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Westminster Hall

Thursday 5 July 2001

[Sylvia Heal in the Chair]

Department for Work and Pensions

[Relevant documents: Minutes of Evidence taken before the Education and Employment Committee in the last Parliament on 1st May 2001, DfEE Funding: Departmental Report 2001, HC 451-I and Minutes of Evidence taken before the Social Security Committee in the last Parliament on 2nd May 2001, DSS Departmental Report, HC457-i.]

Motion made, and Question proposed, That the sitting be now adjourned.—[Dan Norris.]

2.30 pm

The Parliamentary Under-Secretary of State for Work and Pensions (Malcolm Wicks) : I welcome this opportunity to open the debate on the new Department for Work and Pensions and to explain how it will be central in taking forward our welfare reform agenda. I note from the monitor that hon. Members are also discussing social security on the Floor of the House. There is some compatibility between the two debates, but I think that ours is the more important.

We are reforming the welfare state, to make it fit for this century. Through those reforms we want to make opportunity a reality for all. Our reforms are designed to meet our overall welfare objectives of eradicating poverty in childhood and combating poverty in old age, and of ensuring that there is work for those who can work, and greater security for those who cannot. We are overhauling the way in which we deliver services so that, for the first time, welfare services will meet the different needs of our client groups—pensioners, people of working age and children. We are putting in the investment needed for more streamlined services that will be focused on the individual needs of our customers, make greater use of technology and reduce the amount of fraud and error in the system.

We are modernising the way in which services are delivered. We are creating the Pension Service, dedicated to the needs of today's and tomorrow's pensioners, and jobcentre plus, bringing together the Employment Service and those parts of the Benefits Agency dealing with people of working age. In the next three years we shall build new information technology systems to provide a modern, streamlined service to pensioners and those of working age. From 2003, automated credit transfer will be the normal method of payment for benefits. We shall introduce the integrated child credit from 2003 as the next step in the programme to tackle child poverty and make work pay.

We are introducing radical reforms to the pensions system, helping more people to save. Stakeholder pensions were introduced in April. Other changes are the reform of the state earnings-related pension through the introduction of the state second pension in April 2002 and the rewarding of those who have saved with the new pension credit in April 2003.

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We are on target to reduce the amount of fraud and error in the system by 10 per cent. in 2002 and to halve it by 2006. The new Department will provide a single approach to the development of employment, disability and benefit policies for people of working age and for pensioners needing information and support. It will aim to be a joined-up, efficient, modern organisation and to respond to our customers' needs and the changing ways in which they want to gain access to our services.

The Department for Work and Pensions is a more precise reflection of the Government's labour market and social priorities of helping people to help themselves to become more independent. We are giving people new rights in return for accepting greater responsibility. The Department deals with a big business—a big public service. Every day we make 3.5 million benefit payments and every month we place 100,000 unemployed people in jobs. This year alone 8 million households have benefited from the winter fuel payment. People depend on us for their security, especially at the most vulnerable times in their lives—unemployment, bereavement, sickness and old age. It is therefore vital that the service that we provide is efficient, joined-up and geared to the needs of our customers. The creation of the new Department makes common and business sense, reflecting the changing way in which we organise ourselves to deliver services.

Over the past four years, we have laid the foundations for a major change in the social security system. We are moving away from a system designed to pay benefits in a passive way—which does not help people to become self-sufficient and takes little interest in them—to one providing people with greater opportunity for work and enabling those who cannot work to access the support that they deserve and need.

Major milestones were reached during the Government's previous term. We saw the successful reform of the new deal, underpinned by a strong economy, making work possible and making sure that it pays through the introduction of the working families tax credit, which guarantees that families with a member in full-time work will have a guaranteed minimum income of at least £225 per week by October 2001. We also saw the introduction of the disabled persons tax credit and the minimum wage. The minimum wage has been a great success, benefiting thousands of our constituents, despite the dire and absurd warnings that we heard from those on the crowded Opposition Benches.

All that has allowed us to spend more on tackling poverty and raising family support, through increases in child benefit. In the last Budget, child benefit increased to £15.50 a week for the first child and £10.35 a week for subsequent children—an increase of 26 per cent. for the first child over the life of the previous Parliament. In addition, we introduced the child tax credit, worth up to £10 a week. We have also reformed the child support system to make it less complex. Over 1 million children will gain as a result.

We have implemented our agenda to help senior members of society by introducing the minimum income guarantee, to ensure that all pensioners have a decent income in retirement, by increasing the basic pension by £5 a week for single pensioners, by making winter fuel payments and by providing free television licences. All pensioner households will be, on average,

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over £11 a week—£580 a year—better off than they were in 1997. To help tomorrow's pensioners plan and save for their retirement, we have introduced stakeholder pensions, a new low-cost flexible option for those on moderate incomes who do not have access to a good occupational scheme.

All those changes have achieved results. Unemployment is at its lowest level for over 25 years and employment rates are at the highest level ever. There is always a danger of thinking of such facts as dry arithmetic or mere statistics, but when we compare the unemployment of just a few years ago with the job opportunities now, we can all put faces to the figures for our constituencies: we know some of the families behind the statistics.

The new deal for young people has placed more than 250,000 young people in jobs, but what about the second term? We still have a long way to go. There are still substantial pockets of unemployment. Although fewer than 1 million people are unemployed, a further 4 million are without jobs—people who have not traditionally been defined as unemployed. We have started to extend opportunities for those who have missed out in the past. The new deal for lone parents offers a package of choices—more help with child care and training and help to make work pay—and it is working. Some 222,000 lone parents have joined, and more than one in three participants—more than 90,000 people—have found work, even though participation is voluntary. After all, work is the best route out of poverty.

I now come to yesterday's announcement on the proposal to award incapacity benefit for fixed periods of three years. There has been much misconception and some scaremongering in the media and elsewhere. I want to say loudly and clearly that what we propose is not a crackdown on the disabled; it is about giving support and help to those who are able to work. We are not forcing disabled people into work. Those who are still eligible for incapacity benefit will get it. We will treat people as individuals—if they can return to work or undertake retraining then we should help them to do so, not leave them on benefits.

Mr. Tom Levitt (High Peak): Will my hon. Friend confirm what my right hon. Friend the Leader of the House said during business questions today, which is that the new proposals would apply only to new claimants for incapacity benefit?

Malcolm Wicks : Yes, I can confirm that the proposals will apply to new claimants only.

If there is a scandal, it is that of people with handicaps or serious disabilities who have been laid to rest in the social security system, with no one taking an interest in them. Many of those people want the opportunity to work. I can think of a young woman in my constituency, whom I will call Sarah for the purposes of this story. This is a true story. She is a young woman with Down's syndrome. She went to special schools, and afterwards spent some years in a day centre. She did not feel challenged there, and one day she spoke up, saying, "I want a job, like other people." It happened that in

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the borough of Croydon, a voluntary body called Status Employment was in the business of supported work. Sarah was helped by that organisation, and she became a bed chambermaid in a leading hotel. The supported employment project worked with her to teach her that job, and provided support afterwards.

Not so long ago, many people would have said that Sarah could never work—that she had a great disability and was a million miles away from employment. Sarah has now been working in that hotel for four years and is the longest serving employee there. The scandal is that, in the past, the Sarahs of this world have been dismissed as not being eligible for training and work. We need to address that, and we must not be put off by scaremongering in our endeavour to give those people the opportunities of work and citizenship. I give way to the Chairman of the Select Committee on Social Security—as was.

Mr. Archy Kirkwood (Roxburgh and Berwickshire): The Minister might be tempting providence with that welcome. I should like to reciprocate by saying that I find it reassuring that he has taken a new position and an important role in the new Department, because I know of his interest in the subject.

The Minister's story is poignant and apposite. There has been much scaremongering about the recent announcement on incapacity benefit. The Government could have avoided that if they had undertaken a more coherent period of consultation before making the announcement. However, does he accept that simply moving people off incapacity benefit on to the jobseeker's allowance may, by itself, save money, but will not make those people any more job-ready in today's labour market? Support systems need to be available for those people before he can even begin to contemplate this change with any kind of confidence that it will work.

Malcolm Wicks : I will do my best to address that important point.

We accept that there are some individuals and groups for whom it is right to make some exemptions. I should like to make it clear—this is pure common sense and I hope that hon. Members would have expected it anyway—that we will listen to views on the matter in the immediate future. We will listen to the views of hon. Members from all parts of the House today and during the passage of the Bill on welfare reform.

We want to keep people in touch with the workplace through measures such as rehabilitation and skills retraining and by working with employers. That addresses the hon. Gentleman's point. Of course, nothing is to be gained for those individuals who, whatever their physical capacity, are simply put on another benefit.

We must become much more sophisticated in our approach—I will say more about the jobcentre plus concept and organisation later—to those with disabilities or to other groups facing barriers to employment. We must look at people in the round, consider the multiple disadvantages that some of them may face and then address their needs, whether that includes reskilling, retraining or confidence building. I concur with the thrust of the hon. Gentleman's point.

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We all know the background. The numbers on incapacity benefit increased by almost three times between 1979 and 1997, against a background of an increasingly healthy nation. The long-term rate is claimed by 1.3 million people at a cost of £5.3 billion a year. The number now is slightly lower than in 1997.

Fixed period awards are better for two reasons.

Mr. Graham Brady (Altrincham and Sale, West): The Minister and I have had many exchanges and I know that he is a fair-minded man. I do not think that he intended to make a partisan point. In a serious analysis of incapacity benefit, will he accept the fact that, now and over recent years, there have been more new claimants for incapacity benefit than the number of people who have fallen out of long-term unemployment? Surely that disturbing trend lies precisely behind the Government's new initiative to try to tackle new claimants.

Malcolm Wicks : I do not see that as the reason. I was not trying to mislead. The numbers on incapacity benefit are slightly—1 per cent.—lower than in 1997, but they have increased in the past year or so. We could debate the reasons for that, although not today. They are often complex and partly demographic. More people in our society are now over 50 than was the case even a few years ago, and they are obviously more likely to be at risk of incapacity. I hope that the hon. Gentleman agrees on the key point, which is that we all need to work harder and more positively for those people, to give them the job opportunities that many of them are crying out for and deserve.

