are talking about different things—unless the Government have made an announcement of a change of policy to the hon. Gentleman that he has not announced to the House. That is always possible. [Interruption.] On the contrary; we have not had the Green Paper yet. That brings me to my next remarks. All we have to go on at the moment is—

Photo of Pat McFadden

Pat McFadden (Wolverhampton South East, Labour)

Will the right hon. and learned Gentleman give way?

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

No. Let me deal with this matter first. The hon. Gentleman will forgive me. All we have to go on as to what the Government's policy is—

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

No; I am sorry. All we have to go on is what the Government said in February. In February it was indicated that the new reform proposals would not apply to existing claimants, only to new claimants after 2008. Let me just share with the House—

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

I understand why hon. Gentlemen wish to deflect me, but they will not succeed. Let me share with the House what has happened since that grand statement in February, promising the greatest ever reform in incapacity benefit. We were told then that there would be a Green Paper—seemingly it had to be a Green Paper, but at least it would be published in the summer—and that remained the Government's position. Indeed, after the general election the Prime Minister repeated at his first press conference that

"there will be a Green Paper on reform of Incapacity Benefit before the summer recess."

Well, what happened to it? It never appeared. And later, in July, we were told that the timetable had slipped, and that it would be published in the autumn. And then, when asked at oral questions on 31 October why the Green Paper was four months overdue, the Minister for the disabled, the Under-Secretary of State for Work and Pensions—Mrs. McGuire—said,

"the Green Paper is not four months overdue: we made it very clear earlier this year that we would publish it in the autumn."—[Hansard, 31 October 2005; vol. 438, c. 622.]

Well, the difference between summer and autumn is not very different from four months, but we shall put that on one side.

Then we had a statement by the Prime Minister on 16 November that the Green Paper is not now going to be published until January of next year. Now, is January of next year consistent with the autumn? Is this what the Government mean by their policy on climate change? Are these things very difficult to control? When asked why the delay was taking place—

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

I shall not give way for the moment.

When asked why, the Prime Minister said, "Well, you know, there has been a change of Minister at the head of the Department." This, we are told, is the official reason why the Green Paper now cannot come out until next year. Well, when the right hon. Member for Sheffield, Brightside was appointed Secretary of State back in May, that was not given as a reason for delay; far from it. The Prime Minister confirmed that the original timetable was going to be held to.

We know exactly why the delay has taken place. If the Secretary of State will forgive me, it has nothing to do with his appointment. It has to do with the very serious differences of view, to put it mildly, between the Prime Minister and the previous Secretary of State—and perhaps the present incumbent. We just do not know yet what the present incumbent's view is. But what we do know—

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

No.

What we do know is that the Prime Minister has been putting very severe pressure on the Department for Work and Pensions—quite contrary to the Government's stated policy—to toughen up the line. We know that it is contrary to the Government's stated policy, because the Secretary of State has actually said that this is not a cuts agenda.

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

indicated assent.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

The right hon. Gentleman is nodding. And others have said that cutting benefit is not part of the Government's reforms. And yet we know—unless the right hon. Gentleman will tell us that this is not true—that on Monday 10 October, "Channel 4 News" reported—[Laughter.] Well, we shall hear the Government's views on this in a moment—

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

I can understand the hon. Gentleman's nervousness.

On Monday 10 October, "Channel 4 News" reported:

"We understand the Prime Minister wrote to Mr. Blunkett over the weekend asking for cuts to the planned levels of Incapacity Benefit . . . The Prime Minister's proposals would mean"—

apparently, Channel 4 had seen a copy of the letter—that

"average Incapacity Benefit claimants would be ten pounds a week worse off than under"

the Secretary of State's own

"plans. Many could be thirty to forty pounds a week worse off."

It was said that the Prime Minister was

"suggesting the benefits should be time limited"

and

"people could not claim it after two years and would move on to other benefits or no benefits."

On Sunday 30 October, it was reported that, following a further memo from the Prime Minister—or it may have been the same memo—the previous Secretary of State had written to the Prime Minister saying that he could not accept the last-minute, hard-line changes to incapacity benefit that were being demanded by Downing street. Apparently, the demands in the Prime Minister's own memo to the Secretary of State included replacing part of the £76 per week given to incapacity benefit claimants with tokens that could only be spent on job training courses, and that incapacity benefit would be paid at jobseeker's allowance rates, which are, of course, far less than long-term incapacity benefit.

We will expect the new Secretary of State to indicate what truth there is in those reports. Indeed, I am happy to give way to him now. Is he willing at this very moment to come to the Dispatch Box to say that neither he nor his predecessor has received representations from the Prime Minister or from No. 10 Downing street asking for the Green Paper to be changed to become more harsh with regard to incapacity benefit? Would he care to deny that those reports are true?

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

No. Forgive me, but I am interested in the Secretary of State at the moment. I notice that he has not intervened, and we will listen very carefully to his remarks in his own speech to find out whether he deals with this matter or tries to avoid it.

Photo of John Bercow

John Bercow (Buckingham, Conservative)

The confusion is even greater than my right hon. and learned Friend has already eloquently described, given that the then Secretary of State for Work and Pensions, who is now the Secretary of State for Trade and Industry, told the House on 28 February:

"we will not introduce time-limiting of incapacity benefit."—[Hansard, 28 February 2005; Vol. 431, c. 630.]

Would it not be helpful if the current Secretary of State now abandoned his self-denying ordinance, came to the Dispatch Box and told us whether he can repeat that commitment?

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

That would be very agreeable indeed. I think that I can make a fairly clear prediction that that will not happen; but of course, the Secretary of State will have my full agreement if he wishes to clarify the point so ably made by my hon. Friend.

Photo of Lynne Jones

Lynne Jones (Birmingham, Selly Oak, Labour)

I thank the right hon. and learned Gentleman for finally giving way to me. While I would have grave concerns about some of the measures that he has articulated, although I have no knowledge of whether there is any truth in those suggestions, I was very happy with the proposals announced last February by the former Secretary of State for Work and Pensions. However, I take issue with the right hon. and learned Gentleman that the Government's proposals do not help those who are on disability benefits. Will he comment on the success of the pathways to work programme? We must expand that programme, so that more people on disability benefits can get the opportunity and support that it gives. Will the Opposition support those measures?

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

If the hon. Lady welcomed the announcement made in February, she must share my disappointment that it will be three years at least before those measures come into force. Indeed, that raises another question: the date of 2008 was given in February, but we have now had a six-month delay in the publication of the Green Paper. So we must now assume that it is highly likely that it will be 2009, not 2008, before the proposals are implemented. [Interruption.] If the Secretary of State can possibly bear to listen to the debate, he might like to consider whether the date is still 2008, or whether, as a result of the six-month delay in the publication of the Green Paper, 2009 is a more credible date from the Government's point of view.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

No. This is a short debate; I have given way a lot; and many hon. Members on both sides of the House wish to take part.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

I was going to comment on the pathways project. The pilot schemes under that project are useful. They are a step in the right direction, but they are only scratching the surface. As Lynne Jones knows, they are only pilot schemes and could take years before they make the kind of impact that the Government pledged to make back in 2007.

If the House and Labour Members wish to see more rapid progress, they should look much more carefully at the proposals that the Conservative party has made with a great deal of support from the voluntary sector and charitable organisations. They should listen to the views of the Institute for Public Policy Research, which is an organisation to which I would have thought that they would give some credibility—it is not exactly a right-wing think-tank. It said:

"the private and voluntary sectors ought to have a greater role in providing employment support initiatives".

Indeed, the proposals launched by my hon. Friend Mr. Willetts, who is now shadow Secretary of State for Trade and Industry, which were part of our election manifesto, have been well received. For example, the Shaw Trust said:

"We welcome the policy statement"

of the Conservative party. The director of Disability Awareness in Action said:

"The Conservatives are doing . . . good things around benefits."

The chief executive of Scope said:

"The Tories have recently shown a commitment to supporting disabled people into employment through its potentially radical work on incapacity benefits."

Our proposals, which are based on using the voluntary, charitable and private sectors, are not just theoretical ideas, because they already exist in a modest way. They have been more successful because they are more flexible and sensitive. They make less use of taxpayers' funds, and based on the statistics that already exist, the jobs that they find tend to be long-term jobs.

Photo of Edward Balls

Edward Balls (Normanton, Labour)

Is the right hon. and learned Gentleman really trying to tell the House that the IPPR, Scope and the other organisations to which he refers support his proposal to abolish the new deal for young people and the new deal for disabled people?

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

I am talking about incapacity benefit at the moment. I will be happy to deal with those matters on another occasion—[Interruption.] No, I will not be deflected from incapacity benefit. The hon. Gentleman must acknowledge that the Government have manifestly failed to meet their own objective of getting hundreds of thousands of people who would like to work into employment. Voluntary and charitable organisations have endorsed the Conservative party's proposals and are deeply disillusioned by the Government's approach.

Photo of Stewart Hosie

Stewart Hosie (Dundee East, Scottish National Party)

The right hon. and learned Gentleman seems to suggest that the voluntary sector and the organisations to which he refers will be more successful than the public sector generally. Has he compared the outcome of the pathways to work pilot projects with that of the examples that he cited from the private and charitable sectors?

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

I commented on that a few moments ago. I acknowledged that the pilot schemes were useful and that they had made interesting progress. However, I repeat that they are scratching at the surface. They are not making the kind of impact that voluntary, charitable and private sector organisations have already made over the past couple of years on getting people into long-term employment.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

I am conscious that this a short debate, so I will not allow further interventions. I am sorry.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

Well, I will give way to the right hon. Gentleman.

Photo of Tom Clarke

Tom Clarke (Coatbridge, Chryston and Bellshill, Labour)

I am sure that the right hon. and learned Gentleman appreciates that some of us have followed these matters for some time and recall when one of his predecessors as the Member for Kensington and Chelsea had responsibility for them. The right hon. and learned Gentleman mentions organisations such as Scope. Although there is of course great concern that we get matters of incapacity benefit right, does he recall that those organisations rightly led campaigns year after year to plead for the right of disabled people to get out of benefits and into work? Did he agree with those campaigns?

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

I agree with that. I pay tribute to the work of the right hon. Gentleman in those campaigns and the good progress that has been made, with many people in all political parties sharing the same ideal and objective. However, today's debate is about a slightly different issue: the fact that in the past few years, the progress that was made has slowed down and, in some cases, has not been delivered.

The policy over which the Secretary of State has been asked to preside has so far failed. I accept that that is a serious charge, but there are pretty important witnesses for the prosecution. The right hon. Member for Birkenhead, a senior Labour Back Bencher and former Minister, said:

"The Government has lost the plot on welfare reform".

If the Secretary of State wants the view of someone who has occupied his own post, I suggest that of his immediate predecessor, the right hon. Member for Sheffield, Brightside, who admitted that the system over which he presided was, to use his own delicate word, "crackers".

If those are simply the views of ex-Ministers and the Secretary of State will be influenced only by those of his current colleagues, he need look no further than the Minister for Employment and Welfare Reform, the right hon. Member for Barking—[Laughter.] I emphasise that that is a pure coincidence. She said in her own unforgettable words when referring to the welfare system no more recently than 1 November, as quoted in The Herald in Glasgow:

"So far, we have done sweet nothing."

If that is the view of the Minister, we on the Conservative Benches can be forgiven for endorsing her objective assessment of the Government's record so far.

