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Social Security

I am pleased to be able to take part in the debate. Last year, the hon. Member for Bury St. Edmunds (Mr. Ruffley) summed up for his party in the debate on benefits uprating, which he characterised as interesting, important and short. Last year, only two Conservative Back Benchers spoke and no Government Back Benchers; it looks as though our proceedings will be similarly short today. However, as the Minister for Pensions Reform and the hon. Gentleman indicated in their speeches, the debate is important because it has impacts on the uprating of all benefits—means-tested and non-means-tested—administered by the Department for Work and Pensions. As the Minister noted, the uprating will cost about £3.56 billion. We are allocating a little less than three hours to debate it, a scrutiny rate of more than £1 billion an hour by my calculations. We are talking about the uprating of £125 billion-worth of benefits, which, including the uprating of child and working tax credits, gives a total amount of benefits administered by the DWP and Her Majesty’s Revenue and Customs of about £150 billion—more than a quarter of the total managed expenditure of £585 billion for 2007-08, and the largest component of Government expenditure. As both the Government and the Conservative spokesmen indicated, those benefit increases will have an impact on many of the lowest income people in society. The Minister gave us, understandably, an upbeat perspective on progress against poverty since 1997. Like all Ministers, he is inclined to emphasise the positives, but to put the importance of the uprating statement in context we ought to note that 20 per cent. of the population are still in relative poverty, according to the Government’s definition. That amounts to 11.4 million people: 3.4 million children, 6.2 million adults of working age and almost 2 million pensioners, despite the Minister’s suggestion that pensioners can get out of poverty by claiming means-tested benefits. Poverty rates are still high: 27 per cent. for children and 17 per cent. for pensioners. The Minister’s opening comments showed a little complacency about the employment situation and thus, by implication, the number of people dependent on benefits. He said that since 1997 the UK employment rate has improved and that it is one of the highest in the Organisation for Economic Co-operation and Development. However, he did not mention the changing composition of employment and the fact that, compared with the Wilson days of the mid-1970s, male employment is about 10 percentage points lower. It is now 79 per cent. compared to 89 per cent. in the mid-1970s. Since then there has been a big decline in male employment that has been made up by an increase in female employment, which feeds directly into the question of who is affected by the benefit uprating statement. The distribution of employment is increasingly unequal, so although there are many households where two people are employed and earning there are many where nobody at all is in employment. That is why we are in the bizarre situation of having not only one of the highest employment rates in Europe, but more children in workless households than any other country in the European Union. That is a strange combination of factors. The hon. Member for Bury St. Edmunds set out in magnificent detail how benefits are uprated; he talked about the Rossi index and the minimum income guarantee going up by earnings. He was right to say that the different benefits about which we are talking will be uprated in different ways—through the retail prices index, the Rossi index or the earnings index. When we look at the paperwork, circulated in December by the Department, that sets out which benefits would be impacted, we find a long list that tells us something of the complexity of today’s benefits system. It lists 464 different rates, tapers, premiums and allowances that could be affected by today’s announcement, which is titled an upratings announcement. Interestingly, when we look at the benefits and how they will be uprated, we find that of the 464 different benefits, tapers, premiums and allowances, 130 are not uprated at all. In other words, it is an uprating and non-uprating statement. Perhaps I am being slightly generous to the Department, as a number of items are missing entirely from the uprating statement, even some that relate to areas administered by the Department—for example, the 25p addition to the pension for those aged 80 and the Christmas bonus of £10. Those rather embarrassing items, which I do not think have been updated since the 1970s, are not mentioned at all. Before we start on the uprating bit, it is worth saying something about the non-uprating part of the uprating statement. Rather a lot is not being uprated at all. There are the disregards for many people when they go into employment. We discussed that issue in the Pensions Bill Committee the other day. We pointed out that the disregard for people over the age of 60 who are claiming the pension credit but are in employment has not been uprated for many years. I cannot remember the exact number of years; it would be helpful if the Under-Secretary of State for Work and Pensions, the hon. Member for Warwick and Leamington (Mr. Plaskitt), told us when he winds up. However, for another year there is to be no uprating of the disregards for people in those circumstances. That means that many people—pensioners and others—have powerful disincentives to work. We also discovered that the disregards for housing benefit in respect of child care are not being uprated. In other words, more people on housing benefit will find themselves squeezed by the fact that child care costs are going up but no allowance is made for that. There are no upratings of the capital disregards that affect a number of the benefits. That means that more and more people with modest savings will find that their benefits will be disallowed. There is also no uprating of the winter fuel payment. The hon. Member for Bury St. Edmunds spoke in detail about how different elements of the retail prices index are going up very rapidly while other components are falling. I am not sure whether I would follow him all the way down the path that he set out for the social justice commission: that of having a series of different uprating factors for different benefits.