I was making the point that fixed-period awards are better for two reasons. First, they will help people realise that they are not being written off for life when they claim incapacity benefit. Secondly, we will be able to review their claims so that we can ensure that they receive the help that they need. The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) made a point about that. I was going to call him my hon. Friend; I think of him that way because we served together on the Select Committee on Social Security, of which he is the former Chairman. We need to consider the help that people need. Nothing can be gained by shunting someone from one benefit category to another. I hope that he understands our commitment on that.

There are 2 million men and women—two thirds of them are men—in receipt of incapacity benefit, many of whom want to work and could do so given the right help. They want to enjoy the benefits that work brings, such as social contacts and increased financial independence. Through work-focused interviews and jobcentre plus, we aim to make that possible.

Mr. David Drew (Stroud): I thank my hon. Friend and welcome him to his new position, one that is especially appropriate for him. Would there not be an even stronger case for the changes if they were tied into the possible introduction of age discrimination legislation? The main reason why people cannot find work when they are older is plain discrimination in the workplace.

Malcolm Wicks : I certainly recognise the importance of my hon. Friend's point. We are committed to such an

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approach but are not naive about it; we need to consult and tackle the issues carefully. I am sure that we all see the absurdity of ageism adversely affecting many of our fellow citizens, given the facts that people in our society live longer and that there are skill shortages in many constituencies. That is not only a sociological absurdity but an economic one.

Mr. Brady : My understanding is that responsibility for dealing with anti-discrimination legislation lies with the Department of Trade and Industry rather than the Department for Work and Pensions. Will the Minister confirm that? Is that not regrettable, given the fact that anti-discrimination should surely be tied in with promoting work, encouraging people back into the labour market and maximising the use of their skills?

Malcolm Wicks : I shall answer the hon. Gentleman's point fully in my winding-up speech. The responsibility for different aspects of discrimination now lies in Whitehall, and I hope that that is acceptable to him.

This month sees the introduction of the first job brokers under the new deal for disabled people, enabling disabled people to access specialist help and the support to which I have already referred. After all, disabled people are seven times as likely as non-disabled people to be out of work and claiming benefits. Surveys show that 1 million of them would like to work. We want people with disabilities to have similar opportunities to others to find out about moving into work. We want to help them to become and remain more independent. I am pleased to say that, by the end of April 2001, that approach had helped more than 7,900 people back into work.

As announced by my right hon. Friend the Chancellor of the Exchequer in his Budget 2000 speech, the Government will also introduce a new generation of tax credits. That is the next stage in the series of reforms aimed at relieving child poverty and encouraging people into work by making work pay. The new credits will provide separate elements to deal with each of those aspects. I shall go into more detail about the integrated child credit. First, we shall draw together the various existing strands of support for families with children, including the child elements of income support, jobseeker's allowance, working families and disabled person's tax credits, and the new children's tax credit to create a seamless mechanism for channelling support to children. The new credit will provide a more transparent system of support and will be portable, spanning both welfare and work. It will build on the foundation of universal child benefit and will be paid to the main carer—which is important—in line with child benefit.

Secondly, we shall support those in low-paid work through an employment tax credit, building on the adult elements of existing tax credits and the new deal 50-plus. The new credit will help to increase work incentives for low-paid workers and to relieve in-work poverty in working households. The Government will be consulting on the detailed proposals of both credits later this summer, with a view to introducing a Bill later in the Session.

From 2003, the new pension credit will help pensioners with modest savings or occupational pensions and make sure that there are no disincentives

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to saving. The pension credit will have two effects: first, it will provide a basic guaranteed level of income of £100 a week, below which no pensioner should fall. Secondly, the credit will ensure that people are rewarded for their thrift. It will benefit about half of all pensioner households in the country. Like the provision of stakeholder pension schemes for moderate and higher earners, our aim is to ensure that everyone can look forward to a secure retirement. We all meet regularly, not least during a general election campaign, pensioners who feel hard done by—and properly so. Because they have modest savings and a modest pension, they are barred from certain benefits in old age. We want to address that unfairness.

The Department for Work and Pensions carries out most of the functions of the former Department of Social Security and incorporates the employment, disability and international relations elements of what was my old Department, the Department for Education and Employment, including the entire Employment Service. That is a joined-up approach to benefits and employment issues. We are retaining close links, however, with the new Department for Education and Skills as basic skills and lifelong learning are crucial to our work.

Over the next few years, the Department has a formidable agenda. We are committed to creating the jobcentre plus organisation to provide an integrated work-focused service for all employers and people of working age. We shall establish the pension service, which will provide information and support for today's and tomorrow's pensioners. We are committed to delivering the pension credit—so that people are rewarded and not penalised for their savings—and a radically improved system of child support, through the continued implementation of child support reforms.

We will be working closely with the Inland Revenue to deliver new tax credits such as the integrated child credit. It is important to ensure that we are organised in a way suitable to deliver an efficient and modern service and it is vital that our staff have the technology to do their jobs, which is a matter of concern to hon. Members. We must bring our front-line IT systems up to the 21st century. A public service that is in contact with 70 per cent. of the population at any one time needs the proper tools and technology to do the job. As the Select Committee has documented, much of our IT is now 20 years out of date. The Chancellor has given us the money, so we shall be installing new computers in offices from July.

In the new Department, we are building two new operational arms: one for people of working age and one for those of pensionable age. Both will be operational from next year. The first of those is jobcentre plus—our new agency for people of working age. Jobcentre plus will bring together the Employment Service and much of the Benefits Agency to form a single gateway to the system. Everyone of working age—whether or not they regard themselves as looking for work—will go through the same gateway.

Jobcentre plus will bring real benefits to the Department's customers, and to its staff, whom we must treat properly and not take for granted. It will allow us to provide the more active and individualised help,

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which has worked so well in the new deal. We will set up a service with greater flexibility, more use of personal advisers and a focus on tailoring our services to meet the needs of individuals and employers. We will move quickly to set up the first 50 pathfinder offices.

We are offering new help and new rights in return for greater responsibilities. In work-focused interviews, those who are able to work now or in the future will get the chance to hear about the help that is on offer.

At this time of record vacancies, we are also keen to work more closely with employers, matching people and skills to the jobs employers want to fill, and putting the right training and support in place. We will be working closely with the new Department for Education and Skills and the new employer-led learning and skills councils to understand the needs and demands of local economies and the needs of employers and individuals.

For those who have reached retirement or are planning pension provision, the Pension Service will deliver a more focused and streamlined service. It will provide a new and radically better service for today's pensioners, so that they will have an easily accessible point of contact for all their social security benefits and we will make full use of the opportunities provided by new technology, including the internet.

The Pension Service will deal with everything from policy development to front-line service delivery. We want to improve the face-to-face service to pensioners, so that they can receive the information and help that they want—not only on pensions and benefits but on other local services. That means adopting a partnership approach—learning from the "Better Government for Older People" pilots and Care Direct—to join up our services with local authorities and the voluntary sector.

As well as meeting public service agreement targets, the pension sector will have two aims: to provide a unified, modern service for today's pensioners, however they choose to deal with us; and to give a better service to tomorrow's pensioners by designing appropriate pension products and providing accurate information to help them to make decisions about future pension provision.

Crucial to the new service is clear information—from leaflets to forecasts of pension value. To implement that, we will work in partnership with employers and pension providers to introduce new pension forecasts giving both state and private pension details.

The present Disability and Carers Directorate will become a distinct unit within the Department providing an end-to-end service to people on key disability and carer benefits, such as disability living allowance, attendance allowance and invalid care allowance. The directorate will have close links with both jobcentre plus and the Pension Service, but will be managed separately.

As I said at the beginning of my speech, the new Department is intended to build on the work that the Government started four years ago. We have made a good start, but we have a massive programme of further changes to deliver in our second term. We have the integrated child credit, and we will soon have the pension credit. We also have the Child Support Agency reforms and, crucially, the replacement of our entire IT system to enable us to offer a better and more accurate service to the public. The way in which we deliver our

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service is of the utmost importance, and we want to make it our priority. That is why we are establishing jobcentre plus and the Pension Service.

I apologise for delivering such a long speech. I could have written a shorter one, but the work of the new Department covers a range of issues, some of which are controversial, and the debate provides an early opportunity to discuss an important part of our modern machinery of government.

3 pm

Mr. Graham Brady (Altrincham and Sale, West): I am pleased to follow the Minister. Both of us are present at the debate as—so to speak—refugees from other shores. However, although he is now fully assimilated, in due course I might be returned to the shadow brief whence I came.

Malcolm Wicks : You may have leave to remain.

Mr. Brady : I am grateful to the Minister for that comment; it typifies his generosity of spirit.

The Opposition do not take an entrenched view against the reorganisation, even though it reverses an important reorganisation that was effected by the previous Conservative Government. The idea of bringing education and employment together within government had many friends, and the Minister himself was one of them, as a little research reveals. I admire him so much that I rushed out to buy a copy of his book, "A Future for All", which was published in 1987, and in which he perceptively commented:


Although we do not oppose the reorganisation, we have important questions and concerns. The gains that were achieved by bringing together the Education and Employment Departments must not be lost as a consequence of the reorganisation.

I cannot resist sharing a story that was told to me, I think, by the former right hon. and learned Member for Edinburgh, Pentlands, as it is germane to the subject of Government reorganisation. I apologise if the story is familiar to the Minister, but if it is not, it should be. It concerns a new Minister. When he arrives in his Department, he is handed three envelopes that have been left to him by his predecessor. He is told that, if he runs into difficulties, he must open the first envelope; if things get worse, he should open the second one; and if there is a crisis, he must open the third envelope, which will contain instructions telling him what to do.

The new Minister locks the three envelopes in the drawer of his desk, and he thinks that such problems will never arise, but, very soon, they do arise. The Minister reaches into his draw and takes out the first envelope. He opens it, and on a small slip of card inside it are written the words "Blame your predecessor". The present Government have spent four years doing that. On the second occasion when the Minister finds himself in apparently insuperable difficulties, he reaches into the drawer and takes out the second envelope. He opens it, and finds a small card with the words "Reorganise your Department" written on it. He subsequently does that, and it carries him through for a short while longer. However, such initiatives never carry Governments

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through if they fail to deliver in the longer term, and, consequently, the Minister soon finds himself having to reach for the third envelope. Inside it is a card on which is written the message, "Write out three envelopes for your successor".

