Social Security

No, I want to make headway. The hon. Gentleman also dwelt on the issue of fraud and error in the benefits system, describing the recent report by the National Audit Office as critical of my Department in that respect. I urge him to go back and read the report again; it is actually very balanced and fair. Although it certainly takes us to task and says that there is still more that my Department needs to do in respect of fraud and error, it also acknowledges the considerable progress that we have made in tackling them over the last seven or eight years. The hon. Gentleman asked me to distinguish between performance on fraud and that on error, and I am happy to do so. Our performance on fraud is very encouraging. Losses to fraud are now below £1 billion, and we think that the figure now stands at less than 1 per cent. of the total spend. That is a creditable performance. On the main benefits that tend to be prone to fraud—housing benefit, income support and jobseeker’s allowance—losses to fraud are down by a half since 1997. Of course there is still more to do. We recently published the fraud strategy document, which I am sure that the hon. Gentleman has studied, in which we outline additional measures that we are now taking and additional powers that we have to make even more progress in reducing fraud in the benefits system. On error, yes, the figures are flat-lining; there has not been as much progress in reducing losses to error in the system as we would have hoped. We believe that the total of such losses is about £1.7 billion. If the hon. Gentleman has a little patience, I hope to be able to say more about what we can do to make further progress on reducing such losses. The hon. Gentleman moved on to be critical of our proposed reform of housing benefit. I think that I heard him describing the local housing allowance as ““not radical””. Again, I urge him to have a further read of the chapter in the welfare Green Paper. He will find that once the local housing allowance is rolled out nationally in the private rented sector, it will definitely help us to make progress in increasing financial inclusion, something that I should have hoped he would welcome. It will certainly help us make progress in simplifying aspects of the benefits system; I had hoped that he would have welcomed that. It will certainly help us to make progress in increasing return-to-work incentives; and I would have thought that he would have welcomed that. The hon. Gentleman went on to refer to the single room rate. He should know, and I would have thought welcomed the fact, that under the LHA scheme, support for young people is more generous than under the existing scheme. I am sorry that he did not welcome those developments. The hon. Member for Beverley and Holderness (Mr. Stuart) treated us to an amusing trip down a selective memory lane on the performance of the economy under the previous Government, and sought to rubbish the record under the present Administration, therefore overlooking the fact that ever since this Government came to office in 1997, there has been continuous growth in the economy, for a longer period than was ever sustained under the Conservatives. We have falling unemployment—it is now at a very low level. We have had steady and low inflation, which was not delivered by the previous Conservative Government. We have low levels of public debt. We have low levels of interest rates. The hon. Gentleman regaled us with the alleged failings of this Administration in respect of incapacity benefit, neatly overlooking the fact that when the Conservative Government came to office 700,000 people were claiming incapacity benefit, and by the time they left office, the figure was 2.7 million. It was convenient for him to overlook that. He should note that last year we saw a welcome fall in the number of people claiming incapacity benefit—down by 58,000—and once we bring forward measures that are outlined in the welfare Green Paper, we hope to make considerably more progress by reducing that number even further. The hon. Member for Ludlow (Mr. Dunne) sought also to criticise the Government on what has happened to savings. Indeed, one or two other Members made the same point. The savings ratio is quite a volatile indicator and there have certainly been periods under this Government to date when it has been quite low, but I urge the hon. Gentleman to look at the figures under the previous Administration. He will find that at times the savings ratio fell to levels lower than at any time under this Administration. He should know that the savings ratio tends to be very much geared to the housing market, and during periods of high inflation in house prices we see the ratio plummet. When the housing market stabilises, we see the savings ratio recover. Interestingly, that is exactly what it is doing again, as the latest figures confirm. The hon. Gentleman also made some sensible observations, which I welcome, in respect of the Turner report. He urged us to think carefully about the advice that is given to people and about confidence in the system, and he made constructive and sensible comments. I appreciate the work that he does on the Work and Pensions Committee, as I do his comments about the Dutch experience and the importance of undertaking reforms that focus on people’s capacity to work and not on their incapacity to do so. I would claim that that is very much the direction of travel of the Government’s reforms. Since 1997, the Government have worked to build a modern, active welfare state. There are now 2.3 million more people in work and 1 million fewer people on benefits. We have lifted 2 million children and almost 2 million pensioners out of absolute poverty. We have already taken action to replace the ““one size fits all”” model of benefit dependency with an active service, where tailored support to help people back into work is matched by their obligation to do everything possible to help themselves. It is because of the economic decisions that we have made and the reforms that we have delivered that we are making good progress in tackling the challenges apparent in the labour market, but we need to do more. As my hon. Friend the Minister for Pensions Reform said in opening the debate, we need to provide a welfare state that enables people to move on and to escape poverty, rather than institutionalising dependency. That is why we have set ourselves the ambitious target of an 80 per cent. employment rate. Our approach is based on a belief in an active welfare state that balances rights and responsibilities, and provides work for people who can work and support for those who cannot. That strategy is set out in the Green Paper and is threefold: we will endeavour to reduce the numbers of new claimants; we will provide greater help for those on benefits to return to work; and, for the most severely sick and disabled, we will provide greater levels of support. The publication of the Green Paper marks the start of a three-month consultation process. We will listen very carefully to everyone who responds and especially to those who share our commitment to improving the employment prospects of people currently living on benefits. The Government are committed to supporting parents not only in achieving their ambitions in the workplace but in carrying out their parenting responsibilities. This year’s uprating order directly benefits the poorest families and helps to eradicate child poverty. By increasing the child allowance for families on income-related benefits, our uprating measures maintain our commitment to, and progress towards, a fair, inclusive society with opportunity and autonomy for all. This year’s uprating order takes us another step away from the shameful legacy of pensioner poverty that we inherited. Many pensioners were expected to live on as little as £69 a week. My hon. Friend the Minister for Pensions Reform set out at the opening of the debate the pensions policies that we have introduced. Through measures such as pension credit, the state second pension and stakeholder pensions, we have provided a solid basis for a long-term pensions settlement and lifted nearly 2 million pensioners out of absolute poverty. An extra £10 billion will be spent on pensioners in 2006–07. Almost half of that extra money will go to the poorest third of pensioners.