I conclude with a tribute to the Prime Minister, who has put his commitment to welfare reform clearly on the line. He said way back in 1996 at a Labour party conference before he became Prime Minister:

"By the end of a five-year term of a Labour Government"—

that would have been 2002, three years ago—

"I vow"—

not I promise or I hope or I aspire—

"that we will have reduced the proportion we spend on the welfare bills of social failure . . . This is my covenant with the British people. Judge me upon it. The buck stops with me".

On that basis, we invite the House to approve the motion and to condemn the Government's abysmal failure.

5:06 pm
Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

"welcomes the Government's consistent commitment since 1997 to pursue welfare reform to create an active, enabling welfare state where rights match responsibilities;
supports the recent publication of the Principles of Welfare Reform, which builds on the foundations laid out in A New Contract for Welfare, published in 1998 and the Department for Work and Pensions' Five Year Strategy of February 2005;
commends the Government's achievements in helping 2.1 million children out of absolute poverty since 1997;
recognises the success of the New Deals, through which over 1.2 million people have moved into work;
notes that new claims for incapacity benefit have been cut by one third since 1997;
further recognises the importance of the National Pensions Debate in creating a dialogue with the public and building a consensus on pensions reform;
further welcomes the progress made on tackling disability discrimination, opening doors for disabled people to remain in or return to work;
in contrast, condemns the shameful record of the Opposition who spent more on administering the Child Support Agency than they paid out in maintenance and who allowed those on unemployment benefit to hit three million twice whilst also trebling the numbers on incapacity benefits between 1979 and 1997, costing the taxpayer billions and condemning millions of people to a life of benefit dependency."

I thank Sir Malcolm Rifkind for his kind words of welcome; I very much appreciate them. I, too, look forward to our exchanges inside and, I suspect, outside the House. I congratulate him on his speech. It was the traditional rhetoric that we expect from him: it was high on rhetoric and depressingly low on content—in fact, there was no content or substance whatever that would allow anyone inside or outside the House to have any inkling of his solution to the catalogue of misery that he described.

Photo of Paul Goodman

Paul Goodman ((Also PPS To the Chairman of the Party), Work & Pensions & Welfare Reform; Wycombe, Conservative)

You are the Government.

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

That is strangely perceptive of the hon. Gentleman. We are the Government, and we have won three successive general elections partly on the basis of our manifesto in this area, but more widely too.

The right hon. and learned Gentleman suffers from one significant problem, which was clear to all of us on the Labour Benches: not only has he no policy—let us leave that on one side; that is a big enough impediment for him—but I am afraid that no one believes a word that he has to say about welfare reform. The public are right not to do so. We remember his record and that of his right hon. and hon. Friends in government for 18 years. He said virtually nothing about that record during his speech. I intend to refresh his memory and that of all my hon. Friends.

I pay tribute to my predecessor, my right hon. Friend Mr. Blunkett, and I appreciate what the right hon. and learned Gentleman had to say about him. I hope that Members on both sides of the House will join me in recognising my right hon. Friend's passionate commitment to tackling inequality and to helping some of the most disadvantaged members of our community. I am sure that he will continue to make a major contribution to our debates on these and other issues both in the House and outside it.

There are without doubt a number of very demanding challenges that face me as a new Secretary of State, but defending this Government's record on welfare reform from criticism by Conservative Members is not one of them. The right hon. and learned Gentleman's main criticism today is that our approach to welfare reform is incoherent. I totally disagree with that analysis. Since 1997, we have taken forward a programme of radical reform of our welfare state. First and foremost, we have provided much more effective help for people looking for work through the new deal. We have taken action to ensure that work pays. The national minimum wage and tax credits have helped to make the transition from welfare to work possible for hundreds of thousands of our fellow citizens. We have made genuine inroads into the scandalous levels of poverty among pensioners and young families that we inherited when we came to office.

Photo of David Winnick

David Winnick (Walsall North, Labour)

Is it not a fact that almost from the moment that the Government came into existence eight years ago, the winter fuel allowance was introduced? It is now £200, as my right hon. Friend knows, and £300 for the over-80s. During the 18 years of Conservative government, despite constant demands from pensioners, Labour MPs and others, no such scheme was introduced. The only scheme that was in operation was one that offered payment if the temperature was below freezing for seven consecutive days, and people on income support received £7 or £8. Is that not one of the great differences between the present Opposition and Government?

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I am grateful to my hon. Friend and, if he will allow me, I would like to develop that theme in a minute.

We have taken action to improve the quality and efficiency of the services that we provide in the Department for Work and Pensions by establishing, for example, Jobcentre Plus and the new Pension Service. That adds up to a record of substantial achievement, and it stands in stark and plain contrast to the period in which the right hon. and learned Member for Kensington and Chelsea was in office. As I said, he singularly failed to refer to that record at any point, which was probably a wise decision on his part. However, I would like to refresh his memory of one or two matters.

When the Opposition were in power their policies meant that unemployment reached 3 million and there was a 300 per cent. increase in the number of people claiming incapacity benefit. Between 1979 and 1997, the number of people on incapacity benefit trebled from 700,000 to 2.6 million—the equivalent of 2,000 extra claimants every single week. The Conservatives' dismal record of incompetence and failure wrecked families and communities the length and breadth of the country. They managed the extraordinary feat of creating 3 million unemployed not once but twice during their period of office—a unique achievement in 20th-century history—not that they cared very much about it. Mr. Howard, whose own contribution was to add 1 million to the unemployment figures as Employment Secretary was quoted as saying that "unemployment never matters". He will soon have the opportunity to reflect on the accuracy of his observation.

The Conservatives were not content with raising the number of people claiming out-of-work benefits. Child poverty doubled, leaving Britain with the worst child poverty record in Europe. What did they make of that? Dr. Fox told the House that

"all we hear . . . is poverty, poverty, poverty—la, la, la, always on the one note . . . It is just boring for Conservative Members."—[Hansard, 22 October 1992; Vol. 212, c. 636.]

Last month, 51 Opposition Members voted for the hon. Gentleman to be their next parliamentary leader.

By 1997, one in five families had no one in work, and one in three children were growing up in poverty. No one can claim that opportunity and security were more widely distributed during the Tory years. They were not—the reverse was true. The words of the right hon. and learned Member for Kensington and Chelsea this afternoon bear no resemblance whatever to the record of his party in government. Indeed, if there is any incoherence in the House today, it concerns the difference between his words and the actions of his party in government.

The right hon. and learned Gentleman has a unique record, because he was a Minister for the entire period between 1979 and 1997. He cannot claim, as many of his hon. Friends have done in the past few years, that the record of the previous Government had nothing whatever to do with him. His problem is that it has everything to do with him. It is on his record that he and his hon. Friends will always be judged, not on their words. Even if he wants to airbrush the record and forget his party's contribution, we will not do so.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

At the beginning of his remarks, the right hon. Gentleman seemed to be justifying the Government's failures on the basis that his party had been re-elected to power on three occasions. The Government in which I was proud to serve were re-elected on four occasions.

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

Well, we shall wait and see how many times the present Government are re-elected. The right hon. and learned Gentleman may have the opportunity to resurrect his own leadership election campaign after the next election. He made a very good appeal for last-minute support this afternoon.

The right hon. and learned Gentleman said that he was deeply disturbed that the welfare reform Green Paper is to be published in January. I have difficulty reconciling the words of his motion and what he said today with the comments of Mr. Cameron—briefly the right hon. and learned Gentleman's rival and soon to be his new boss. The hon. Member for Witney said on 8 November in his speech to the Centre for Policy Studies:

"Conservative economic empowerment"—

that is something of an oxymoron, of course—

"is a long term agenda to lift more people more securely from dependency to self sufficiency. The details of our agenda will take years rather than months to develop."

So there we have it. We will be publishing our proposals for welfare reform within months of being returned to office, and we are accused of incoherence. The hon. Gentleman's proposals will not see the light of day for years, and we are invited to take the view that his party has a better alternative. What complete and utter rubbish.

We take a very different view of these matters. The difference between our approach and the approach of the right hon. and learned Member for Kensington and Chelsea could not be clearer. We believe in a modern, active, welfare state, able to help extend opportunities to people so that they can help themselves and their families, and we have put this new approach into practice in the face of opposition from both Conservative and Liberal Democrat Members in the House. His approach, by contrast, such as we are able to discern it, is all about limiting the support and help that is on offer.

Photo of Kali Mountford

Kali Mountford (PPS (Rt Hon Des Browne, Chief Secretary), HM Treasury; Colne Valley, Labour)

I am grateful to my right hon. Friend for reminding the House why we should not take lessons from Opposition Members on how to tinker with welfare reform. The policy that they seemed to outline today did not deal at all with the aspirations of people who need to get off benefit but do not have the necessary support. Simply extending the hours that a person can work while on benefit would not do it. Will my right hon. Friend make a commitment to ensure that people on incapacity benefit who wish to work—there are many of them—are fully supported in that transition?

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

Yes, that is precisely what we want to do. I shall shortly come to the Green Paper. I am grateful to my hon. Friend for making that important point.

We should remind ourselves what has happened since 1997. The right hon. and learned Gentleman said we had done nothing since 1997. He is a lawyer, and he should know the importance of studying evidence and drawing conclusions from it. Let me put my evidence to him. There are now more people in jobs than ever before—2.3 million more than in 1997. Unemployment is at its lowest level for nearly 30 years, with long-term youth unemployment 90 per cent. lower than in 1997. With almost three quarters of the working-age population in work, our employment rate is the highest of any of the G8 countries. The right hon. and learned Gentleman, not surprisingly, failed to mention any of those facts. I suspect Mr. Laws is likely to follow suit, unless he quickly amends his speech to take into account what I have just said.

By supporting people in work and providing financial security for those who cannot work, we have helped 2.1 million children and almost 2 million pensioners escape from levels of absolute poverty since 1997. That is a positive record. We have done it, first, by building on a strong and stable economy, with low inflation, low interest rates and consistent growth—which the Opposition consistently failed to manage—and secondly, by embarking upon a radical transformation of the welfare state, introducing the most comprehensive menu of support ever provided. It is a menu of support tailored to the needs of the individual, focused on the right to work as the best route out of poverty, and balanced by a clear set of responsibilities on the individual seeking benefit.

The new deal has helped more than 1.2 million into work since it was started in 1998. The lone parent employment rate has increased by 11 percentage points since 1997. Independent studies have shown that half of the increase in the lone parent employment rate since 1997 can be attributed directly to the impact of the new deal. Because of the measures that we have taken, there are now nearly 1 million lone parents in work and the numbers of lone parents on income support have fallen by more than 200,000 since 1997. When the Conservative party was in power, lone parents were stigmatised rather than supported. It now says that it wants to end its war on lone parents, but it has its work cut out to convince anyone that that is so. Mr. Letwin talks instead of

"painful cuts in the new deal."

I am sure that will be a huge comfort to lone parents up and down the country.

The new deal for lone parents has helped nearly 320,000 lone parents back into work, yet Conservative Members have confirmed again today that they would scrap it, and so would the Liberal Democrats. Independent research shows that that would not even save money, as the new deal for lone parents saves the Exchequer £40 million a year through reduced benefit payments and increased tax revenues resulting from getting people off benefit and back into work.