The Government's reorganisation will be judged on whether it helps them to achieve an improvement in its record on delivery—rather than on its usefulness in helping them to disguise failures with regard to that. There have been failures of delivery. I think that the Government, from the Prime Minister downwards, would accept that, and I know that the Minister would—although I will not ask him to accept it now.

The Government have failed to deliver on some of their most important targets. We need to see real delivery with regard to stakeholder pensions, as their introduction has caused problems. Action needs to be taken to improve employment opportunities, especially in stubborn job blackspots, to which the Minister alluded in his opening comments. We need the children's tax credit to unfold as an improvement on a grossly inadequate current provision, which discriminates against families who should not suffer such discrimination. Far-reaching reform of the new deal is also needed. In all those areas, and more, real delivery is essential.

As I said, many people have expressed concerns about the possible reorganisation of the Departments, especially the splitting of the Department for Education and Employment. When Sir Michael Bichard appeared before the Education and Employment Committee in May, he made it clear that he was concerned. He said that, although the impact of splitting the two Departments would be less if officials were more mobile than tended to be the case in the past, serious difficulties might arise. It was made clear before the general election that the right hon. Member for Sheffield, Brightside (Mr. Blunkett) had reservations about the proposed reorganisation, even though he knew at an early stage that he might not be directly involved in dealing with the consequences. If the former permanent secretary at the Department for Education and Employment wanted to see more mobility between Departments for officials, will the Minister say how many officials have moved? What has been the degree of mobility between the old Department and the new reorganised Department? At what grades and functions has that mobility become a reality?

Considerable concern has also been expressed about the possible loss of synergy in the previous combination of the education and employment functions. As the right hon. Member for Bishop Auckland (Mr. Foster) said at the Select Committee hearing,


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Does that bode ill for delivery in the next four or five years, and can the Minister assure hon. Members that two years of disruption will not be the price?

On the benefits and social security side, there is an obvious concern about what the merger may mean. My hon. Friend the hon. Member for Havant (Mr. Willetts)—who, as the Minister knows, can bring to bear in such matters as much cerebral firepower as the Minister and I combined—was concerned about screens. As he put it, the Benefits Agency operates behind screens, whereas the jobcentre has always been a welcoming environment. Will the integrated function take place behind screens? I am sure that the initial intention will be to have a warm, open, friendly environment, without screens, whether one is seeking employment or payment of benefits. However, can the Minister be confident that that will continue? Is there a danger that, as the process moves forward, instead of losing the screens from the benefits function, the employment function will be carried on behind screens?

The Minister rightly raised the question of incapacity benefit. Certainly, the information that emerged recently about proposed changes in the screening process for incapacity benefit has caused concern. As the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) said, much of that could have been avoided had the Government engaged in more consultation with interested groups beforehand. Will the Minister assure us that the Government will learn from that? Can he assure us that that consultation will now progress as it should have done previously?

What is the timetable for the implementation of changes to incapacity benefit? When the changes are put in place, what criteria does the Minister anticipate using to decide which recipients will be exempt from triennial screening and which will be included? Given that the Minister has confirmed that the change will apply only to new claimants—I think that I welcome that—what estimate has the Department made of the effect of the change over time on reducing the number of claimants of incapacity benefit?

The Government should be conscious of a wider concern about the treatment of disability issues in the reorganisation. The lead Minister for disability issues is no longer within the Department for Education and Employment, but is in the Department for Work and Pensions. That may send some people the wrong message. I accept the Minister saying that when disabled people are able to work, or may be able to work with sufficient help and support, they should be given every encouragement. However, is it the right message to give a disabled person who is neither retired nor able to work that the lead Minister is located within the Department for Work and Pensions, but is also the Minister in the role of gatekeeper for the benefits system? That sends potentially worrying messages to disabled people, and is a matter that the Government should treat with sensitivity.

Mr. Levitt : Throughout the years of the Conservative Government when there was a Minister for disabled people, that Minister was in the Department of Social Security and, therefore, the same criticisms that the hon.

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Gentleman is now levelling could have been levelled at that Government. Under this Government, since the establishment of the Disability Rights Commission and other cross-departmental measures, where the Minister is based is less important than what the Minister is doing.

Mr. Brady : My point was not so much that it matters where the Minister is based as the signal that may be sent out. The name of the Department may—perhaps in the Government's preferred jargon—seem to exclude those who are not able to work or who are not in receipt of pensions. However, there is the more significant concern of the lead Minister for disability issues being connected with the gatekeeper function for benefits.

The priority in the matter must be that when people are, or may be, capable of work, the assessment must be carried out as quickly as possible and when there is the possibility of a person getting work, all reasonable help must be extended to that person as quickly as possible. Early signs showed that the Government have proceeded without the sensitivity required, but one hopes that that will improve now that one or two warning shots have been fired. The matter is obviously one of deep concern to the Prime Minister if he is moved to appear on a voluntary basis in the House of Commons, not merely when he is here to answer questions on a Wednesday. I gather that he made an appearance on the Terrace last night—clearly he was somewhat shaken.

I draw the Minister's attention to some of the deficiencies of the Government's reporting strategy. The most recent departmental annual report contains gaps where, in the previous year, there was information. Clearly that must be addressed. That is not just for the benefit of Her Majesty's Opposition, because a Government who claim to believe in open government must wish to provide the maximum useful information to all who are interested. However, in between last year's and this year's annual report, some important information has disappeared. The tables that showed the total and real-terms level of expenditure on benefits over a number of years—which were tables 1 and 2 in the previous year's annual report—have gone, as has the table that showed the number of recipients of the main benefits, which was table 10 in last year's annual report. The forecasts of future spending and take-up of specific benefits were contained in all tables in the previous year's report, but largely disappeared from this year's report. We would also welcome more detail of future plans for the Department, especially regarding the year 2003, which is largely missing from the report. Will the Minister give an assurance that next year's annual report will contain this important information, and in the meantime promise to write to me with this missing information, in order to improve the openness of the Government's reporting procedures?

The Minister knows that I have taken a close interest, as a member of the Employment Sub-Committee and in my position in the shadow Cabinet, in the opacity of the Government's new deal figures. It is difficult to discover from those figures the truth of what is happening, especially when one wishes to establish how many jobs are sustained or unsustained and how many paid or unpaid. The figures might be presented in an infinitely

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more readable and understandable way; that would be an important development, which I hope that we shall see.

The Minister talked about the future development of the new deal, which is of enormous importance. The new deal has done some good, as I have always accepted.

Linda Gilroy (Plymouth, Sutton): I am pleased to hear the hon. Gentleman say that the new deal has some good features. Does that mean that the policy that his party took into the general election has been ditched? I understand that his party intended to get rid of the new deal.

Mr. Brady : The hon. Lady has made the mistake of believing what she has been told by Millbank, which she must understand is not a good idea. The Conservative party's policy to replace the new deal with "Britain Works" still stands, I am pleased to say. That policy would improve the new deal and not remove everything that it has created.—[Interruption.]

Mr. John McWilliam (in the Chair): Order. Hon Members should not heckle. They may make their own speeches.

Mr. Brady : Thank you, Mr. McWilliam. I think that the hon. Member for High Peak (Mr. Levitt) wanted to draw in the Liberal Democrat Members by his latest sedentary intervention, but I would not want to become involved in that.

The new deal has done some good, but at huge cost. The cost of a positive outcome on a cost-per-job basis is unacceptable. That is held to be the case by not only Her Majesty's Opposition but many of those involved in the independent evaluation of the new deal; those people have raised concerns about the cost.

The new deal has had an impact on the payment count and the distribution of the payment count between the long and short-term unemployed. There is a flow of people from long-term unemployment, when they become eligible for entry to the new deal, into new deal options, and out of those options into short-term unemployment. There has been a churning of people from long-term unemployment through new deal options, so that if they return to unemployment they have the status of short-term unemployed.

Phil Hope (Corby): I want to draw a minor fact to the hon. Gentleman's attention. In Corby, youth unemployment fell by 70 per cent. whereas long-term unemployment fell by 84 per cent. as a direct result of the economic success of the Chancellor's handling of the economy and the impact of the new deal. It has given those young people and those long-term unemployed people chances that they did not have before. Is he now saying that those opportunities and successes will be ignored?

Mr. Brady : The hon. Gentleman could almost persuade me against my better instincts to become a fan of the more consensual approach, which is supposed to be characteristic of Westminster Hall.

The situation in the hon. Gentleman's constituency, and across the country—as he knows—was that unemployment was falling strongly before the Labour

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Government came to office and has continued to fall strongly since. A difficulty that serious commentators accept—those with knowledge of the subject who study the performance of the new deal in detail—is that the most difficult thing to decide is what element of the fall has been connected to the new deal, and what has been entirely unconnected.

When the National Institute of Economic and Social Research conducted an evaluation in December 2000, its conclusion stated that the new deal had raised youth short-term unemployment. That was clearly not the intention of the new deal, but an unintended side effect. By moving people from long-term to short-term unemployment, the distribution of the figures was changed, particularly through young claimants returning from an unwaged new deal option.

When examining how to improve the new deal, I hope that the Government will allow new thinking to be introduced. I hope that the fact that the employment function has moved to another Department will allow for a more open-minded attitude to be taken in the review of the scheme. It is important that we continue to see development, particularly in relation to areas of high unemployment—I think that the Minister has implicitly acknowledged the underperformance of the new deal in that respect. That has always been a difficulty for any scheme intended to tackle unemployment. We need a more flexible scheme and a less bureaucratic approach, and the new deal must be more results-oriented, as was foreshadowed in the "Britain Works" proposals, which the Conservative party brought forward. A key aspect of those proposals was a real focus on real jobs.

I will briefly quote from the Trades Union Congress's labour market briefing in June. It is perhaps not the obvious source to endorse the "Britain Works" proposal, and I am sure that the TUC would say that that was not its intention. However, the briefing states:


When conducting the review of the new deal, and considering how it can be improved in future, I would like to know what preparation the Department has made for the possibility of an economic downturn. Most people who are familiar with the performance of employment generation schemes are familiar with the fact that they tend to work better at times of economic growth and do not work well at times of economic stagnation or contraction. The way in which the new deal had been put together in its first form failed to take account of that possibility. I shall be interested to hear from the Minister what changes he and his Department have in mind to tackle that.

