Social Security Benefits Up-rating Order 2006

rose to move, That the Grand Committee do report to the House that it has considered the Social Security Benefits Up-rating Order 2006 [16th Report from the Joint Committee]. The noble Lord said: I am satisfied that this is compatible with the European Convention on Human Rights. The uprating order will, as usual, increase most national insurance benefits by the retail prices index, which is 2.7 per cent, and increase most income-related benefits by Rossi, which is 2.2 per cent. I will also speak to the Guaranteed Minimum Pensions Increase Order, which will be moved separately. This sets out the amount by which contracted-out occupational pension schemes must increase members’ guaranteed minimum pensions which accrued between 1988 and 1997. The guaranteed minimum pensions indexation requirement will be increased by the retail prices index, up to a cap of 3 per cent under the primary legislation. This year’s order therefore provides for an increase of 2.7 per cent. The uprating order adds, we estimate, £3.44 billion of extra government spending, tackling poverty by helping those most in need, as part of our ambitious programme to renew our welfare and pensions systems. I refer to the Statement I made in the House on 6 December 2005 for the details of the individual benefit rates. We have kept to our guarantee to uprate basic state pension by 2.5 per cent or the increase in RPI, whichever is highest. Pension credit guarantee will rise in line with earnings—4.2 per cent—so that all pensioners can share in the rising prosperity of the nation. Through the winter fuel payment, free TV licences for over-75s and increased basic state pension, we have helped all pensioners. By targeting resources at the poorest pensioners first, through the minimum income guarantee and then pension credit, we have succeeded in lifting nearly 2 million pensioners out of absolute poverty. Overall, between 1996–97 and 2003–04, average pensioner incomes grew by 21 per cent, while average earnings grew by 12 per cent. The introduction of pension credit and other improvements in support of pensioners have been successful in breaking the historic link between old age and poverty. Pensioners are now no more likely to be poor than any other group in society. But we must go further to build a system that will enable us to meet the significant challenges of demographic change and undersaving. The Government welcomed the broad framework of the Pensions Commission proposals and believe it forms the right basis for the continuing debate which culminates in the National Pensions Day on 18 March. We continue to work with the finance industry to consider the options for the national pensions savings scheme. The Government will produce a White Paper in the spring. Work is a key part of meeting the demographic challenge. If we are to support an ever ageing population successfully we need all those who are willing and able to work to do so. There are 2.3 million more people in work today compared to 1997—reflecting the success of our welfare to work policies and the clear framework of rights and responsibilities. The New Deal has been a tremendous success, so far helping more than 1.5 million people into work. Long-term youth unemployment has been virtually eradicated and youth claimant unemployment has fallen by two-fifths, to around its lowest level for 30 years. The New Deal for Young People has contributed to this success, helping nearly 650,000 young people into jobs. The number of lone parents on benefits is down by over 200,000—more than a fifth—since 1997. The New Deal for Lone Parents has contributed to this success by helping more than 420,000 lone parents into work. But we are not complacent, and we have set ourselves a target of an 80 per cent employment rate to ensure we deliver opportunity to all. Achieving it would probably mean a reduction of 1 million people claiming incapacity benefits, helping 300,000 lone parents into work and increasing the number of older workers by 1 million. We want to break down the barriers that incapacity-benefit recipients face and give them the support they need, so that they are given the opportunity to work and enjoy all the benefits that work can bring. We are ensuring that the tax and benefit system encourages and promotes movement towards and into work wherever this is possible, and provides greater security for those for whom work is not currently an option. Maternity benefits have been improved as part of the Government’s drive to help pregnant women and parents, both financially and to achieve a better balance between their work and home lives. These improvements complement other measures to improve the lives of working parents, such as increasing maternity leave to 26 weeks, introducing an additional period of 26 weeks’ maternity leave after that, and introducing rights to 2 weeks’ paternity leave and pay and 26 weeks’ adoption leave and pay. All this support goes hand in hand with our uprating measures designed to support working families with children and to eradicate child poverty. Families on income support and jobseeker’s allowance will continue to benefit from the increased generosity in child tax credits. These increases will directly benefit the poorest families. We are committed to supporting parents fulfilling both their parenting role and their aspirations in the workplace. I hope that the Committee will welcome our uprating measures that continue our commitment and progress towards a fair and inclusive society of opportunity and independence for all. I commend these orders to the Committee. I beg to move. Moved, That the Grand Committee do report to the House that it has considered the Social Security Benefits Up-rating Order 2006 [16th Report from the Joint Committee].—(Lord Hunt of Kings Heath.)