If the charge of incoherence can be levied at anyone today, it is the right hon. and learned Member for Kensington and Chelsea who is most at risk. We share neither his analysis of the problem nor his proposed solutions. We believe—our welfare reforms are proving this—that Britain can best seize the opportunities and respond to the challenges of social, economic and demographic change, if we support all those who can and want to work to enable them to make their own contribution to our society.

Photo of Liz Blackman

Liz Blackman (PPS (Rt Hon Geoff Hoon, Lord Privy Seal), Leader of the House of Commons; Erewash, Labour)

The pathways to work pilot in Derbyshire is doing particularly well at supporting physically disabled people back into work, but it faces much more of a challenge in supporting those with mental disabilities and mental illnesses. Will my right hon. Friend assure me that he will give more thought to how we can correct that imbalance?

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I shall certainly do so. My hon. Friend is right to draw attention to the fact that that is one of the biggest challenges that we face in tackling the problems that we are discussing today. Some 40 per cent. of new incapacity benefit claimants have a mental health problem, and the matter requires a broader response than the work of the Department for Work and Pensions. We must actively involve the national health service and other partners, particularly local authorities and the voluntary sector, in the future reforms of the relevant support packages.

Photo of Edward Miliband

Edward Miliband (Doncaster North, Labour)

Will my right hon. Friend comment on whether pathways to work allows existing incapacity benefit claimants to take up the scheme? I understand that it does, but in his speech the shadow Secretary of State categorically said that it does not.

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

My hon. Friend is right not to believe everything that the right hon. and learned Member for Kensington and Chelsea, who has a closed mind on all those issues because his agenda essentially concerns withdrawing active support from people who need it to get back into work, has to say on the matter.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

indicated dissent.

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

The right hon. and learned Gentleman spoke for 35 minutes, but he was unable to provide a single policy option or indicate his strategy on providing more support for people who want to work and who feel that they can work. My hon. Friend Edward Miliband is right to say that the pathways to work pilots have made a significant difference to employment rates and the sustainable employment rate, which is the most important thing.

Photo of Edward Balls

Edward Balls (Normanton, Labour)

To be fair to Sir Malcolm Rifkind, it is not right to say that he made no policy proposals at all, because he confirmed his support for the abolition of the new deal, which is a policy proposal. I think that my right hon. Friend should correct the record.

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I stand corrected, but in my book the abolition of the new deal is not a serious policy proposal; it is a giant step backwards that flies in the face of all the evidence on what works. If the right hon. and learned Member for Kensington and Chelsea wants to convince anyone of his sincerity about his policies on welfare reform, he should start by studying, rather than ignoring, the evidence on what works.

Photo of Philip Dunne

Philip Dunne (Ludlow, Conservative)

As the Secretary of State is fresh into his job, I appreciate that he may not have had the benefit of studying the evidence on pathways to work, which we all hope produces the results that he anticipates. However, the evidence is not clear cut, because only three out of the seven pilot areas have been going for more than 12 months, so to argue that those schemes have already produced sustainable jobs is a little premature.

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

It is a nice experience to be patronised by the hon. Gentleman. I am sure he will have other opportunities to do so in future. I point out to him that there is a growing body of evidence about the effectiveness of the pathways to work pilot. He says that the he wants them to work. He needs to have a conversation with the right hon. and learned Member for Kensington and Chelsea, who has already decided that they are failing and wants to cut their budget.

Photo of Huw Irranca-Davies

Huw Irranca-Davies (PPS (Rt Hon Tessa Jowell, Secretary of State), Department for Culture, Media & Sport; Ogmore, Labour)

Will my right hon. Friend accept my invitation to visit the pathways to work project in my area in the near future? To confirm what was previously said, not only is the scheme reaching out to its target audience, but 1,000 individuals on long-term incapacity benefit have self-referred themselves on to it and are getting into work.

Does my right hon. Friend agree that the difference between the two Front Benches is typified by the fact that the constituency of Sir Malcolm Rifkind is 214th in the incapacity benefit league table, whereas my constituency is 14th? There are more lessons to be learned from my constituency than from Kensington and Chelsea.

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

Yes, indeed. I look forward to accepting my hon. Friend's invitation. I hope that he is aware that my right hon. Friend the Minister for Employment and Welfare Reform is due to visit his constituency—tomorrow, I believe, but either way she is on her way to South Wales. That is my first decision.

When we came into office in 1997—[Interruption.] Conservative Members are huffing and puffing because they do not like to hear what we have been doing. This debate was apparently motivated by a concern that the Government have been doing nothing on welfare reform. I am simply trying to set the record straight.

When we came into office in 1997, there was something that we wanted to put right. I am sorry to say that, having had 18 years to try to get it right, the Conservatives spectacularly failed to do so, despite 14 attempts to produce legislation. Only the most blatant forms of direct discrimination against disabled people had been outlawed. Sadly, there was still no protection for disabled employees in small firms or for disabled pupils and students. The Disability Discrimination Act 1995 lounged—that is the only description for it—on the statute book. It fell significantly short of its potential and provided no champion to help people to enforce their rights or to give employers advice and guidance on how to meet their legal obligations.

In March this year—again, before the right hon. and learned Member for Kensington and Chelsea returned to this House, so he might not be aware of it—the Disability Discrimination Act 2005 completed the most far-reaching programme of disability rights legislation that any European country has put in place. It fulfilled our manifesto commitment to deliver enforceable and comprehensive civil rights for disabled people, and represented a major landmark on the road to a world in which disabled people can be empowered to live independently and be respected as equal members of society.

The right hon. and learned Gentleman mentioned the new deal. Our new deal for disabled people has seen nearly 75,000 job entries since its launch in 2001, with 200,000 disabled people helped into work through our total package of new deal programmes. We are seeing very encouraging early results from our pathways to work pilots, which bring together Jobcentre Plus, the health service, GPs and employers to improve the package of support that we offer to people on incapacity benefit.

In the first year of the pilots, the number of recorded job entries for people with a health condition or disability had almost doubled compared with the same period in the previous year. I hope that the right hon. and learned Gentleman will think that that is a step in the right direction. Their continued success has driven a significant increase in the proportion of people leaving incapacity benefit in the first six months of their claim, compared with non-pilot areas. We are now achieving progress in helping people off incapacity benefit, with new cases now down by a third since 1997 and the first falls in the total count, which is down by 41,000 in the year to May 2005.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

Does the Secretary of State realise that the answer to the question I am about to ask is awaited as eagerly by his hon. Friends as it is by mine. Will he use this opportunity to confirm that the Prime Minister, or the Prime Minister's office, has made representations to the Department of Work and Pensions, to his predecessor, or possibly to himself, that would have the effect of toughening up entitlement to incapacity benefit?

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I am not going to talk about correspondence between the Prime Minister and me, just as—let us be clear—he would not have done when he was standing at this Dispatch Box. He can forget about that.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

Will the Secretary of State give way?

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

No, I am going to make this point, because the right hon. and learned Gentleman has asked me about it. I have made it repeatedly clear that the reforms that we are making are based on our manifesto and the five-year-plan strategy that my predecessor, my right hon. Friend the Secretary of State for Trade and Industry, Alan Johnson, produced in February. It is clear to anyone that that agenda is not about cuts. I have made that explicitly clear and I do so again today.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

Will the Secretary of State therefore state unequivocally that the Green Paper—I appreciate that we do not yet have it and that it is now not due till January—will contain no proposals that have the consequence of reducing entitlement to incapacity benefit compared with current rates?

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I have made it clear that the programme is not a cuts programme. It is not about cutting benefits.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

Answer!

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I am explicitly answering the right hon. and learned Gentleman. The territory that the Green Paper will occupy is that which we mapped out in the manifesto and our five-year plan.

We are now experiencing progress in helping people off incapacity benefit, with new cases down by a third since 1997 and, as I said, the first falls in the total count—down by 41,000. However, we have to accept the need to modernise the way in which we deliver our services. That is why we have sought improvements in the service that Jobcentre Plus provides.

Jobcentre Plus helps almost 3,000 people into jobs every working day. It does that against a background of a major efficiency exercise. It has reduced its staff from around 86,000 in March 2002 to 74,000 in March 2005 and is on course to reduce the total number of staff employed to 65,650 by March 2008.

Ninety-seven per cent. of our customers are now being paid their entitlement by direct debit. That move to direct payment will save the taxpayer more than £1 billion over the next five years. Centralised pensions centres provide a new telephone-based service, which is designed around the needs of today's 11 million pensioners. One year ahead of schedule, the Pension Service has already achieved the target of 2.1 million pensioners in receipt of the guarantee element of pension credit by 2006. Taken with our other measures to help pensioners, including winter fuel payments, free TV licences for the over-75s and the pension credit—all of which Opposition Members opposed—the average pensioner household is now £1,400 a year better off compared with the 1997 system, with the poorest third on average £1,900 better off.

The right hon. and learned Gentleman made several references to the lack of progress on welfare reform. The evidence contradicts his assertions. We stated in our manifesto that we would move further on the welfare reform agenda because we know that the challenges that confront our country and our people will accelerate. We are preparing the ground for that now.

Photo of David Laws

David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

Will the Secretary of State confirm that there will be a statement on the reform or abolition of the Child Support Agency this year?

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

We will make a statement about our reforms for the Child Support Agency. My right hon. Friend the Member for Sheffield, Brightside said that he intended to introduce the proposals before the end of the year and I shall try to stick to that. We must discuss the appropriate format for the statement—whether we make it here or, as was planned, in the Select Committee. However, there will be a proper opportunity for hon. Members to examine the proposals and pass judgment on them.

We strongly believe that people have the right to work and the right to the support that will enable them to do so. However, alongside those rights go responsibilities—the responsibility, when possible, to take up the support, actively to seek work and for each person to make their contribution to the well-being of our society.

Photo of Stewart Hosie

Stewart Hosie (Dundee East, Scottish National Party)

The Secretary of State has been generous in giving way. On rights and responsibilities, the pathways to work pilots have been labour intensive. Others will correct me if I am wrong, but I believe that the Renfrewshire project had 40 additional advisers plus 40 additional rehabilitation staff to help with health issues. Will the Secretary of State guarantee that, in expecting people to take responsibility, the Government will continue to contribute the correct amount of resources, and all the additional advisers and rehabilitation staff who are required so that the pilots are not perceived to be a cost-cutting exercise, but continue to be a genuine method of getting people who can work back into work?

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I do not think that anyone could fairly or accurately describe the pathways to work projects as cost-cutting exercises. That is, quite frankly, ridiculous.

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

The hon. Gentleman says that that was not his question, but he certainly implied that the pathways to work projects were cost-cutting exercises. He used those words quite deliberately. We shall ensure that the active support that we provide for claimants in receipt of incapacity benefit is fit for purpose and does the job that we want it to do, which is to get people back into work, when they are able to work, as quickly as possible. Of course we will provide the appropriate level of resourcing to ensure that we can deliver such an effective policy.

I was talking about rights and responsibilities. We want to continue to pursue this agenda because we want to continue to work towards our aspiration of an 80 per cent. employment rate, which will help another 1 million people to escape from the trap of incapacity benefit. That is why I wholeheartedly endorse the principles of welfare reform that my right hon. Friend the Member for Sheffield, Brightside published last month, and why I am committed to taking forward this reform agenda, and to building a modern, active and inclusive welfare state that balances rights with responsibilities, that matches the respect of society for the individual with respect for society by the individual, and that, above all, helps people to move away from dependency and to make their own way in the world.