A few loose ends remain which I hope that the Minister will help us with. What will be the final fate of the Employment Service? Will jobcentres and jobcentre

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plus continue to be run by the Employment Service in its present form, and will they continue to be run by an entirely public sector organisation? Will jobcentres be subject to contracting out? Will we see more private sector involvement from private sector partners in the delivery of the jobcentre plus function?

How many jobs does the Minister expect to be created as a result of the new interview requirements with personal advisers? The evidence of the new deal for lone parents is that the intervention of personal advisers is not always effective in increasing the likelihood of people going into employment.

The movement of child benefit is now in the hands of the Inland Revenue. Can the Minister give an assurance that that is not a precursor to the taxation of child benefit, which would lead to the diminution of the benefit for many families?

Finally, can the Minister give some information and estimates on what will happen under the reorganisation—first, to the departmental overhead figures and, secondly, to the overall establishment figures? In the process of moving functions from the Department for Education and Employment to the Department for Work and Pensions and the Department of Trade and Industry, and perhaps to other areas of government, will the total cost of delivering those functions remain no higher than it has been? Will the total number of officials involved in their delivery remain no higher than it has been? In that context, will we see a corresponding reduction in the establishment of the Department of Education and Skills as we presumably see an increase in the establishment of the Department for Work and Pensions?

3.26 pm

Linda Gilroy (Plymouth, Sutton): It is a great pleasure to welcome my hon. Friend the Minister to his new post in his new Department. He has a long track record in dealing with matters concerning older people, and I am sure that he will bring that experience to bear. Our paths first crossed in Church house, Westminster back in 1976, when he had prepared a document about tackling hypothermia to contribute towards something called the manifesto on the place of the retired and elderly in modern society. At that time, I had recently graduated and was working for the Scottish Old People's Welfare Council, which became Age Concern.

In those days, we knew that many more people were going to live long and fruitful lives in retirement, and that preparations needed to be made for appropriate pension provision so that they could have fulfilling retirements. Sadly, too many of the years that intervened were wasted in terms of preparing for that, as was the case with the other important part of my hon. Friend's departmental responsibilities relating to work. I remember attending meetings with the Scottish Council for Social Services,where predictions were made that if the Government did not develop active policies, we would face unemployment levels as high as 3 million to 4 million people.

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My constituency, Plymouth, Sutton, has faced some of the greatest challenges with regard to tackling poverty. The Minister mentioned the focus of the work of his Department in continuing to bear down on that issue. I am pleased to say that during the first four years of the previous Labour Government we saw some remarkable changes, and it is a bit rich for the hon. Member for Altrincham and Sale, West (Mr. Brady) to say that the new deal has not had a significant impact on unemployment. My hon. Friend the Member for Corby (Phil Hope) mentioned the 70 per cent. drop in youth unemployment. Some of the most remarkable falls in unemployment have been in my constituency, including a 90 per cent. drop in youth unemployment. I know from the stories of many young people from families such as those that the Minister mentioned that their lives have been transformed. I well recollect going round to people's houses before the 1997 general election, when behind almost every door that I knocked on there were people asking what the new Labour Government were going to do for them, because someone in the household was either unemployed or knew of someone who was. This time, the problems that I encountered on the doorstep included far fewer to do with unemployment. I will touch on some of those problems in a moment.

Mr. Brady : I certainly do not claim that unemployment has not fallen, but the hon. Lady must understand that such an employment generation scheme involves the phenomenon of deadweight. Ministers in her Government accept that at least 60 per cent. of new deal participants who get jobs would probably have got jobs without the new deal's assistance. Some evaluations put that figure even higher. Not every job that has been created has been created by the new deal.

Linda Gilroy : There is much more to the new deal than introducing people to work and work experience. One of its important features has been to ensure that the accompanying training is mainstream, leading to NVQs, and that it begins to introduce people who might have fallen out of the training world to the idea that we are now living in a world of lifelong learning. That has helped to raise our employment market in Plymouth to greater skill levels. We have great challenges yet to face in that area, and I will discuss it further.

I was referring to the wasted 20 years for pensions and work. We knew that there would be significant challenges and problems in both areas, which were not tackled during that time. During the past four years, some of the building blocks have been put into place to change that.

I shall deal with two main topics—first, pensions, which are very important to all our constituencies. In Plymouth, a city of 250,000 people which includes two and a half constituencies, there are some 50,000 people of retirement age. I never understood why a great deal more anger was not generated among us at the start of the previous Parliament by the scandal that 17,000 to 20,000 people of retirement age in the city of Plymouth were trying to live on incomes of less than £90 per week for a single person and £135 per week for couples. The Select Committee on Social Security worked on that. I was not able to serve on the Committee, but from the video of its inquiry, I listened to the evidence taken. The

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Age Concern representatives put forward cogent arguments that there was a low but adequate basic income on which people could manage, without having to rob Peter to pay Paul.

The provisions for the minimum income guarantee will, to a large extent, address those problems. However, there are outstanding problems concerning the huge differences between households. Some properties are well insulated and have good modern equipment, whereas others are draughty, exposed and poorly equipped, and people in those households must spend much more of their income on heating. Of course, the fuel poverty strategy goes side by side with the minimum income guarantee to address the income requirements of such people. There are far too many of them, including a huge proportion of my constituents.

I greatly welcome the move to address the concerns of pensioners who, although they have every sympathy with their poorer neighbours, feel that they are being rewarded very little for having saved throughout their lives. It is important that we should address that, in fairness to them and to ensure that in future people think that it is wise to save. Far too many older people to whom I have spoken are beginning to say to their children and grandchildren, "Look, it didn't do me any good to save for retirement. You'll get taken care of to a certain level anyway." An important part of introducing the pension credit is rewarding the thrift of those people who have saved towards pensions or put away savings for a rainy day.

I warmly welcome the new pensions agency and hope that the Minister will confirm that it will tackle several issues. I welcome his remarks about offering a choice to people who inquire about their pensions. There were rightly many references in the previous Parliament—and a few in this Parliament—to the very long document, which contains several inappropriate questions, for people applying for the minimum income guarantee. My understanding is that the new Department intends to streamline that document, and that it will offer a range of choices for people to access information and make an application for a pension.

The publicity from the Department says that people will be able to choose whether to make their inquiries by telephone, internet, post or face to face. I would be glad if the Minister could say more about face-to-face contact. In the previous Parliament there was much discussion about the role of post offices. I hope that they will continue to have a role in offering practical advice, particularly in those areas—of which I have too many—of our constituencies where there are low levels of literacy and basic skills. Such people need somebody's help on a week-by-week basis not only to make sense of their pension income but with some of the challenges, which they will continue to face, of making ends meet on modest incomes.

I hope that we are right to look towards the new pensions agency to give a much better service to our constituents. I also hope that it will be able to do so in a timely way, which is often important. A constituent who recently wrote to me is obviously one of those people who like to be prepared. He wrote some two years in advance of his retirement to get a forecast of the pension income for which he would be eligible. Some 18 months, later he approached me in desperation to help him get that forecast ,so that he could make important decisions

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with regard to his forthcoming retirement. It was some time after his retirement before he was able to get at least part of the information that he wanted.

I hope that the Minister's faith in the new information system will prove to be justified, and that it will live up to our expectations and deliver timely and accurate information. I also hope that the software that is being designed will be of high quality. That has been a problem across many Departments, and I am sure that my hon. Friend will be taking a keen interest in ensuring that we do not have future debates on the system's failure to live up to our expectations.

It has been my experience in Plymouth that a well-designed programme, in this case bringing together information from the Benefits Agency and from the Employment Service lone parent new deal advisers, can transform the ability of both staff and constituents to benefit from a service. My hon. Friend the Paymaster General and I visited an organisation in my constituency called Routeways, where we saw laptop computers going through complex calculations to work out whether lone parents would be better off in employment. That is a model of how such information and advice should work. I hope that we can progress to a similar quality of service being available for our constituents who inquire about their pensions.

Many of the young generation are conscious of the need to make provision for their future, but it is difficult to do so in a vacuum. The regular forecasts that will become available through the Department will be invaluable in increasing general awareness that people who save at a specific rate can expect a specific income, and that putting by a little more each month and each year, if they can afford to do so, will have an impact over the years to retirement. That will encourage people to save, and the Government's general approach will ensure that as many people as possible receive pensions and a decent income in retirement. People will be able to see the benefit of saving.

I turn to the work side of the Department for Work and Pensions, which is of great importance in my constituency. We can never underestimate the effect on unemployed people of getting a job, which gives them dignity and self-respect. When young people are asked what they want to be, they rarely respond by saying that they want to be good parents or good neighbours, and that may be regrettable. They usually define their future in terms of the job that they want. Long-term unemployment is a form of social exclusion, as I learned when campaigning during the 1997 election from those who had studied hard and got qualifications, but still could not get on to even the bottom rung of the employment ladder.

My hon. Friend the Minister spoke movingly of the need to end the scandal concerning those who have disabilities which make it even more difficult for them to enter the job market. He referred to a large number of people with disabilities who are unemployed and want to work. I believe that the figure was as high as 1 million.

Malcolm Wicks indicated assent.

Linda Gilroy : My hon. Friend may not be surprised to learn that, as I travelled around during the recent election, I met a number of constituents in that position.

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I shall take a moment to share with my hon. Friend the stories of three of those constituents because they illustrate, as did my hon. Friend's constituent, the scope that exists for a Department which can offer a service sufficiently sophisticated to enable people to achieve their potential and find work.

I have met one of those constituents over a number of years and came across him again during the recent election. I have not asked permission to mention his name so I shall use a pseudonym. Peter is a young man who is determined to be independent, despite a significant disability arising from a severe form of cerebral palsy. It makes him reliant on a wheelchair, but his mind is acute and he is a whizz on the internet. He has developed his skills over a number of years and examined the possibility of working, perhaps in some form of public relations, where he could use his internet skills and his ability with words. He has travelled independently to other parts of the world, including Africa and India, and is a remarkable, acute and very bright young man. He has made representations to and through me to the Minister with responsibility for disability in the previous Parliament. No doubt we will exchange correspondence with new colleagues in the Department that now has responsibility for that.

