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Means-testing

9. Mr. Graham Brady (Altrincham and Sale, West): If he will make a statement on the means-testing of benefits. [154866]

The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley): Investment in income-related benefits such as the minimum income guarantee and the disability income guarantee has provided the most effective and immediate way of tackling poverty.

Mr. Brady: I am grateful to the Minister. Can he confirm that under the pension credit proposals, a person

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who has saved £75,000 in a pension fund will be just£6 a week better off than somebody who has saved nothing at all?

Mr. Bayley: That comes badly from a party that never proposed introducing pension credit, that never proposed rewarding savings and that is happy that people who pay into pension schemes and save capital should get no benefit from the state at all. We do not share the view of the Conservative party; that is why we made our proposals for pension credit--so that those who save to provide for themselves in old age see a real benefit from doing so.

Mr. Paul Goggins (Wythenshawe and Sale, East): Will my hon. Friend please ignore the comments of the Opposition and their allegations about increasing means-testing? He will be aware that, since the last general election, the number of people in households forced to depend on income support and jobseeker's allowance has fallen by more than 1 million. That total includes 400,000 children. Is not that a sign that the Government are tackling poverty and that the Opposition's claims are wrong?

Mr. Bayley: One of the real indictments of the previous Government was that the number of children living in poverty trebled. One of the things that the Labour Government will be remembered for is that our policies--not least the welfare-to-work policies, but a whole range of fiscal and benefit policies too--have meant that1.2 million children, who under the Conservatives were living in poverty, have been removed from living in poverty. That is as a result of the work of the Government.

Mr. Andrew Rowe (Faversham and Mid-Kent): I get quite a lot of real people with real addresses in my surgeries. One of the things that they complain most bitterly about is that whenever they come into contact with the social security system, not only do their letters get lost but they have to deal with a different person each time they go back into the system. Are there any plans to improve the system so that people can relate to the same person each time they have a problem?

Mr. Bayley: Yes, indeed there are--changes that the Conservatives did not make when they were in government. We are creating a working age agency to provide just such a service for clients: not just dumping them on benefits and leaving them in a labyrinthine system that provides no support, but providing personal advisers who will help clients both to deal with their benefit problems and to get back to work.

Social Fund

10. Mr. Hilary Benn (Leeds, Central): If he will make a statement on the operation of the social fund. [154867]

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): Our drive to modernise and improve the social fund is already benefiting those in greatest need.

Today, I am pleased to announce that the budget for the discretionary social fund will be more than£620 million for the coming year. That is an increase of almost £25 million over last April's allocation and

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includes a rise in the community care grant budget of£3 million. That will provide more help to grant applicants, especially families with children and disabled people. It contrasts with the £90 million Tory raid on the social fund that will hit hardest the poorest and most vulnerable.

Mr. Benn: I am grateful to my hon. Friend for that reply. I am sure that the increase in resources for the social fund that she has just announced will be widely welcomed. However, she will be aware that those who cannot get help from the social fund often face extortionate rates of interest when borrowing from elsewhere. Will she look at ways in which the social fund might link with other forms of low-cost credit, so that we as a society stop placing the highest costs on those who already have least?

Angela Eagle: I welcome my hon. Friend's observations. We believe that micro-credit, local credit unions and local exchange and trading schemes--LETS--all have a valuable role to play in assisting people on low incomes with access to borrowing small amounts. We are considering how all those provisions can interact sensibly with the benefits system.

Dr. Vincent Cable (Twickenham): As the Government intend to combine the Benefits Agency and the Employment Service to provide an integrated service for working people, what will happen, in that system, to the social fund, which caters to that group and also to a wider group of people in need? What assurance can the Minister give us that the fund will not simply fall through the cracks in the benefits system?

Angela Eagle: I can assure the hon. Gentleman that the social fund will not fall through the cracks in the benefits system. I remind him that the vast majority of the discretionary social fund is spent on people of working age, and we shall certainly ensure that in changing the system and its administration--when we separatethe working age agency from the pensions directorate--the social fund is adequately provided for and administered.

Mr. Christopher Leslie (Shipley): Is not the social fund an example of the most basic necessary safety net that we have in our welfare system, as it provides help with furniture, cookers and even funeral payments? What does my hon. Friend think is the dogmatic motivation behind the Conservative party's proposing such an enormous cut in that benefit?

Angela Eagle: Taking £90 million out of the social fund would undoubtedly have a devastating effect because so much less money would be available to the poorest and most vulnerable people in society. The figures show that 50 per cent. of those who claim from the discretionary social fund are lone parents with children, so it is important to realise that the Tory policy of raiding£90 million from the social fund would hit the poorest and most vulnerable people hardest.

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Stakeholder Pensions

11. Mr. Peter Lilley (Hitchin and Harpenden): What rebate will be payable into a stakeholder pension for an employee earning (a) £9,000 and (b) £10,000 per annum who opts out of the state second pension. [154868]

The Secretary of State for Social Security (Mr. Alistair Darling): As the right hon. Gentleman will know, the amount of rebate payable into a stakeholder pension that is contracted out of the state second pension will vary according to the age of the person concerned.

Mr. Lilley: If the original purpose of the stakeholder pension was to enable those on low earnings to opt out of the state system into privately funded pensions, why does it discriminate in practice against those on low earnings? Will the right hon. Gentleman confirm that, whereas those with earnings of more than £10,000 will receive a rebate sufficient to buy a pension equivalent to the state pension that they forgo, those with earnings of less than £10,000 will receive only a partial rebate and, therefore, will be discriminated against? Is not that unfair, unnecessary and likely to lead to the sort of mis-selling that The Sunday Times said in an article was widespread as a direct result of the Government's policy?

Mr. Darling: I know that the right hon. Gentleman has been engaging in quite a lot of revisionism recently, but he really does have a brass neck to lecture us about the mis-selling of pensions. Let me answer his question on stakeholder pensions. First, he is wrong on a fundamental point: we have always said that people on low incomes earning about £10,000 or less would do better to go into the state second pension, which doubles--and, in some cases, trebles--the amount of money that they would have received under the state earnings-related pension scheme, which we have now reformed. So low earners ought to be in the state second pension. The stakeholder pension is designed for middle and higher earners, and he is right to say that those earning approximately between £10,000 and £22,000 a year will benefit from an enhanced rebate. But it is not only on the mis-selling of pensions that he is a little forgetful, because on 21 February this year, he gave an interview to the Financial Adviser and said:


He also said:



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