In our modern world, people can do 10 jobs in a lifetime instead of one, and they might even pursue several careers. A renewed welfare state must provide the support that enables people to make the transition from one job to another, by assisting them through rapid change and insecurity, helping them to balance the multiple pressures of work and family life, and enabling them to re-establish their independence and to benefit from the opportunities that change creates.

In our Green Paper, which the right hon. and learned Member for Kensington and Chelsea mentioned, we shall go further to tackle exclusion from economic activity and independence across the working-age population. We shall establish the necessary steps that we all need to take—as individuals, in Government and in the wider communities—to engage people with social and economic activity. We shall outline further measures to simplify and streamline the benefit system. We shall also develop the right support systems through which we can raise employment, skills and productivity and improve social inclusion and cohesion, at a time when the integration of communities worldwide has never been more important. As has now been made clear, we shall set out our detailed proposals in January.

Photo of Kali Mountford

Kali Mountford (PPS (Rt Hon Des Browne, Chief Secretary), HM Treasury; Colne Valley, Labour)

My right hon. Friend mentioned dependency. I am particularly concerned about people who are in the early stages of claiming incapacity benefit. Will he take a particularly close look at how we can raise people's aspirations when they have just been told that they cannot carry on with their former employment, and ensure that, in the long term, they are properly supported in finding a different career, so that they do not feel that their life has ended at that point?

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

Of course we shall do that. There are a couple of important issues that need to be tackled head on in this reform programme. One is that we need to restore the confidence of people with a disability or an illness coming into the benefit system that they will be able to work again soon. About 90 per cent. of people who receive incapacity benefit expect to be able to get back into work soon. Sadly, however, the present system does not ensure that that happens, and we need to tackle that problem head on. That will be at the core of the proposals in the Green Paper.

Photo of Michael Connarty

Michael Connarty (Linlithgow and East Falkirk, Labour)

One cost-cutting exercise that has been admitted to by the Department under my right hon. Friend's predecessor—and his predecessor before him—was the closure of many jobcentres. I was promised a Jobcentre Plus in the mining village of Bo'ness, but what I got was a closure, and people were transferred on to the books of a jobcentre 10 miles away. Can I have a guarantee that people who seek to come off benefits and get back into work, or to change jobs, will not be forced to travel 10 miles without being given adequate financial support to cover their costs?

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I shall have to look into the particular circumstances that my hon. Friend has drawn to my attention. Let me put it clearly on record, however, that the modernisation and reform of Jobcentre Plus is not a cost-cutting exercise. The reforms have been backed by more than £2 billion of new investment in systems, technology, buildings and premises to improve the delivery and modernisation of that service. One of the challenges that the Green Paper will need to address—I hope that this will give my hon. Friend some reassurance—is the need to ensure that our employment advisers are out there in the community as well. We know that that can be effective and work well. Perhaps we need to look into that in my hon. Friend's constituency. I am sure that the Minister for Employment and Welfare Reform will deal with this issue when she winds up the debate.

Photo of Tom Clarke

Tom Clarke (Coatbridge, Chryston and Bellshill, Labour)

My right hon. Friend is being very generous in giving way so often. Many of us feel that he should not be rushed into setting a timetable in regard to incapacity benefit. The important thing is to get this right, because we are dealing with individuals, their families and their lives. Some of my hon. Friends have referred to the practical issues. Does my right hon. Friend agree that when medical professionals meet people, it is important for them to show both competence and sensitivity, which, sadly, has not always been the case hitherto?

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I am sure that we will wish to make certain that it is the case. I am grateful to my right hon. Friend for offering me the extra time that I clearly need to ensure that we get all this right.

The House will be glad to know that I shall skip the rest of my speech, because I think that most of the ground has been covered. I shall confine myself to saying that I am proud that this Labour Government have helped to transform the lives of millions of people through a programme that promotes opportunities for the many, not the few. With opportunity comes responsibility, which is why our programme of welfare reform will build on both. I look forward to proceeding with the next chapter of our reforms in the new year.

Having heard what was said by the right hon. and learned Member for Kensington and Chelsea at the beginning of his speech, I have no doubt that the record of this Labour Government will be strongly supported by all my right hon. and hon. Friends tonight.

5:41 pm
Photo of David Laws

David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

I congratulate Sir Malcolm Rifkind on securing the debate. Unless my memory fails me, this is our first opportunity to debate welfare issues in the Chamber since the general election, apart from Work and Pensions questions on a couple of occasions.

I must confess that when the right hon. and learned Gentleman and I accepted our portfolios after the election, we feared that, given a hyperactive Secretary of State with a record in his previous Departments of frequently announcing initiatives in all sorts of policy areas, we would rapidly be faced with a series of proposals and statements from the then Secretary of State on such issues as Child Support Agency reform, housing benefit reform and incapacity benefit reform, and would be rushed into taking positions on all of them. Every Monday since I took on my portfolio in May, I have come to work expecting an announcement from this Secretary of State or his predecessor. We are still waiting for an announcement, but it seems possible that the only welfare reform issue on which we shall hear any detailed news about the development of Government policy before the end of the year will be the one that the Government have contracted to an outside agency, the Turner commission.

The Secretary of State was kind enough to touch on CSA reform earlier. He implied that it was the one issue on which we might expect to hear an announcement before the end of the year. Will he clarify his response to my question? He appeared to be saying that it was possible that a major announcement on reform or abolition of the CSA would emerge in the form of a statement by him or one of his Ministers—I am not sure which—to the Work and Pensions Committee. A few weeks ago, it was expected that the former Secretary of State would make such a statement to the Committee tomorrow, when I believe that it will take evidence from the present Secretary of State.

I hope that the Secretary of State is not saying that he will make a major statement to the Select Committee rather than in the House, where members of all parties would have an opportunity to question him. As a member of the Government and as a constituency MP, he must realise that this is a matter of great concern to Members in all parts of the House. Notwithstanding the excellent job that will doubtless be done by our colleagues on the Committee, it would be very unsatisfactory if such a major statement were not made in the House. I ask the Secretary of State to reflect on that, and to clarify the position before the end of the debate.

May I congratulate the new Secretary of State on taking over his responsibilities? He has an incredibly important job to do, and I suspect that the job of Secretary of State for Work and Pensions is not looked on with a great deal of envy. It is a heavyweight portfolio, not one for which policy can be made up on the hoof, and it requires constant liaison with the Treasury to establish funding issues. It is not an easy portfolio, but is one of the most important in the Government, not only because it has a larger budget than any other Department, but because it impacts on all our constituents in many different ways. I want to touch on some of those different ways today.

It is fair to say, Mr. Deputy Speaker, at the outset of what is a pretty short debate that there are clearly some respects in which the Government are justified in boasting about their performance, and certainly their commitment, since 1997 in comparison with what went before. Funding has been targeted at areas that have not brought a particularly large political return for the Government, which is an indication of their seriousness in dealing with issues that were not high on the political agenda before 1997.

I also hope, however, that the Secretary of State will acknowledge that, in a range of areas, there are very serious concerns about the operation of Government policy and its future development. I wish to speak briefly today on four issues about which major concerns have been expressed about Government policy—concerns that will be shared on the Government as well as the Opposition Benches. The first relates to an aspect of the welfare system that we have not discussed today—the tax credit system, which is not directly the Secretary of State's departmental responsibility, but will be a matter of concern to him. The second is the Child Support Agency, which appears in both the Conservative and Government motions, but we have not had much opportunity to debate it so far today. I also want to speak briefly about pensions reform and, finally, incapacity benefit reform.

Let me tell the Secretary of State that, on those issues, although we will endeavour to do our best to make life as difficult as possible for this Department in the years ahead when we believe that policy is wrong, we are more than willing to work constructively to find solutions, particularly in matters for which cross-party agreement is necessary in order to secure stability and certainty for the future. The issue of pensions policy is particularly relevant there.

I hope that the Secretary State will take a keen interest in the tax credits system, even though it is not directly his responsibility. Since 1997, an increasing degree of influence or even control over the Department for Work and Pensions has come from the Treasury. If I may say so, the Treasury A-team has turned up today in the shape of Ed Balls, who is no longer in his place, and the hon. Members for Doncaster, North (Edward Miliband) and for Dudley, North (Mr. Austin). I hope that that shows the degree of interrelationship between the two Departments and it may also suggest that the Treasury is continuing to do what it has done since 1997—keep a close eye and a short leash on Secretaries of State for Work and Pensions.

I hope that the Secretary of State will, in looking at the development of the benefits system, reflect on whether it has really been sensible to transfer responsibility for so much of the means-tested benefit budget away from his Department to the Treasury? In particular, has it been right to put the administration of means-tested benefits for children and for people in work outside the Department for Work and Pensions, which is well used to dealing with that low-income client group, and making it a Treasury responsibility? Frankly, what I have heard in my constituency from people who work in the Secretary of State's Jobcentre Plus offices, is that that has been immensely unhelpful to the joined-up nature of the benefits system. It has not been helpful for tax credits and other benefits to be sitting in two different Departments. It has not been helpful for claimants' understanding of their entitlements and it has not been helpful for people trying to get back into employment. It has not helped the understanding of the interaction of different benefits.

We have also seen the disastrous consequences of the lack of understanding in the Inland Revenue of the difficulties faced by many people on low incomes. The system has not only generated massive overpayments of £2.2 billion in the first year, but has driven hundreds of thousands of people into debt and poverty as a consequence of the way in which tax credits were withdrawn. Labour Members, who are committed to dealing with poverty, should be willing to listen and to address these criticisms. They will be aware from their own constituency work of that system's impact on many people on low incomes. I hope that the Secretary of State can liaise with the Treasury on whether these tax credits are sitting in the right place, and use his special position to continue to lobby the Treasury to make the changes necessary to protect the interests of those on very low incomes. That includes not automatically withdrawing tax credits before such people have had a chance to establish whether the overpayments were due to official error—the ombudsman herself has been very critical of that—and considering whether this volatile system is the right way to help such people, or whether we should go back to fixed awards, which would create greater stability. So far, however, the Treasury has shown no willingness to do that.

Photo of David Davies

David Davies (Monmouth, Conservative)

I must say that I agree with every word that the hon. Gentleman has said. Does he share my concern at the fact that, in some cases, Government agencies are refusing to take complaints from very poorly paid people who actually want to give the money back to the agency? They do not want it sitting in their bank account, given the obvious temptation, but they are encountering a great deal of intransigence on the part of the authorities, who seem not to want to reclaim that money immediately.

Photo of David Laws

David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

I am afraid that I recognise precisely the issue that the hon. Gentleman raises. In recent months, a number of people have pointed out to me at my constituency advice centre that, on suspecting that they had received an overpayment of tax credits, they had contacted the Inland Revenue, said that they wanted to repay the money and were told that there was no problem. However, they were contacted six or nine months down the line and told that there had indeed been an overpayment. Of course, by that stage the Inland Revenue is already recovering the money automatically. When the recovery takes place in-year, there is no protection of people's income in the way that the money is withdrawn. That is causing a lot of problems for people on low incomes.

Photo of Stephen McCabe

Stephen McCabe (Birmingham, Hall Green, Labour)

Given the hon. Gentleman's dissatisfaction with tax credits, will he be advising those of his colleagues who avail themselves of the tax credit system to stop taking advantage of it, just as he advised them to stop taking advantage of the pension system—a policy announced today?