Peter tells me that one of the downsides to our great success in reducing unemployment is that he now finds it very difficult to recruit a carer. He has a full-time carer who lives independently in his home. We should perhaps consider some aspects of that with regard to forthcoming new deal developments and initiatives. We should consider whether there is scope for working with people in such situations.

My constituent's case raises other issues relating to inflexibility for people on benefits. If he wishes to move into work, the period that is allowed for him to experience that work before deciding whether it is a viable option for him to maintain an independent income and life—

Mr. John McWilliam (in the Chair): Order. I have no power to limit the length of speeches, but if every hon. Member takes as long as the hon. Lady, not everyone will be called.

Linda Gilroy : I shall move on to describe the other two constituents. We shall call one of them Paul. He suffered a sports injury and needed information and support to retrain. He did not know about the new deal programme, and that illustrates the need for us to ensure that people are periodically given the opportunity to discuss their needs. The job broker will be able to help people in such circumstances.

A third constituent is partially sighted, the first person with such a disability to gain a recognised qualification in photography. He has made representations to me, which I will pass on to the new Department, about how helpful it would be if he had greater flexibility and support with regard to travel. He refers to a local arrangement in London called a freedom pass.

The cases of my constituents show that there is a need for flexibility—the Minister referred to being sophisticated—in meeting those challenges. It would be

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of great benefit to us if we could help people with such severe disabilities by being flexible and sophisticated in our responses to them. They would become role models for others with less confidence and less enthusiasm for overcoming their disability or incapacity. Such help could lead to more fulfilling lives and greater opportunity.

I wish my hon. Friend well in his new post and new Department, and I look forward to working with him on many of the other challenges that face it, particularly in dealing with the long-term unemployed. Constituencies such as Plymouth, Sutton will take even greater steps forward between now and the next election in tackling poverty through work and better arrangements for pensioners.

Several hon. Members rose

Mr. John McWilliam (in the Chair): Order. Before I call the next speaker, it might be helpful if I told hon. Members what I intend. There could be a large number of Divisions at 4 o'clock. Some may say that there will only be 11, but as an ex-Whip I can say that there could be 12. I intend to suspend the sitting and then resume 15 minutes after the last Division. If the Divisions are compressed into less than 15 minutes, we should not finish too late. However, I can assure hon. Members that there is injury time and the sitting will last for the required length of time, regardless.

Mr. Levitt : On a point of order, Mr. McWilliam. Under those circumstances, would the sitting continue until 7 o'clock, or could it continue beyond that?

Mr. John McWilliam (in the Chair): The sitting will continue for the number of hours allocated to it, which is three. It may continue after 7 o'clock without me, but there will be three hours of debate, regardless.

3.49 pm

Mr. David Heath (Somerton and Frome): Thank you for that guidance, Mr. McWilliam. I fear that the speech that I am about to start may be the longest that I have made in the House, and probably the longest that I will ever make. That is an accident of the timetable.

I should like to my add my welcome to the Minister and his Conservative shadow, both of whom bring to their tasks experience in education and employment that is obviously relevant to the new Department. I do not have the same expertise. I have followed a different and more unusual career path, similar to that of the Minister for Work, the right hon. Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown), who has come from the Ministry of Agriculture, Fisheries and Food. The career structure is not obvious, but I am sure that I am as happy in my responsibilities as he is.

I welcome the establishment of the new Department, which was a logical step. I did not think that some of the changes to the structures of the Government, made by the Prime Minister in the flurry of reformatory zeal immediately after the election, had been thought through. However, the logic of the new Department's responsibilities is there for anyone to see, and its creation is a step that we have long promoted. I am less sure about its name, which has a distinctly Stakhanovite timbre. It hints that those not lucky enough to have

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work and who do not yet qualify for pensions may not be the Department's top priorities. I hope that that concern will be dispelled as we see the Department in operation.

The new Department got off to a rather unfortunate start, and has received a poor reception to the changes in incapacity benefit. My hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) was right to say that that could have been avoided with a more proper approach to consultation. It could also have been avoided if senior members of the Government had not commented on the subject with such relish. I was staggered on 25 June, during the debate on the Gracious Speech, by the comments of the Chancellor of the Exchequer, who, if not the titular head of the Department, certainly sets most of its activities in motion. His embracing of and approbation for the economic and social policies of Ronald Reagan, and his wish to be seen to be endorsed by George Bush, raised doubts in my mind as to what will be the Government's intended approach over the next few years. It must have raised doubts in the minds of many Labour Back Benchers as well.

As long as the Department provides a helping hand to the elderly, those with disability or those seeking work, it will have the wholehearted support of the Liberal Democrats. When that helping hand is transformed into a bully's implied or actual threat, it will have our undying opposition. We will be robust in saying that we will not stand for a Department based on sanction rather than support.

Phil Hope : Is the hon. Gentleman saying, based on the position of his party, that he supports the changes to incapacity benefit, given that they offer individuals the support, rehabilitation and skills retraining whereby they can return to work?

Mr. Heath : The hon. Gentleman will forgive me if I do not accept the blank cheque that he offers on the assurance that what he says is what is intended. We are not yet convinced that that is the case. We hear the rhetoric but want to see the proposals and will discuss them in detail when a Bill is presented to the House. We are wary of what is suggested, as it may make life more difficult for people with disabilities, rather than helping them to obtain work if it is available, as we would want, and to gain security if it is not—[Interruption.] The hon. Gentleman may take things as he chooses, but he should listen to his hon. Friends to find out what concerns are shared within and outside this Chamber.

Mr. John McWilliam (in the Chair): Order. Hon. Members cannot have private conversations, or we shall all want to join in.

Mr. Heath rose

Mr. Levitt : Will the hon. Gentleman give way?

Mr. Heath : Having just taken an intervention, I think that it would be unwise to take another. It might incur your wrath, Mr. McWilliam.

We have heard, in the context of the new Department's delivery systems, about jobcentre plus and the Pension Service. I have no quarrel with the intention of integrating the delivery of services. Any sensible Administration would try to achieve that.

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However, we need to think about the detail and about what progress is likely to be made with integration. As to the Pension Service, the letter from the Secretary of State, which was widely distributed in the past day or two, stated:


The Minister has corroborated that statement today. That is fine as far as it goes, but—and this is a big but—the Government do not have a good track record in introducing modern technology to carry out some of the functions in question. We need to ask the Minister what progress has been made so far on, for example, NIRS2. When will the many problems associated with it be resolved? When will we be able to deal with substandard information technology infrastructure? Would it not be better to solve one new technology problem before creating new ones?

As to the operation of programmes that have already been established, an expensive—and justified—take-up campaign has been run with respect to the minimum income guarantee. However, one quarter of the poorest entitled pensioners still do not claim. How will that problem be solved? Will the new integrated structure be better at ensuring that those who are entitled to claim do so, or is that issue considered to be water under the bridge? There are 1 million men entitled to winter fuel payments dating back to 1997. How will the Minister ensure that they receive the money to which they are entitled?

The structure of the Pension Service and jobcentre plus needs to be considered. I read the Secretary of State's letter to colleagues working in the relevant services and the first question that struck me was whether there would be redundancies. Will we lose from those services skilled people who are not located near one of the new pension centres and who cannot relocate? Will they be out of a job?

The process of integration will be more difficult with respect to jobcentre plus. I do not know how much thought the Department has given to that issue. Two different cultures are involved in the agencies that will be united. I do not say that the difficulties are insuperable, but the integration of cultures and management structures and the agencies' interface with the public are issues that will need to be dealt with. I am also interested—this point is relevant to the Minister's previous responsibilities—in how the new jobcentre plus structure will interface with the ConneXions service that he was so instrumental in introducing. Connection between them is important and should be established, if that has not happened yet. It should be integral to the working of the new agencies.

The hon. Member for Altrincham and Sale, West (Mr. Brady) spoke at length on the new deal. There is evidence that it has achieved some of its objectives. There is also concern, as the Minister knows, about whether it is doing everything that we would want it to do, particularly whether it is sustaining employment for the new deal entrants. The Employment Sub-Committee of the Select Committee on Education and Employment looked at the matter in detail and, in its report of 13 March 2001, concluded that some 22 per cent. of new deal participants who had found a job through the new deal had not obtained

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sustained employment. That is an important factor. Until the new deal is capable of guaranteeing sustained employment for those young people, it is not fulfilling its primary function. We need to be satisfied that that will happen.

The hon. Member for Stroud (Mr. Drew) mentioned the staggering lack of appropriate legislation to deal with discrimination on the grounds of age. That is a great disappointment. The Secretary of State has stated that one of his objectives is to help the over-50s into work. Through private Members' Bills, many hon. Members have expressed their desire for legislation at an early stage. However, the Government are dillying and dallying, saying that it will not be introduced until 2006, the last possible date under the EU regulation—so not only did we not see legislation in the previous Parliament, but we shall not see it in this one either. That is regrettable. I know that there are difficulties in framing legislation, and that consultations have to take place, but it cannot be right that it will take another five years to introduce appropriate legislation in an area that is of great concern to many people.

I hope that the jobcentre plus structure will allow greater flexibility in the way in which the Department works. I am thinking in particular of how to deal with a matter that I have raised in the House—hotspots of unemployment that occur in areas that are otherwise areas of high employment. Often, the closure of a relatively small company in a market town or rural area can mean a temporarily high percentage unemployment rate in an area where it is difficult to create new employment because there is no infrastructure to attract business from outside—[Interruption.].

Mr. John McWilliam (in the Chair): Order. The sitting is suspended until 15 minutes after the last vote has taken place. It is possible that the last vote will be on parliamentary pensions, with two amendments, (a) and (b). Hon. Members should be aware that not all amendments will necessarily go to a Division, and I shall not be handing out lines for lateness because I am as likely to be late as anyone else.

4.2 pm

Sitting suspended for a Division in the House.

5.6 pm

On resuming—

Mr. John McWilliam (in the Chair): I apologise to hon. Members who turned up in the Chamber before me. I seem to be late, but I had warned them about that possibility.

Mr. Heath : Thank you, Mr. McWilliam.

Some hon. Members have been kind enough to say that they enjoyed the last hour of my speech. I now want to move on to the more contentious matter of whether we are moving towards a regime of benefit sanctions. The hon. Member for Corby (Phil Hope) said that we were not. He believes the Government's

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press releases—but then he always believes the Government's press releases. I treat them with a little more cynicism than he does.

