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Welfare Reform and Incapacity Benefit

I congratulate the right hon. and learned Member for Kensington and Chelsea (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 the hon. Member for Normanton (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.