Photo of David Laws

David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

Given that hundreds of thousands of people are being driven into real poverty by the failure of, and maladministration of, the tax credit system, it is very sad that the hon. Gentleman seeks to make a rather cheap party political point about what is a very small number of claims. This issue affects his constituents, as well as mine. Hundreds of thousands of incredibly vulnerable people are making claims, and he would not be taking this matter so lightly if he had sat in the same advice centre that I did a couple of weeks ago. I heard a string of people on very low incomes—£10,000 to £11,000—explain that they face frightening repayments of £5,000 or £6,000, often as a consequence of errors caused by people other than themselves.

The second issue, which has not been discussed much today—it certainly was not discussed much by the Secretary of State, or by the right hon. and learned Member for Kensington and Chelsea, perhaps because of his party's connection with this debacle—is the problem with the Child Support Agency. Since its introduction in 1993, its operation has been a disaster. Given that we have known that it was failing for a long time, and given that the Prime Minister acknowledged that it was a mess back in 1998, it is surely astonishing that nothing has been done to make the system work more effectively. As a result, billions of pounds in maintenance due to some of the poorest families in the country has not been paid, and an unbelievable backlog of a third of a million cases are sitting in the CSA. Indeed, 80,000 of them have been sitting there for more than two and a half years without being processed. That demonstrates not only that the CSA has been a failure since it was established, but that it continues to be so. It is managing to collect only £1.85 for every pound spent on administering the system. In countries such as Australia, the collection rate is approximately £8 for every pound spent.

We Liberal Democrats were interested to hear the Prime Minister say last week that the CSA is not fit for purpose. We thought that out of that might come the serious prospect of radical reform, be it reform of the existing arrangements, or the transferring of the CSA's responsibilities to the Inland Revenue—several Members from all parts of the House have suggested that—to enable the information that we currently collect on people's incomes to be used more effectively, and to enable a much greater deduction from the earnings of those who are determined to evade their responsibilities.

Journalists and others such as Mr. Field left the House in a state of excitement that day, thinking that the Prime Minister had announced a policy on the CSA. However, when journalists phoned the Department for Work and Pensions and the No. 10 press office to check, they established that there was no such policy. It seems as if the Prime Minister was making up policy on the hoof in this area, as he seems to have done since 1998. That is why it is particularly important that there be an early opportunity for the Secretary of State to introduce proposals that tackle these problems, which have existed for many years, in a fundamental way, rather than simply seeking to gloss over them.

Photo of Peter Bone

Peter Bone (Wellingborough, Conservative)

As a new Member of Parliament, I have been shocked to discover the distress that the CSA has caused families. I understand where the hon. Gentleman is coming from, but can he outline where improvements could be made, or is it too late? Does the CSA need to be scrapped?

Photo of David Laws

David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

I see the same desperation among constituents that the hon. Gentleman sees. I am particularly concerned about the fact that many of our constituents seem to have given up all hope that the CSA will ever work. I have noticed in the past year or so that, while tax credits have taken off as an issue raised at constituency advice centres, the number of CSA cases raised seems to be going down. However, that reduction does not mean that such problems do not exist; rather, I suspect that many people have been bashing their heads against a brick wall for so long that they have given up.

Mr. Bone asked what the solution to this problem is, and it is clear that it consists of a number of elements. First, the CSA's computer system is not working properly. Given the amount of detail with which it has to deal, if it is not effective, major problems will arise. Secondly, there are simple administrative failings. That is staggering, given how long the CSA has been around and the number of attempts that must surely have been made to reform the system. I was astonished to be told a few weeks ago by an expert on the CSA that there is currently no obligation on non-resident parents to notify the CSA of a change of job or of address. That is one of the most obvious, common-sense, miniscule proposals that could possibly be made. However, it has since been confirmed by a DWP Minister that there is no such obligation.

Photo of Jeremy Hunt

Jeremy Hunt (South West Surrey, Conservative)

Does the hon. Gentleman agree that one big problem with the CSA is its complex relationship with the benefits system? People who go on to benefit have their CSA case de-prioritised; if they then come off benefit, it is re-prioritised. That complex web makes it very difficult for people to know where they stand with the CSA.

Photo of David Laws

David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

The hon. Gentleman is right. In fairness to the CSA, the hard core of cases that it is trying to deal with involve some of the most difficult families in the country in terms not only of their willingness or otherwise to make the assessed maintenance payments, but of the number of changes in their circumstances. That argues for introducing a simple system and—to us—for folding the CSA into the Inland Revenue, so that it can use the large amount of information that the Revenue already holds on people's incomes. It probably also argues for greater use of deduction at source from the earnings of those who are unwilling to pay, which is the Australian approach. The Australian deduction-of-earnings-at-source rate is about twice the UK's. As a constituency MP, I am often amazed by the reticence of the CSA to put deduction-of-earnings orders in place, despite the fact that people are often not willing to meet their maintenance liabilities.

Photo of Anne Begg

Anne Begg (Aberdeen South, Labour)

I am somewhat confused about Liberal Democrat policy in respect of the CSA. The party used to favour returning that agency's responsibilities to the courts, but the hon. Gentleman seems to be proposing that they should be handed over to the Inland Revenue, even though he has spent a large chunk of his speech criticising that agency for its failure to deliver on tax credits. Alternatively, is he just going to tinker at the edges of the problem? After what he has said, I am totally confused about where his party stands.

Photo of David Laws

David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

The hon. Lady should pay more attention to Liberal Democrat policy statements. Perhaps she would like a standing invitation to the conferences that my party holds around the country, as that would enable her to track the development of our policy on these matters. However, I can assure her that my party's policy is to fold the CSA into the Inland Revenue. That is because the Inland Revenue already collects a lot of information about the incomes of people who evade their responsibilities, and because it would be easier to deduct the money owed at source.

Photo of David Laws

David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

No. I am going to press on and deal with a couple of other issues, as time is short. I hope that reform of the CSA will be an early priority for the Secretary of State, and that he will undertake to make a statement about it to the House of Commons rather than simply to the Select Committee.

The two other issues that I want to mention are reform of the pension system, and reform of incapacity benefit. I do not expect much information on pensions from the Secretary of State as he is entitled to say that he is waiting for the report of Lord Turner's commission. The leaks to various media sources about the contents of that report seem relatively authoritative, but we will see whether they turn out to be as accurate as most people assume. When he responds to the announcement next week of the commission's final conclusion, I hope that the right hon. Gentleman will not try to give answers to all the points that are raised. We do not expect that of him, but we do expect him to give a signal on two issues.

First, I hope that the Secretary of State will give us an indication as to whether he accepts what seems to be the consensus outside Parliament, and among the three commissioners—that the increasing reliance on a complex, means-tested pension system is unsustainable over the long term. I hope that he will make it clear that, even if means testing has been necessary as a way of targeting money on poor pensioners in the short term, he will move away from it in favour of a simpler state pension system that will incentivise private saving over the long term.

The Secretary of State will also have to address the question of fairness in the public and private sectors. If the leaks about Lord Turner's report are accurate, it is likely that he will suggest an increase in the state pension age to 67 or 69. It would therefore appear very odd for the Government to sign off on a deal with public sector workers that would allow them—even those who have not even joined the public sector yet—to continue to retire at the age of 60 for a number of years after the introduction of Lord Turner's proposal to set the state pension age at 67. I hope that the Secretary of State will acknowledge that it may be necessary to return to the issue of public sector pensions reform. The office of the Prime Minister seemed to do as much in comments made to The Times in recent days. The matter needs to be looked at more in a more fundamental way. It is possible that a second independent report will need to be commissioned—not necessarily to be compiled by Lord Turner—on the future sustainability of the pension system.

Photo of John Hutton

John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I am sorry to interrupt the hon. Gentleman, and I know that other hon. Members want to speak, but I am very struck by his request that we revisit the deal on public sector pensions. Mr. Burstow condemned the Government for proposing that new entrants—let alone existing scheme members—should have their pension age increased to 65. What is his view on that response? His position seems totally inconsistent with it.

Photo of David Laws

David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

The Secretary of State will know that the view among Liberal Democrat Front-Bench Members has been perfectly consistent, and that we have criticised the deals struck by the Secretary of State for Trade and Industry. If he wants to enlighten us in this debate, will the right hon. Gentleman say whether he thinks that the deal that the Government have struck with some major public sector unions has been helpful to him, and to Lord Turner's commission, in moving the debate forward on this key issue?

We await the Secretary of State's comments on 30 November. We will find out then whether his views are in line with those of the Secretary of State for Trade and Industry, or whether they are more in line with those of the Prime Minister. The latter seems to be very unhappy with the deal that has been struck.

Photo of Adam Afriyie

Adam Afriyie (Windsor, Conservative)

Does the hon. Gentleman share my concern that the complexity of applying for tax credits and benefits, and of making claims to the CSA—all of which requires long forms to be filled in—deters the least well off and most vulnerable people in society, who often suffer from dyslexia and similar learning difficulties?

Photo of David Laws

David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

I agree precisely on that point. One of the challenges for the Government, and for all political parties, is to simplify the tax and benefits system. A couple of weeks ago, a person came to one of my advice centres from whom a total of between £4,000 and £5,000 in tax credits was being reclaimed. He had learning difficulties, and had been put in a work placement. He had no understanding of how the tax credits system worked, and was therefore facing a very unfair recovery process. Moreover, Government policy is very ambiguous about whether he would be required to repay that money.

Finally, I turn to the question of incapacity benefit reform. We welcome the Government's intention to look at the matter seriously. Over the past 20 years, there has been a turnaround in the number of people on unemployment benefit and incapacity benefit. In the early 1980s, between 2 million and 3 million people claimed unemployment benefit, and very many fewer claimed incapacity benefit. The change since then has been enormous, and the number of people on incapacity benefit is now between 2.6 million and 2.7 million.

Clearly, that is extremely wasteful for the economy, but it is often very undesirable for the people involved as well. As the right hon. and learned Member for Kensington and Chelsea noted, the Government have said for eight years that a million people on incapacity benefit want to get back into employment. The fact that that figure of a million people has been used year after year underlines the lack of an effective policy so far to change the system.

We believe that the Pathways process helps people to get back into employment. I have visited the Pathways centre in my Yeovil constituency and it seems to be working well so far, although relevant statistics are fairly modest, as the system has been in operation for only a limited period. However, we hope that the Secretary of State will be willing to fund the Pathways process across the country, and that he will not come under pressure to deliver savings in a way that could damage incapacity benefit reform. Such savings might be achieved by time limiting payments or by turning a portion of the payments into vouchers, but they would hit a very vulnerable group of people.

Although some people on incapacity benefit would like to work, are capable of doing so and would be helped by the Pathways process, I hope that the Secretary of State has got the message that some very vulnerable people—whose conditions are often difficult to detect—are very worried about the proposals that the Government might bring forward. They are keen to get an assurance that their position and vulnerability will not be threatened by a precipitate attempt to secure savings to fund the Pathways process.

By the time that we next have the opportunity to debate welfare reform, I hope that the Government will have given us policies of more substance than has been the case over the past six months.

Photo of Alan Haselhurst

Alan Haselhurst (Deputy Speaker)

Order. It is appropriate for me to remind the House now that Mr. Speaker has imposed a 10-minute limit on Back-Bench speeches. If hon. Members can make do with less than that, they will earn the gratitude of their colleagues.