Such matters are a real worry to hon. Members and those outside the House. If we are moving to a regime that imposes more burdens on those who are rightly claiming benefits that we want them to have, we must understand what the regime entails and how it will impact on claimants.

I do not know whether the Government are retreating on the matter of incapacity benefit. I heard what the Secretary of State for Work and Pensions said yesterday and I heard what the Leader of the House said this morning. The claim that the benefit will not apply to existing claimants was repeated today. That is not a change of policy. That is probably what the Department had intended originally, but such a line is now spun as a reaction to the adverse comments made at Prime Minister's Question Time yesterday and elsewhere. It may be helpful to the Government for such a decision to be seen as a partial retreat in order to secure the support of their right hon. and hon. Friends.

Mr. Levitt : The phrase "new claimants" was certainly used in yesterday morning's press coverage.

Mr. Heath : I accept that such policy had existed previously. However, it is now packaged as a partial reaction to the adverse criticism that the proposals have encouraged. But what will happen to those individuals on incapacity benefit? Will they be subjected to a full medical test, as they are when they claim the benefit initially? Who will carry out the test? Will it continue to be carried out by the private contractors, Sema, which presently undertake the test? If so, the Minister knows the considerable criticism that has been levelled at the way in which medical testing and assessments are carried out currently. He will also know that I, as well as other hon. Members, have asked about the high level of successful appeals—about 50 per cent.—against the assessment. He will correct me if I am wrong, but that suggests that something is inherently wrong with the assessment. You will also know of the considerable criticism levelled by the Social Security Select Committee in the previous Parliament.

Mr. John McWilliam (in the Chair): Order. "You" refers to me.

Mr. Heath : I am sure that you are aware of it, Mr. McWilliam, and it was to you that I referred. The Minister may also know—let us hope that he does. He will have read the report of the Social Security Committee from April and the comments on the present contractor arrangement, which states:


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We are concerned that setting targets—and this Government are increasingly obsessed with targets—in such sensitive areas as benefit take-up and getting people into work may result in a loss of objectivity among the agencies concerned. On the question of lone parents and people with disabilities, the Secretary of State suggested that there should be targets that define the percentage who come off benefit and go into work. Yesterday, he repeated those targets. The aim is for 70 per cent. of lone parents to go into work by 2010, whereas the present target is 50 per cent., and for 70 per cent. of those on incapacity benefit to go into work. There is a fine dividing line between encouraging people to meet the targets and compelling people to return to work to meet them. That is our potential major criticism and the test against which we shall judge the proposals when they are finally put on the table.

I shall not go into detail on child credit because it is an area on which we are likely to find much common ground with the Government. I look forward to the proposals. I hope that they will not be over-complicated or bureaucratic and that it is possible to devise a system that integrates the present arrangements to a far greater extent.

Will the Minister clarify where the responsibilities lie both within the ministerial team in the House of Commons and between the Department for Work and Pensions and other Departments dealing with children and their welfare. It is important that we have a clear understanding; otherwise an important area of public policy may fall between the cracks.

Pensions policy is a matter of enormous concern to every hon. Member, and for millions of people throughout the country. We sometimes hear of the Government's good intent, not least in the debates that took place in the general election. However, we suspect that much pensions policy is being made up on the hoof—that it lurches from one programme to another and from one intent to another, with little coherence. We do not need to look far back to see the 75p increase: we considered that to be derisory, as did many other people. The public reaction to that produced a move to so-called transitional arrangements—a £5 increase in the pension this year, a £3 increase next year, and it appears that there will be a £1.50 increase in 2003. As that arithmetical progression does not encourage us to feel optimism on behalf of pensioners, we need to know exactly where it is heading.

As I have said, a quarter of the poorest pensioners who are entitled to the minimum income guarantee failed to claim it. It is extraordinary that the Government's pension credit consultation paper clearly states that the minimum income guarantee has several flaws. For example, it states that


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That damning indictment comes from the Government, and it criticises a scheme that they, rather than the previous Government, devised. If anything amounts to an admission of defeat, it is that consultation paper on a scheme that was introduced merely two years ago.

We do not know what form the pension credit will take. It appears to be very complex, but we do not know in detail how it will work. We are, in effect, witnessing the abolition, after merely two years, of the minimum income guarantee, and it is possible that the second state pension will also be superseded.

Questions need to be asked. What proportion of pensioners does the Minister think will be on the means test after the introduction of the pension credit? How will the new Department deal with problems of take-up, such as those that have been experienced with regard to the minimum income guarantee? How will the pension credit interact with housing and council tax benefit? How will it work for people who are not receiving a full state pension? That final issue is not addressed in the consultation paper.

Those are important questions. It is possible that we will be told the answers to them today, but we may have to wait until the legislation is put before the House. However, for many of us, the bottom line is that we must establish a robust and sustainable pension arrangement for elderly people that fully recognises need and addresses the fact that frequently very elderly people have increasing needs. At the moment, there is little confidence that that is either in place or envisaged.

We welcome the establishment of the new Department. I look forward to working with others to scrutinise both the legislation that is put forward and the practical applications of the Department and its agencies on the ground.

I hope that we shall base our opinions of what is put forward on facts and figures, rather than on an unnecessarily impressionistic view that is coloured by the opinions of people who might not have carefully read the proposals or on an overly optimistic view that is spun by the Government and their Ministers. At the end of the day, the test is whether those who are vulnerable and who need the assistance of the state are better or worse off at the end of this Parliament. I am not yet convinced by what the Minister said. I have enormous respect for his personal qualities and I hope to see those qualities—both in terms of his intellect and in perception of what is needed—applied in full to the task ahead, and I hope that we will have fruitful discussions for the benefit of all the groups of vulnerable people whom we hope to serve.

Mr. McWilliam (in the Chair): Order. I apologise to the hon. Member for the unprecedented interruption to his speech. I also apologise to all hon. Members because the debate has been fractured in many ways. I have had the matter put on the agenda for the Chairmen's Panel when we meet on Tuesday, and I shall raise it in the strongest possible terms.

5.20 pm

Phil Hope (Corby): I welcome the debate about the Department, and I congratulate my hon. Friend the Minister on his appointment. In his previous job, he and

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I had many conversations about matters that affect young people. He thought that he had escaped me—he has not. I will press him on what the Government will do for older people. I hope that I shall receive the support and response that I received in our previous discussions. I hope that you will forgive me, Mr. McWilliam, if, due to the unusual circumstances of the debate, I am unable to listen to the Minister's winding-up speech because I have another engagement.

It is widely recognised that we live in an ageing society. One fifth of the United Kingdom's population is aged over 60, and by 2030 it is estimated that that figure will rise by a half to more than 19 million. We are not only getting older but living longer. That is good for us, but not so good when one must pay the cost. The Secretary of State is the Government's champion of older people in Cabinet and has a crucial role to play. I shall focus my contribution on older people.

We must face the challenges that an ageing population brings, and the Department is at the forefront of responding to that. We must ensure that older people have financial security, and we must take action over a range of areas to plan for an ageing population and ensure that older people are at the centre of decision making. Public services must meet their needs and their contribution to society must be valued.

In the previous Parliament, the Government made significant progress in meeting those twin challenges, especially with the real improvement to pensions and benefits for older people. That has lifted many pensioners out of poverty and given more pensioners security in retirement. However, the debt that we owe our pensioners is not always appreciated. In recent months, I met voters on the doorstep—as we all have—and I was struck by the impact of the extra help that the Labour Government have given to pensioners, and by the need to do a lot more to put right decades of injustice.

As we approached the end of the past century, life had become hard for too many of the generation who fought for their country in the second world war. Conservative Governments from 1979 to 1997 made it hard to keep warm in winter because they put VAT on fuel, and made it hard to see because they put charges on eye tests. They made it hard for people to walk out of their homes in safety, because crime doubled. They created a national health service that failed our old people more, and there were year-on-year cuts in social services. That did not make for a great couple of decades for older people. It is a pity that when the hon. Member for Altrincham and Sale, West (Mr. Brady) spoke, he did not take the opportunity to make some small apology for the fact that, when the Conservatives left office, there were 3 million pensioners living below the poverty line.

I am pleased that we have turned the corner. Older people in my constituency recognise the measures that the Government have taken over the past four years to improve their quality of life. It was great on the street because I remember a pensioner saying to me, "I'm going to vote for you, Mr. Hope, because I've never been better off as a pensioner. In the whole of my life, I've never been better off. For the first time, as a pensioner, I've been able to put a bit by. I'm going to go to Blackpool for a week's holiday." For the first time, she

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had a bit to spare from her income to be able to take a holiday. That may seem a small thing to some Members of the House, but it is a significant achievement of the Government to tackle pensioner poverty and provide a decent quality of life and a chance of a holiday for pensioners who in the past could not afford it. We can be proud that 1.7 million of the poorest pensioners are better off by at least £800 a year, and that the average pensioner household is £11 a week better off than in 1997. The Minister quoted those figures in his introduction.

We must do more, however, not only for the poorest pensioners but for those who have worked and saved for their retirement. I welcome the Government's commitment, renewed in the manifesto, to reward pensioners who have savings. The hon. Member for Somerton and Frome (Mr. Heath) made the point earlier that the priority was to tackle the issue of the poorest pensioners. The legacy that I have described had to be addressed, and we spent many billions of pounds in doing so.

As for those pensioners above the poverty line, who have some savings and a small works pension but who are not seeing a reward for their savings and financial management, the pension tax credit is the way forward. There are legitimate questions on that matter, some of which have been asked this afternoon and which need to be answered through the consultation process. Those pensioners who fall just outside the minimum income guarantee and have some savings need to be rewarded for their thrift, not only because it is right but because we should give a signal to those who are saving now for their pensions that to do so will mean that they are rewarded when they reach retirement. The group of people who are older than 50 but have not reached retirement age will clearly be affected by the Government's proposals on incapacity benefit.

I said that those were legitimate questions to ask about the pension tax credit; questions may also be asked about the changes to incapacity benefit, but that is not the same as scaremongering. Although the hon. Member for Somerton and Frome asked some legitimate questions about the nature of the changes to incapacity benefit, he also suggested that people would be compelled to work—would be thrown out of their wheelchairs and made to work. That is scaremongering of the highest order, and should not be allowed.