6:09 pm
Photo of Stephen McCabe

Stephen McCabe (Birmingham, Hall Green, Labour)

I am grateful for the opportunity to take part in this short debate. I found the contribution from Sir Malcolm Rifkind intriguing. It was almost as though he had never been away.

Debates such as this are an opportunity to probe the Opposition. As Opposition Members have spent the past two months touring the country and the television studios with the tale of two Davids, this could be a useful debate. I recently had a glimpse of one David, Mr. Cameron, giving a speech in Birmingham, in which he attacked the Labour party's approach to welfare. He told us that his vision for the future promises a huge expansion of the voluntary sector. I do not know whether that was a code for cuts, but I was a bit disturbed when he went on to say what he thinks the sick, the unemployed and the disabled need. Apparently, they do not need the new deal, access to work or pathway-to-work pilots. No, according to him they need the confidence—note the confidence, not the money—to buy a new suit. Well, maybe old Etonians whose confidence has taken a bit of a knock need a quick shopping spree and all is okay, but that is not my experience of how we need to deal with some of the hard problems we face today. To parody that speech a little, I could point out that the hon. Gentleman also commented on Labour's DNA in our approach to welfare. It is my view that it is the Tories' DNA that characterises their approach to welfare. They simply despise the welfare state, as we have heard again today.

We know what kind of Britain the Tories want. In the past, their Britain was a place where mass unemployment was a price worth paying. They trumpeted it. They declared war on every British shipyard worker, steel worker and miner. They thought that the humbling of a once proud working class was a sign of political strength. Ask my hon. Friend John Mann what crushing mining communities means. It means a generation reared on heroin. It means taking once stable communities and smashing them into the ground. It means tearing apart the very bonds of family and community that give society its cohesion. So when I hear Opposition Members accuse us of incoherence or incompetence, I wonder whether they have changed at all.

I know that the highest concentrations of people on incapacity benefit are densely clustered in areas of disadvantage in once proud industrial and manufacturing towns, and I know that the record rises in claims in those areas occurred during the period when the Opposition were in power, because of their cynical manipulation of the unemployment figures. The party that today thinks that it can point accusing fingers at us would like the public to forget the fact that Mr. Howard was once responsible for managing unemployment. Those were the days when GPs signed off healthy men on long-term sickness because their jobs were gone and no one on the other side of the House had any intention of doing anything else for them.

Photo of Nadine Dorries

Nadine Dorries (Mid Bedfordshire, Conservative)

The hon. Gentleman is going back down memory lane, but I have an example of my own. In my constituency, the only people who can see an NHS dentist are those who can afford to pay for one, which means that the people who need treatment most cannot get it. It was not like that in our day.

Photo of Stephen McCabe

Stephen McCabe (Birmingham, Hall Green, Labour)

Well, I am not surprised that the hon. Lady does not like to be reminded of the track record with which the Tories have to live. I dare say that she was not in her place for Health questions this afternoon, because if she had been she might not have asked that question.

I contrast the Tories' record with what we have seen with Labour in power, including record levels of employment; the creation of more than 1 million new jobs; a minimum wage, which the Opposition fought tooth and nail to try to prevent; the new deal, which offers hope where none existed; and the education maintenance allowance for youngsters with talent whose only impediment is that their families are not wealthy. Contrast the pension credit, the minimum income guarantee, free eye tests, free television licences and the winter fuel allowance with the recommendation to wear a woolly hat and gloves. That was no doubt exactly the sort of cost-efficient, confidence- boosting measure of which the hon. Member for Witney would approve.

Of course, people are anxious about proposals to reform incapacity benefit. We are talking about people who have suffered illnesses, disability or anxiety attacks and who fear for their long-term security. Our job is to demonstrate that Labour's approach to this is as caring, as determined and as fair as our approach to all the other social justice issues that we have sought to tackle.

I think that we have a good track record. Only yesterday, the Under-Secretary of State for Work and Pensions, my hon. Friend Mrs. McGuire, announced a further £2.6 million for 13 choice and control pilot schemes across the country, which are designed to give older and disabled people more power over the services they use and control over their social care budgets. It is the same approach of putting the individual first that we need to demonstrate with incapacity benefit. We need to make it clear at the outset that disability does not mean "cannot work". I recall a young man at a place where I worked some years ago. He had a severe sight problem, but with the benefit of an enlarged screen he had no difficulty working with computers. He had been out of work for many years—in fact, I think that it was his first job. He loved it. He loved being useful. That is the spirit that we should seek to engender.

We need to consider why some people are unable to enter the employment market. I understand that the current incapacity benefit claim form has only one page related to mental health. There are many stress conditions that mean people find particular work environments difficult. I have a friend who had a serious breakdown some years ago and has not worked for a long time. Recently, he started part-time on one of the pathway projects. He told me that he was enjoying it immensely and his confidence was returning. He was grateful for the support that he had received; he was working in an environment where he felt safe and could make a contribution. He is better off under the financial arrangements that we have put in place, and he has an incentive to do well. We need to provide more such help. We need a strong link between the Department of Health and the Department for Work and Pensions to help people get back to work. The choice and control pilots pool the resources and efforts of those two Departments and the Office of the Deputy Prime Minister, and the same approach is needed to welfare reform.

Perhaps the greatest fear among people who have lost employment because of illness or disability and found themselves on benefits is that if they return to work and it goes wrong they will end up poorer. If they take a risk, it may threaten their security. We must counter that feeling, and I think that we can. We need a sliding scale of benefit, with protections built into the system that guarantee that we will look after such people.

Photo of Pat McFadden

Pat McFadden (Wolverhampton South East, Labour)

Does my hon. Friend agree that one of the benefits of the pathways-to-work programme is that the personal adviser not only advises the incapacity benefit claimant in the run up to finding work, but stays with them as they take up work to provide help and support after they have come off benefit?

Photo of Stephen McCabe

Stephen McCabe (Birmingham, Hall Green, Labour)

I agree absolutely. That is the difference between caring about people and trying to help them get into work and looking for a way to cut budgets.

Photo of Stephen McCabe

Stephen McCabe (Birmingham, Hall Green, Labour)

No; I should move on for the sake of others who wish to speak.

I want to mention the 16-hour rule. During the MG-Rover crisis, we realised that it could be an impediment to people getting into training or work. I hope that we can learn from that experience when we develop our new rules on incapacity benefit.

What is wrong with aiming for 80 per cent. employment? Unless one is the right hon. and learned Member for Folkestone and Hythe, I can see no problem with that. It is not only good for the economy, but for the dignity of our people. Employment at 80 per cent. is a desirable target. Contrast that to the figure of one in five families where no one was in work—the legacy of the Conservatives.

Photo of Stephen McCabe

Stephen McCabe (Birmingham, Hall Green, Labour)

No; I am about to finish—[Hon. Members: "Hooray."] As Members are enjoying my speech so much, I will not finish quite so quickly.

Let us do the decent thing. Let us do what only Labour can do and get on with reforming the system, giving people the chances they deserve. Let us ignore the humbug that we have had to listen to today.

6:20 pm
Photo of David Ruffley

David Ruffley (Whip, Whips; Bury St Edmunds, Conservative)

Just over 7.8 million of our fellow citizens are outside the labour market when they could be in it, according to the Office for National Statistics. That demonstrates that welfare under Labour is not working as well as it could.

Eight years of Labour have given us chaos, complacency and false starts. Since 1997, the Department for Work and Pensions has had six Secretaries of State and we have had 28 White or Green papers. Nowhere is the Government's shambolic performance on welfare better demonstrated than in incapacity benefits. There are now 2.74 million people of working age on those benefits, 116,000 more than when Labour came to power.

The Government messed up reform long before their current attempts. They reduced the value of incapacity benefit to new claimants by clumsy means-testing changes in 2001, which merely deterred existing claimants from returning to work because they feared that if they ever had to go back on to benefit they would have to do so at a much lower rate. Another change that year tightened up the IB eligibility criteria by demanding a much tougher national insurance contribution record. What was the result? A perverse effect. Certainly, people came off pure IB, but they then claimed income support with a disability premium, shoving up those numbers.

Photo of Kali Mountford

Kali Mountford (PPS (Rt Hon Des Browne, Chief Secretary), HM Treasury; Colne Valley, Labour)

Will the hon. Gentleman give way?

Photo of David Ruffley

David Ruffley (Whip, Whips; Bury St Edmunds, Conservative)

Time is fearfully short, so I hope that the hon. Lady will forgive me for not giving way.

There was a zero-sum game. The law of unintended consequences—classic new Labour reform.

Since that reform, the proportion of IB claimants who had been receiving incapacity benefit for more than five years rose from 47 to 51 per cent.—Members should remember that the duration of the claim is at least as important as the number of claimants. The proportion of new IB claimants coming from the unemployment register is up from 46 per cent. in 1997–98 to a staggering 60 per cent. in 2003–04. That is despite the Prime Minister rightly saying in 1999 that IB had to be reformed because it was merely

"an alternative to long-term unemployment or early retirement".

The problem is that he has done nothing about it.

Earlier, it was said that the Conservative party had no positive proposals. Let me set Labour Members straight about that. The modern Conservative party certainly has more thinking to do on welfare reform, and the new leader in December will start that work. It will take time, but we already have positive proposals on the table, specifically those we talked about last May. There should be more payment by results, with contractors paid a fixed amount per claimant on completion of various milestones for putting claimants back into employment. We need more rehabilitation, possibly with spend-to-save measures; for example, an additional fee paid to contractors to cover the cost of expensive medical and vocational rehabilitation, such as higher level physiotherapy. We also need a greatly enhanced role for the voluntary and charitable sector as, by and large, it is more effective—certainly more so than some of the state functions that I have seen in my constituency.

Photo of David Ruffley

David Ruffley (Whip, Whips; Bury St Edmunds, Conservative)

No. I am sure that the hon. Lady will understand that other colleagues want to speak.

This autumn, as the Prime Minister looks fretfully at his legacy, he seems to be thinking quite radically about incapacity benefit—at least, if his leaked October memo to the then Work and Pensions Secretary is anything to go by. I shall quote—from a transcript that appeared in a national newspaper—the words of the Prime Minister to Mr. Blunkett, who was then Secretary of State for Work and Pensions. The Prime Minister said:

"We should publish information on the number of sick notes signed by GPs, and audit the top ten per cent . . . Employers should have a right of appeal when an employee is signed off sick . . . We could propose taking sick note certification away from GPs and create a new specialist service . . . Incapacity benefit should be paid at £56 per week, the same rate as the jobseeker's allowance"—

which would of course be a cut. The memo continues:

"Claimants have to attend compulsory monthly work-focused interviews . . . Those not engaging in activity lose the entire premium."

Best, and most controversially of all, the Prime Minister said in his memo:

"Given the cost of employment programmes, it seems that the only funding option might be to widen the scope of means-testing the system . . . Alternatively, part of the benefit top-up could be paid as a voucher"—

for "rehabilitation and training programmes".

I quoted at length for a simple reason—those proposals are anathema to the majority of Labour Members. We know that they object to that radical thinking, and those proposals are certainly radical. Some of them may be worth mature and serious debate and discussion, and some of them may be to the liking of the Conservative Opposition. As my hon. Friend Mr. Cameron said, if the Prime Minister comes up with good ideas, we will back him. The question is: will his own side back him?

As I have indicated, there is much opposition to the Prime Minister's radical thinking on welfare. We may have to support his ideas; who knows? However, we know that Mr. Smith resigned his position rather than implement radical reform as dictated by No 10. We also know that when the Secretary of State for Trade and Industry was Secretary of State for Work and Pensions he fought a pitched battle—he won that one—to rule out the time-limiting of incapacity benefit from the strategic five-year review that he published.

We have already heard from our Front Bench about the delays in the Green Paper. First, the Prime Minister said that it would be published before the summer recess. Then, the Minister for Employment and Welfare Reform, who is in the Chamber, said that it would be published later in 2005. Finally, last week, the Prime Minister said that it would be published some time in January. We might think that we needed no more evidence, but there is more to come. We know that the Secretary of State for International Development did not want to take the job of Secretary of State for Work and Pensions because he knew that he was on to a loser. He would have had to defend and argue for radical reform that his own side could not stomach. Perhaps most depressing of all for the Prime Minister—it really shows that he is beleaguered—is that he cannot even install his No. 10 hawk on welfare policy, Mr. Gareth Davies—the gentleman who wrote the memo to which I referred—as a director in the DWP serving the Secretary of State, due to opposition from the civil service. As was widely reported in the Financial Times and elsewhere, Sir Richard Mottram, the permanent secretary, blocked the appointment of Mr. Davies. One of the newspapers reported:

"Sir Richard put his foot down . . . In the old days Blair would have won the battle with no difficulty but this is just a sign of how weak he has become."

The Prime Minister once said that in the area of welfare reform he would think the unthinkable. With the amount of opposition on his side, is not it a case of him trying to do the undoable?

6:29 pm
Photo of Natascha Engel

Natascha Engel (North East Derbyshire, Labour)

Thank you, Mr. Deputy Speaker, for calling me in this very important debate. I did not think I was going to be called in the end, but I am very grateful to you.

Photo of Natascha Engel

Natascha Engel (North East Derbyshire, Labour)

I was a bit surprised.

I also thank the Opposition for tabling this motion on welfare reform, and on incapacity benefit in particular, because it gives Labour Members a great opportunity to showcase the many developments that we have seen since 1997. [Interruption.] Oh yes.

The reason why the Government have placed such a consistently strong emphasis on welfare reform is that the inherited system of benefits led to the most appalling social exclusion. Welfare is, by definition, for the poorest and the most vulnerable, but welfare should also be about well-being, and for most people, work is still the best route to both. Work is how we build our self-esteem, learn more skills and self-reliance and develop our social life. It is something that every Member of the House takes for granted.

Labour's welfare reform agenda is about helping those who want to find work find a good job, but it is also about giving extra support to those who cannot work. We have had a consistent, targeted and tested welfare agenda since 1997, with a range of successful new deal programmes. A welfare system cannot be tinkered with, but nor can it sustain massive overnight change, which I think that the Opposition have asked for. But I think everybody agrees that our welfare system must change.

A person who has been claiming incapacity benefit for over two years is more likely to die or retire than to work again, ever. That is so wrong, and that is why we must reform our incapacity benefit system. Not just as a Government but as a society, we should be ensuring that everyone has the opportunities that we have.

The vast majority of people claiming incapacity benefit would like to return to work, but the current system is stacked against them. Once on incapacity benefit, there is no expectation that an individual will look for work, even if it would help to improve their condition. The system that we have inherited means that 2.8 million people have effectively been consigned to a life of poverty and lack of opportunity. That is not just a criminal waste of talent; it is a crime against equal opportunities. Unfortunately, we still live in a society that does not give everyone the same chances—a society that still discriminates against sick and disabled people. It is no surprise that having a serious health condition is a barrier to work, so it is no surprise that benefit claimants have real problems getting a job.

Our ongoing welfare reforms, of which the reform of incapacity benefit is a vital part, have been targeted and tested in those parts of the country where benefits claims are the highest. Derbyshire was one of the three initial pathways to work pilots, and covers the constituency that I represent. The pilot was introduced in 2003, through Jobcentre Plus, and I shall go into a bit of detail about this because I have heard a lot today that has demonstrated that the Opposition are not too clear in their minds about the details of pathways to work.

Pathways to work is aimed at cutting the number of people moving on to incapacity benefit in the first place, as well as moving people who are already on benefit into work. I apologise in advance for all the jargon that I shall use now, but it is part of pathways to work. Through work-focused interviews, using specially trained personal advisers and a varied choices package, a claimant can access professional and tailored information, advice, guidance and support. The choices package is really important, because it recognises that claimants have a range of different barriers to work. People are being helped to manage their conditions by working with primary care trusts and GPs, and they are given suitable training to ensure that they are ready for jobs. This condition management programme is arguably the most imaginative and successful part of pathways to work. It recognises that an individual's condition is what initially brought them on to incapacity benefit, but it also recognises that work is sometimes the best way of dealing with a deteriorating illness.

Fundamentally, the pathways to work programme is such a success because it focuses on what people are able to achieve rather than writing them off as incapacitated. There are hundreds of stories to illustrate that. When people who have been off work because of sickness for many years arrive reluctantly for their first work-focused interviews, they are nervous and lacking in self-confidence, but they are being given the chance to rebuild their self-esteem through condition management and work, and they have the feeling that their life is being given back to them.

To get even more parochial, at the start of the pathways to work pilot in Derbyshire, the Staveley neighbourhood management project commissioned the Derbyshire unemployed workers centre to carry out a study of barriers to employment. Staveley had a long history of coal mining and heavy manufacturing, which used to make up the majority of the work. The pit closures and the loss of manufacturing continue to have a devastating impact on employment in the area. Many of those people in Staveley who are now long-term incapacity benefit claimants would have been usefully employed in light duties when we still had a mining industry in North-East Derbyshire. There is no mystery behind the high number of people claiming incapacity benefit, as there is no mystery behind the high crime levels and poor health.

The unemployed workers centre's study is a very small study of about 10,000 people, but interestingly, it reflects absolutely what is happening nationally. The vast majority of people want to go back to work and the vast majority of them have welcomed the pathways to work pilot. Most people who had claimed incapacity benefit before the start of the pathways to work pilot had received no help from employment services. Now those same people welcomed work-focused interviews with Jobcentre Plus and looked forward to a return to work.

Every month, Jobcentre Plus personal advisers in Derbyshire interview about 700 incapacity benefit claimants. These figures are small but they are really significant. Of those 700 people, 150 find work every month. This is not scratching the surface; this is real success, and the feedback is positive not just from those who are being helped off benefits and into work—advisers and employers are massively enthusiastic about being involved in these pilots.

One of the really exciting developments in Derbyshire is the pathways agreement with Tesco, which is offering tasters and in-work support to benefits claimants. If we can roll out to the rest of the country not just the pathways to work models but the enthusiasm that comes with them, we shall be taking a huge step towards greater social inclusion and greater equality. This is the right direction for welfare reform. It is not a punitive agenda designed to force people into work; it is a positive agenda, which helps people to stay in work and allows them to develop themselves and improve their economic circumstances.

To conclude, I want to point out again that our welfare reforms have been ongoing, they have been targeted and they have been coherent since 1997. We have tried wherever possible to break down barriers to work. We have recognised that health does not have to be a barrier to working. Over 3 million people with long-term illness or disability are at the moment in work. Work and well-being are two sides of the same coin. Our welfare system must be flexible to suit changing needs, but it must provide opportunities for people to work and greater support for those who cannot work. Our Labour Government's answer is to make policy to suit individual need. Pathways to work, which has been rolled out to a third of the country, has demonstrated that a personal advice strategy to help people into work has meant that twice as many people leave benefits and find jobs as before. Most important, they are staying in those jobs.

The Opposition day motion calls upon the Government to deal with the increasingly urgent need for welfare reform. We are reforming welfare, and we have been doing so since 1997. I hope that after this debate the Opposition will support us both in our progress and our successes to date.

6:38 pm
Photo of David Heathcoat-Amory

David Heathcoat-Amory ((Also PPS To the Chairman of the Party), Work & Pensions & Welfare Reform; Wells, Conservative)

We called this debate in our own time with the aim of giving the Government an opportunity of clarifying and explaining their own policy, and we did so in a genuine spirit of inquiry on behalf of many millions of claimants, who want to know what the Government mean by reform. Natascha Engel said that the Government are in a continuous reform programme. All I can say is that we have not noticed that. The windy rhetoric that accompanied the first election victory of the Labour Government has simply not been carried into practice.

Again, in this short debate many questions have been raised and almost no answers have been provided, so I do hope that when the Minister gets to her feet to wind up the debate she will start to give us some hard answers to some of the hard questions that we have asked—not least by my hon. Friend Mr. Ruffley, who in an excellent short speech asked, in effect, which side is the Department on: the Prime Minister's, or Back Benchers'—or perhaps its own side? That triangulation is going on between different bits of the Government and the Labour party, and it is profoundly damaging to any real or genuine reform.

For instance, we have not got to the bottom of the incredible shrinking Green Paper on welfare reform, which the Prime Minister promised immediately after the election. In fact, I think that it was the first promise that he made in May this year. He said that the Green Paper would be produced by the new Secretary of State by July this year. I join other hon. Members in welcoming the new Secretary of State to his position, but I hope that, despite the fantastic turnover of Secretaries of State in the Department for Work and Pensions, he will survive long enough to see the publication of his own Green Paper.

The victims of the continuing confusion and delay are not just successive Secretaries of State and Ministers, but more importantly, the benefit claimants themselves who are trying to grapple with a system of increasing complexity that is not only beyond their own comprehension, but very often a bafflement to those whose job it is to administer the system. The National Audit Office made some observations on that only earlier this month. It pointed out that the very complexity of the system is itself an inducement to fraud, because those who are administering the system are trying to process vast quantities of information, often of a very personal kind, and—in the language of the NAO report—that

"may persuade some people that fraud is a risk worth taking."

We need a massive simplification programme as part of the reform, but we know that benefit claimants are not part of the debate at all. The real dynamic is between No. 10—the Prime Minister and the policy unit—on one side and the Department on the other. The Prime Minister generally cries, "Forward." The Department cries, "Back."

Photo of Edward Miliband

Edward Miliband (Doncaster North, Labour)

May I take the right hon. Gentleman to a point of substance in the debate: the nature of the pathways to work programme? Earlier, Sir Malcolm Rifkind said that the programme did not apply to existing claimants. In fact—I have checked this—11,000 existing claimants have volunteered for the programme, and from February 2005, the programme has been applied to more existing claimants. Will the right hon. Gentleman correct the record on that point?

Photo of David Heathcoat-Amory

David Heathcoat-Amory ((Also PPS To the Chairman of the Party), Work & Pensions & Welfare Reform; Wells, Conservative)

No. The hon. Gentleman is making a mistake. My right hon. and learned Friend Sir Malcolm Rifkind was referring to the Green Paper programme, which will not apply—at least initially—to existing claimants, but only to new ones. Of course the pathways to work programme, to which he was not referring, applies to new claimants. That is a simple category mistake, and I ask the hon. Gentleman to refer to the Official Report.

Photo of David Heathcoat-Amory

David Heathcoat-Amory ((Also PPS To the Chairman of the Party), Work & Pensions & Welfare Reform; Wells, Conservative)

No; I will not give way again. I have answered the hon. Gentleman's point.

What we had in February this year was a five-year plan. Despite its rather Stalinist title, it gave us some indication of how the Government wish to split incapacity benefit in two: one benefit more appropriate for those who will never work, and other benefit to become a pathway back into the world of work. We did not agree with all the substance in the February paper, but it was at least reasonably specific and somewhat detailed. So imagine our surprise when, on 7 October this year, we went back to what are called the "Principles of Welfare Reform".