If the hon. Gentleman read the speech that the Secretary of State made to the Institute for Public Policy Research, he would discover specific references to the fact that help will be given to people who have had accidents, to provide rehabilitation if they need special equipment for work, while more will be done to support those who will never be able to work. To introduce the notion of compulsion in this debate is scaremongering and must be rejected.

Mr. Heath : I said clearly that we would reject compulsion, were it to be proposed. I am not saying that the Government are proposing it. Does the hon. Gentleman not understand the distress caused to many disabled people by the current assessment process, let alone the idea of assessments at repeated three-year

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intervals? Is he satisfied that that is an appropriate way in which to monitor the effectiveness of the benefit programme?

Phil Hope : The distress that I recognise is that caused when hon. Members in this House go out of their way to frighten people unreasonably with allegations of changes to policy that will not happen.

I move on to a more positive note by mentioning the Government's "Better Government for Older People" project—a national project being rolled out at local levels in different constituencies. I am delighted to tell the House that on Monday I will join Jim Waite, Corby's champion for older people, to launch a local strategy to deliver better government for older people. We are establishing a new partnership between Corby borough council and other key agencies within Corby borough, including healthcare groups, the police, voluntary organisations, the Benefits Agency, social services and organisations such as Age Concern.

The broad aims of the local strategy are to develop and implement better, more responsive and more innovative policies and services for older people throughout the borough. Crucially, we want to develop and support older people with their skills to ensure that they have the opportunity to play an active part in society. It is especially important that we get rid of the stereotyped and discriminatory image of older people as being stuck in homes without anything to offer to society. Next week in the House, a reception will take place to celebrate older volunteers, as part of the international year of volunteering. Older volunteers throughout the country will be recognised for their contribution, whether it is helping in their communities, serving on voluntary management committees or carrying out one of a range of other activities. It is crucial that we make a positive statement about the contribution that older people make.

We can teach old dogs new tricks. A school in my constituency, Lodge Park technology college, has just opened a new technology suite for the community. The people who are using it are grandmothers and grandfathers, who learn how to do things with computers that they never thought that they could do, and subsequently can help their grandchildren with their information technology homework. That is a terrific example of how everyone in the community can learn, at any age, and can benefit. I hope that more opportunities will be provided and barriers removed, so that older people have the chance to succeed.

Finally, I want to draw the Minister's attention to the Five I strategy published by Warwick university, which relates to better government for older people. The first of the five is information, to ensure that we understand older people's needs, views and priorities. The second is imagination, which creates a vision that will be translated into a real plan of action. The third is inclusion, to ensure that all the stakeholders who work with older people are part of a local strategy. The fourth is integration, because of the need to integrate local services, especially health and social services, to respond to the needs of older people. The fifth is implementation—getting the job done.

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A local strategy can be very successful in bringing together the different agencies, putting older people at the heart of that strategy, listening to their concerns and responding to them. Life for older people in this country could be transformed if the Government took bold and practical action now, at all levels, to plan for an ageing population. They must consult and listen in order to ensure that our public services are responsive, integrated and of high quality. That is relevant not just for today's older people but for the older people of tomorrow, some of whom may be sitting in this Chamber this afternoon. "Better Government for Older People" means better government for all.

5.31 pm

Mr. Archy Kirkwood (Roxburgh and Berwickshire): I am pleased to follow the hon. Member for Corby (Phil Hope), and I agree with much of what he said. I certainly agree that "Better Government for Older People" was a welcome initiative. It is being developed in my constituency, as well as his, with some enthusiasm, and it will improve the ability of local elderly people—I include myself in that, as I am over 50—to participate more at crucial policy-making times when they can make a difference. The experience of the pilot scheme in the Borders in south-east Scotland was that the initiative was welcome, and long may that continue. The only comment that some local people would have made was that the central Government support that was enjoyed previously under the pilot scheme has since been reduced. That has diminished the ability to perform. However, one cannot have everything, and I am happy to concur with the hon. Gentleman's view that the initiative is welcome.

I am delighted that the Government decided to stage the debate. It is necessary, and the new Department is an essential part of the work of this Parliament. I wholeheartedly support the Government's desire to move towards a more active welfare policy, although I hope that it is an active and supportive welfare policy. One can construe the adjective "active" in a harsh sense. Some of the statements that have appeared on the No. 10 website, for example, refer to "value for money" in the welfare policy agenda. Everyone in the Chamber wants value for money, but there is a difference between trying to constrain a £7 billion incapacity benefit budget from the Treasury viewpoint of trying to save money, and developing a policy that is necessary and addresses the needs of those who require benefit.

The Minister's involvement in the Department—I say this honestly, without trying to sound too greasy—greatly reassures me. Knowing him as I do, I know that he will not have anything to do with any kind of policy that saves money for the sake of it. The debate has helped to explain the provenance of the Department, which is welcome.

This change involves huge administrative upheaval—no one should underestimate the extent of it. Even with the Minister's best endeavours and good faith, he may find many an administrative hurdle locally that will go against his serious plans for the future. The official start date for both the pensions agency and the new jobcentre plus is 1 April 2002. April fool's day may have been a mistake as a date to choose for opening the two new agencies; perhaps 2 April would have been better.

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The timetable is enormously ambitious. If the Minister believes in his heart of hearts that that it is too challenging, I would rather that he postpone the formal launch date; we all experienced NIRS2. The integration of the computer schemes is the most ambitious target that I have encountered, and previous experience of that is inauspicious. I would rather do this to a sensible time scale with computers that work than try to rush it to a political timetable so that the Government can say that they have delivered the change on time. The Minister would certainly get my support and sympathy if he came to the House and said, "We are doing our best, but we need more time for the computers," because this is such an important change.

This is a cultural change in two directions. First, it is a cultural change in terms of trying to promote an active employment policy, which is the most important thing that the Government have done in their first term. They are getting the idea across to people that doing nothing is no longer an option, which is welcome. However, it will take a long time before that culture infiltrates down to the front line of the new service. Secondly, it is a huge cultural change for the staff of the Benefits Agency and the Employment Service; when Sir Michael Bichard gave evidence to the Select Committee on Education and Employment in May 2001, he said that it was the biggest upheaval since the second world war. The change involves 80,000 members of staff and diverse computer systems. It includes not only the Benefits Agency and the Employment Service but the Inland Revenue and the Child Support Agency. The Government are taking on an ambitious scheme to rejig the CSA into a new configuration by July 2002. That is welcome, but it will not work if the computer systems are not in place. How can they get the integration over such a short time scale? It is a good trick if they can do it and I wish the Minister well in trying to deliver it. However, he must be careful not to bite off more than he can chew, which would result in claimants getting hurt because the system is not working and delivery services do not measure up to expectations.

There are some issues that the Minister will not have time to consider because this has been a detailed debate in which both Government and Opposition Members have raised interesting questions. I should like to know exactly what is happening to the social fund administration, which, as I understand it, is being split up. Some of the social fund services people of working age as well as those who are retired, which will mean disaggregating the current administration of the social fund. It is important that issues such as that are addressed sensitively and that we do not get things wrong as a result.

This is really a second order question, but it is important: some of the changes in responsibilities on anti-discrimination legislation will leave the Department for Work and Pensions responsible for disability issues across government. However, as was said earlier, the Department of Trade and Industry has responsibility for race equality in employment, but, as I understand it, the Cabinet retains responsibility for gender legislation and policy. There is a danger of incoherence as a result of that change because it will be difficult to focus properly on a strategic Government

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policy for anti-discrimination. The Government must be careful about that when they come to the fine print and the detailed execution of the change. However, it is both the right thing to do and a positive move. I certainly wish it well.

I shall now turn to some of the individual elements of the change. In terms of benefit and work, one thing that is often underestimated is the burden of responsibility that is placed on some of the staff. Staff of the middle management and lower levels are paid meagre salaries to do crucial processing as part of important public service work. That is particularly true of executive and administrative officers in London, as the Minister knows better than me. If such staff do not get their work right, or do not get the right training, or do not stay, there are breakdowns in the service quality that we would all like to see. I hope that any change to pay rates—or equalisation of them because, in some regions at least, Employment Service staff are usually better paid than those of the Benefits Agency—will be an upgrading, and that that will be an opportunity to float up pay rates for some frontline staff at the Benefits Agency. That opportunity may not present itself again for some time.

Sir Michael Bichard, when he gave evidence to the Education Sub-Committee, was keen to stress the very different culture for workers in the Employment Service compared with that for frontline staff in the Benefits Agency and its local offices. The question of those different cultures must be embraced very sensitively. The Government have left little time in which to do so, and I hope that that will not threaten the policy change.

I have said that the Government are slightly culpable for their lack of consultation on the treatment of incapacity benefit. However, I know for certain—I have the document in front of me—that the idea was floated in April 2000 in a report from the performance and innovation unit called "Winning the Generation Game". It was very interesting and thoughtful, but the press took a headline story out of it: men aged over 60 would have to look for work or face loss of benefit under tough plans drawn up by the Government to get more older people back into jobs.

I am the first to admit that the idea behind the policy is not new and that it does not come as any surprise. The implementation of the policy is, however, crucial. The 60-65 age cohort is especially difficult to cope with for incapacity benefit and jobseeker's allowance. I cannot remember, although I should know, whether people in that age group are currently exempt in the case of JSA. They certainly used to be, but I do not know whether the new policy change will embrace a new look at that.

There is a world of difference between those people and someone who experiences a life-threatening or life-shattering event, such as an accident—the Secretary of State used that example—at the age of 35. It seems entirely reasonable that there should be an award of incapacity benefit if there is eligibility and that that should be tested regularly, as long as there is support and the Government are not using that as a method of coercion. I support that measure.

My hon. Friend the Member for Somerton and Frome (Mr. Heath) referred to a Select Committee report, and I make no apology for returning to it. Current medical services, and the work that they do in

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disability living allowance and incapacity benefit, are very inadequate, with insufficient doctors to do the work necessary at the moment. Even if, as the Minister might say, much care will be taken in bringing the new cohort of claimants into the new regime, the Government can safely increase numbers of claimants for incapacity benefit only if they are absolutely sure that the medical profession can supply the specialist medical advice to service that policy change. Otherwise, there will be shoddy service, as there is at the moment. I am not satisfied that the Sema services contract is capable of withstanding anything like the number of prospective new applicants for work capacity tests that is envisaged.