Remarkably, in eight months, the Government have gone from fairly specific proposals to very general principles. The world was rather surprised that the new policy on welfare reform was summed up in various phrases. That document says:

"We will create a new relationship between the individual, the family and the wider community."

It continues:

"The Government will tackle dysfunctional behaviour head-on, and use the wider strength of neighbourliness and community to provide support through a range of interventions."

What support? What interventions? We have got beyond principles; we want to know what the Government are going to do. Of course the reason why the Government are now taking refuge in vacuous and general phrases is that No. 10 has vetoed the specific proposals that the Government announced back in February.

Another factor in all this, of course, is the purported discontent among Labour Back Benchers, but what we need from the Government now are some answers. We want to know how the Government want to put those principles into action. Will they still pursue the split in incapacity benefit in the way that they set out back in February? We also want to know what has happened to the promised review of housing benefit. That has not been mentioned in the debate, but in the Queen's Speech, Her Majesty read out the following sentence:

"My Government will introduce legislation to reform support for housing costs."

Will the Minister for Employment and Welfare Reform tell us when she responds to the debate how that is progressing? Her Majesty may not want to know the answer, but the House does.

Photo of David Heathcoat-Amory

David Heathcoat-Amory ((Also PPS To the Chairman of the Party), Work & Pensions & Welfare Reform; Wells, Conservative)

I hope that the hon. Lady will forgive me; I must reply to some of the points made.

Mr. Laws referred to pensions. We did not hear a word on pensions from the Secretary of State, although pensions form part of both the motion and the Government's amendment. Of course the truth about pensions is that the halving of the savings ratio under the Government has dealt a body blow to the entire concept of private sector provision. The reason for that goes back, again, eight years to 1997, when in almost the Government's first fiscal action, they removed dividend tax credits from private pension funds. The Government's siphoning of money from the private sector pensions into the Treasury has gone on year after year. If the Prime Minister wants to pick a fight with a Department, I suggest that he should do so not with the Department for Work and Pensions, but with the Treasury and the Chancellor, because that is where the damage to pensions has been done.

In 1997, our pensions system was an acknowledged international success. We had more private sector pensions under management than the rest of Europe put together. That fact has been alluded to many times by Mr. Field and other hon. Members of all parties. That policy is now in ruins. Instead, the Chancellor's contribution to welfare reform—and his main legacy from the Treasury—will be a vast extension of means testing. Again, that has been alluded to in the debate. Almost half of all pensioners are now subject to means testing and the proportion is increasing. So the Treasury is responsible for not only the policy, but the shambolic administration of child and pension credits, as we know from our surgeries and advice centres, and the developing, unresolved mess that that is producing.

In the debate, we have seen again the wide and growing gap between Labour's words and deeds. Despite repeated promises of reform, the welfare system is complex, badly targeted and sets up perverse incentives. It is prone to error, fraud and abuse. It lets down the taxpayer and those whom it is supposed to help. We should be having an open debate on how to change the system, instead of which it is a subject of repeated wrangles and leaked memos between No. 10 and the Department. It is time that the House expressed its displeasure and dismay about this continuing state of affairs, and I urge all my hon. Friends to vote for the motion.

6:49 pm
Photo of Margaret Hodge

Margaret Hodge (Minister of State (Work), Department for Work and Pensions; Barking, Labour)

I urge right hon. and hon. Members to reject the Opposition motion and support the amendment.

We have had a short debate, but there have been several thoughtful, valuable and eloquent contributions, especially from Labour Members. It is bizarre that Her Majesty's loyal Opposition called a debate on this matter. Opposition days give Opposition parties the opportunity to lay out their alternative stall on what they would do if they were in government, but the official Opposition utterly failed to do that. Let me cite just one phrase from the speech made by Sir Malcolm Rifkind. He said at some point during his very long contribution that logic is the art of going wrong with confidence. That meaningless and illogical phrase attempts to mask the fact that the official Opposition have no ideas, no policies and no understanding of the issue.

I am happy to welcome the Conservative party's belated conversion to the importance of welfare reform, but most people will share Labour Members' cynicism and think that its newly born interest has more to with short-term opportunism than long-term opportunity. Today's somewhat pathetic attack on our record was a cover for a policy vacuum, rather a recipe for serious welfare reform.

Photo of Malcolm Rifkind

Malcolm Rifkind (Shadow Secretary of State for Work & Pensions & Welfare Reform, Work & Pensions & Welfare Reform; Kensington and Chelsea, Conservative)

If the right hon. Lady is upset by the attack on her record, will she explain what she meant when she was quoted in The Herald in Glasgow as saying that the Government have done "sweet nothing" on the subject of welfare reform?

Photo of Margaret Hodge

Margaret Hodge (Minister of State (Work), Department for Work and Pensions; Barking, Labour)

I am always delighted to put the record straight, so I am pleased that the right hon. and learned Gentleman has given me the opportunity to do so. I make many speeches about the matter and always say that during the Conservatives' 18 years in government, they allowed increasing numbers of people—up to 2.7 million—to languish on incapacity benefit, without giving those people any help or support to return them to work.

The Conservatives are informed by their lasting values, which lead them to want to slash benefits across the piece so that they can cut taxes. The Labour Government, however, are informed by the lasting values that we have consistently articulated of opportunity for all those who can, combined with security and support for all those who need it.

Photo of Mary Creagh

Mary Creagh (Wakefield, Labour)

Does my right hon. Friend agree that Conservative proposals to use the private and charitable sectors to deal with the most difficult cases involving incapacity benefit would lead to cherry-picking, if output-related funding were used? Does she agree that the proposals represent an attempt by the Conservative party to divide people into the deserving and undeserving poor?

Photo of Margaret Hodge

Margaret Hodge (Minister of State (Work), Department for Work and Pensions; Barking, Labour)

We certainly would not endorse any policy that cherry-picked people off incapacity benefit. However, the voluntary sector, especially, can play a legitimate and strong role in supporting people on incapacity benefit back into work.

Photo of Margaret Hodge

Margaret Hodge (Minister of State (Work), Department for Work and Pensions; Barking, Labour)

Not now; I have only a few minutes left.

I welcome the opportunity that the official Opposition have given us to remind all hon. Members and, most importantly, the public about the Conservative party's abysmal record on welfare and to draw attention to the Government's successes. I shall respond briefly to several of the contributions that were made.

Mr. Laws added little to the debate. He was good on analysis, but, as usual, short on solutions that add up, especially given his party's most recent commitment not to increase taxation. My hon. Friend Steve McCabe made a feisty speech and reminded us that Mr. Howard was the Minister for unemployment. My hon. Friend highlighted the importance of understanding the nervousness that individuals face on the journey of incapacity benefit reform.

Mr. Ruffley got a lot wrong. I think that he would not take interventions because he did not want to be corrected, so I would like to correct one point for the record. People who move from benefits into work have the entitlement to come back on to that benefit level. Indeed, we are extending the time for that to two years from April 2006 so that we can deal with the insecurity that some people feel.

Photo of Margaret Hodge

Margaret Hodge (Minister of State (Work), Department for Work and Pensions; Barking, Labour)

One quick one.

Photo of John Bercow

John Bercow (Buckingham, Conservative)

It is always a pleasure to listen to the Minister—I say that in all seriousness—but we are entitled to be clear about the historical record. Is she saying that she was misquoted by The Herald in Glasgow in so far as she was alleged to have said

"we have done sweet nothing",

or is she simply saying that she is now embarrassed and has changed her mind? Which is it—I think we ought to be told?

Photo of Margaret Hodge

Margaret Hodge (Minister of State (Work), Department for Work and Pensions; Barking, Labour)

I am in some difficulty because I have not actually seen the quotation. However, I have dealt with the issue already.

I congratulate my hon. Friend Natascha Engel on her passionate and strong speech. She pointed out the importance of work to individuals and the way in which work and well-being are two sides of the same coin. She showed a proper understanding of the issues and the way in which we can bring down the number of people on incapacity benefit.

I agree with Mr. Heathcoat-Amory about simplification of the benefit system. We are attempting to do that day in, day out, whereas when his party was in government it failed even to think about the measurement of fraud. The Conservatives never measured fraud, let alone took action to reduce it, whereas we have done that successfully.

Let me put on record the fact that the right hon. Gentleman and his party are wrong to suggest that existing benefit claimants cannot take advantage of the opportunities in the pathways to work pilots—they can, they do, and they are returning to work. It is absolute nonsense to suggest that we are not talking to interested groups about welfare reform. The Under-Secretary of State for Work and Pensions, my hon. Friend Mrs. McGuire, and I have done that. Indeed, our new Secretary of State has already visited several groups that would be affected by the proposals that we shall put before the House and the country when we publish our Green Paper.

The debate has given us the facts with which to judge which political party is fit to tackle welfare reform. The simple fact is that we are completely divided—[Laughter.] No, we are completely divided across political parties on the reasons behind the programme of welfare reform and the purpose of it—[Interruption.] Perhaps Conservative Members should listen to this.

Labour Members are committed to our agenda because we see it as a means through which we can unlock opportunity for all so that all can find jobs and individuals can support themselves and their families, realise their potential, enjoy the sense of purpose and self-worth that comes with work and develop a network of friends and companions. We are committed to our agenda because we recognise it as a means of eradicating poverty from British communities and British society. We are committed to our agenda because we understand that by realising individual potential, we can build a stronger economy in the more competitive global environment in which we have to live.

For the Conservative party, the agenda is benefit cuts to finance tax cuts. It is about fostering individual greed at the expense of wider interests and needs. Compassionate conservatism is about dismantling the active welfare state and destroying the support and opportunities that we in government have created. The Conservatives' policies in government created dependency, chaos, incoherence and despair.

The words of the Opposition motion give us a clear indication of their incoherence and direction of travel, whereas the Government's record on welfare reform is one of which we are immensely proud. The challenges that we face in the immediate and long term are complex and important, but the platform that we have built is strong, the values that inform our approach are right, and the task of translating those values into programmes is one we welcome and on which we shall deliver. The truth is that the Conservative party has not just lost the argument, it has lost the plot.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 232, Noes 309.

Division number 104

See full list of votes (From The Public Whip)

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.

Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.

Resolved,

That this House welcomes the Government's consistent commitment since 1997 to pursue welfare reform to create an active, enabling welfare state where rights match responsibilities; supports the recent publication of the Principles of Welfare Reform, which builds on the foundations laid out in A New Contract for Welfare, published in 1998 and the Department for Work and Pensions' Five Year Strategy of February 2005; commends the Government's achievements in helping 2.1 million children out of absolute poverty since 1997; recognises the success of the New Deals, through which over 1.2 million people have moved into work; notes that new claims for incapacity benefit have been cut by one third since 1997; further recognises the importance of the National Pensions Debate in creating a dialogue with the public and building a consensus on pensions reform; further welcomes the progress made on tackling disability discrimination, opening doors for disabled people to remain in or return to work; in contrast, condemns the shameful record of the Opposition who spent more on administering the Child Support Agency than they paid out in maintenance and who allowed those on unemployment benefit to hit three million twice whilst also trebling the numbers on incapacity benefits between 1979 and 1997, costing the taxpayer billions and condemning millions of people to a life of benefit dependency.