The philosophy of the policy is acceptable, as long as it includes safety features, such as the presence of necessary doctors. We heard earlier about the active support that comes in once the benefit is withdrawn, and that is essential. It is especially essential for people in the 60-65 age group.

We must recognise that there is a world of difference between the economy that would be found by members of that age group facing a reduction in incapacity benefit who live in Reading, and that which would be found by those who live in Govan. The benefits structure inadequately reflects the different labour market circumstances, which are like night and day. People acting in good faith can nearly always get reasonably well paid work in a regional economy such as Reading or Northampton. In Toxteth or Govan, however, there is no effective labour market—there is a collapsed market—and special circumstances may need to be taken into account.

My final word about incapacity benefit is that I will be watching the situation carefully. I am willing to support the philosophy, as long as the delivery is there to support it. However, I will be robust and critical if the back-up is not there and policy change is introduced in a way that does not give personal advisers the chance to follow and support those who are having their incapacity benefit reassessed. Previous Department of Social Security research stated that Child Support Agency claimants are being looked after if they are coming in for first interviews or for return interviews at the 13 to 26-week review stage. However, early evidence suggests that personal advisers are not that effective at getting rid of the barriers to work for people who are not in those two categories. The Minister must be satisfied that such problems are ironed out before it is safe to proceed with the changes that he suggests.

The new pensions agency is a step forward. The psychological change of disaggregating benefit delivery from the Benefits Agency caller station is a welcome move. Many of my constituents who have retired were reluctant to sit in queues with people with whom they had no real community of interest. If sensitive arrangements, such as call centres and house visits, are organised and introduced, that will be welcomed.

I ask the Minister to consider something that might cost a little money. I have some reservations about the fact that the Government are funding the minimum income guarantee as heavily as they are—I would prefer to pay the money flat rate to the older cohort of pensioners than to use the means test for the minimum income guarantee—but there is an arguable case for the Government's position. It is easier when a pensions agency is disaggregated from the Benefits Agency, so

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why do we not impose a new legal duty on the new pensions agency to maximise pensioners' benefit income levels when an application is made? The Minister knows that at the moment no duty is imposed on the Benefits Agency to go prospectively fishing—if I may put it pejoratively—for other benefits to which people may be entitled, should they make an application. I would not suggest that that principle be applied across the gamut of the Benefits Agency's operations, in respect of income support and the like. However, now that we have a more focused agency, will the Minister consider the case that the new pensions agency, when set up, could be charged with a new legal duty to look at every pensioner application when it arrives and consider the range of benefits that a pensioner may be entitled to—things that are over and above what their application is for? I do not know how much that would cost; it might be very expensive. It would certainly be staff-intensive in terms of time. However, it would encourage people even more about the new pensions agency if the Minister said something positive about that.

I will not address the criticisms of the pensioner credit in full, but I look forward to seeing the detail of the Bill. I am worried about its interface with housing benefit and council tax benefit—an issue that was rightly raised by my hon. Friend the Member for Somerton and Frome. I cannot see how the two systems can be interfaced without causing people to lose housing benefit if they get added income from pension credit; it is a conundrum. If a person is on council tax benefit or housing benefit and they are awarded pension credit, it is simply lost at the other end. If that is true, the Government should say so transparently. Many people are expecting real support from the new agency, and I hope that they get it. I would not like them to lose housing benefit and council tax benefit pound for pound as a result.

I think that the CSA reforms are right, but it will be difficult to run two CSA policies after July 2002, when the new system is introduced. I make the plea that the Government consider introducing a £10 child maintenance premium for everyone after that date. It is unconscionable to have two neighbours—families who are in every sense identical in terms of family size and are both claiming child support from the Child Support Agency—one of whom does not get to keep the £10, just because they are on the old system, while the one in the new system does. That will cause difficulties in all our surgeries. If the Minister will give the matter careful consideration, he will do us a great favour.

I complete my remarks with two final points. First, the treatment of black and ethnic minority claimants is an issue that the Select Committee on Social Security was getting very vexed about. I do not want to pre-empt any decisions about what may happen in the reconfigured Select Committee, but I hope that, whatever its membership, it will return to the subject of the disadvantage that is experienced by ethnic claimants at just about every level because the systems are not sensitive enough and there are insufficient resources for interpreters and other such services. The problem is becoming so serious that the Department cannot ignore it any longer. I hope that the Minister will spend some time investigating that.

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Secondly, the issue of take-up is an essential issue for the Government. I have some misgivings about the extent to which means testing is being introduced into the system. If the Government are going to take that route—as they obviously are, and there is a perfectly arguable case for targeting help at the people who need it most—they will need a systematic and continuous policy for take-up campaigns. I do not know how successful the Department thought that the pensions take-up campaign on the minimum income guarantee was. As the Government intend to move so far in the direction of targeted benefits in future—the percentage of the benefit claimant count reliant on means-tested benefits is continually creeping up—it is incumbent on them to come up with a more coherent, integrated, systematic and on-going administrative system that deals with the whole issue of take-up. Otherwise, people will not get benefits to which they are entitled. Although the Government will be able to say that the levels of means-tested benefits are reasonably generous, people who do not receive them do not get the advantage.

There is much work to do and there are many challenges ahead, and I seriously wish the new Minister well. I know that he will make as big a success of it as anyone can. My final word to him is that if one tries to be too ambitious and policy gets too far ahead of its implementation, the level of service to the claimant suffers, even with the best will in the world. I hope that he will carefully guard against that.

5.52 pm

Mr. Tom Levitt (High Peak): I, in my turn, express my welcomes to my hon. Friend the Minister, who is in his seat for the first time in this Chamber, and to his Parliamentary Private Secretary. The team in the Department for Work and Pensions has a nice blend of experience and new blood. I look forward to the implementation of the Government's campaign to tackle poverty at all levels through many of the schemes that we have heard about today and will continue to hear about in future. Over the past four years, the Department of Social Security, as it then was, made significant strides forward in making a fairer, more accessible and more effective Department, and I am sure that that will continue.

The new band between working age issues and pension age issues is sensible. It removes the arbitrary definitions of in-work and out-of-work benefits and encourages a greater cohesion of the benefits systems for any individual who is of working age. The definition of pension age varies and is likely to vary again. It involves issues at the border. Not least, one of my constituents tells me that, as he is on incapacity benefit and his 65th birthday falls on a Monday, he loses his incapacity benefit for one week but does not get his pension until the week after, so he has a week without benefit to which to look forward to. If his mother had delayed his birth by a day 65 years ago, that would not have happened.

Under the old system it was easy for people to miss out on benefits and to fall between two stools. I echo what the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) said about take-up levels and the need for consistent take-up campaigns through Government

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agencies, the voluntary sector and welfare benefit services in local government and elsewhere. I am sure that the excellent start that has been made with, for example, the working families tax credit, which has a much greater take-up rate than the old family credit, will continue.

I shall spend most of my contribution talking about disability issues, but I want to respond to one or two of the points made by the hon. Member for Somerton and Frome (Mr. Heath) about pensions. He referred to a worrying arithmetic progression of the basic pension from £5 this year to £3 next year and came up with £1.50 the following year. In terms of inflation projections and the rule that links pensions to the retail prices index those are generous figures. However, he missed out the fact that the minimum income guarantee will not only produce more money for the people who benefit from it every year but increase in relation to the rise in wages, so the benefit obtained from the minimum income guarantee will rise faster than that from the state pension. Also, more people each year will benefit from the minimum income guarantee as it gets higher, bringing more people within its ambit.

I hope that, when the pension credit is introduced, the tax system will identify people who would benefit from the minimum income guarantee so that take-up will be much easier. The three-year projection to which the hon. Gentleman referred includes the starting years for the pension credit. I believe that it is not the level of pension or benefit that elderly people receive but the level of income that provides them with dignity and the income to spend on the little extras that my hon. Friend the Member for Corby (Phil Hope) mentioned. By concentrating on increasing pensioners' incomes by a variety of complementary systems, we shall ensure that poverty is tackled effectively.

This is not a short-term measure and I echo what my hon. Friend the Member for Corby said about the response of elderly people to the help that has been available so far. During the recent election campaign, I came across two 86-year-old women in different parts of my constituency on two consecutive days who said that they would vote Labour for the first time in their lives because they felt more comfortable on their incomes than previously. I was a little concerned about a statistic that I read in a newspaper recently concerning the low turnout at the general election. In some constituencies, half those who voted were pensioners, so any Government who lose their way on the pensioner vote will pay a serious price. I believe that the majority of pensioners are convinced that we have made a good start; the measures that my Department will be taking forward in the years to come will only add to that.

I said that I would spend most of my contribution talking about disability. Before coming to the House four years ago, I was an adviser to local authorities on disability issues and a trustee of a major national charity for disabled people. The story that my hon. Friend the Minister told reminded me that I am also an employer within a sheltered employment scheme. A young lady with Down's syndrome has worked in my office one day a week for six months. The arrangement is working well and she now comes without her assistant to help and guide her. Her independence and confidence have grown and I look forward to her continuing to work there until

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she feels able to move on to something else. I shall not stand in her way, but I hope to be involved again in such a scheme.

The special interest that I have had in disability matters led me to take an active interest and to sit on the Standing Committee on the Bill that became the Welfare Reform and Pensions Act 1999. I have experienced a sense of déjà vu over the past 24 hours. The new debate on welfare reform, which is now 48 hours old, has not got off to the best start. However, if one examines the Secretary of State's speech yesterday, one finds that it is an entirely reasonable and sensible document. It contains proposals for future legislation and is clearly the beginning of a consultation and a discussion, and not the end of one. It contains no threats or axes, and was considerably more moderate than the spin that preceded it.

I must echo the concerns of my hon. Friend the Member for Corby about the way in which the issue has been presented. Twice yesterday I went on television programmes to argue the toss. Twice I was preceded by library video of disabled people in wheelchairs chained to fences and throwing paint around. That is not what the debate is about. This is not a confrontation. The Government are not attacking or removing the rights of anybody. The sort of images that are used, not just in the media but in the House, have not been helpful and do not lead to the best, most positive sort of debate.

I support the measures that the Government have proposed on incapacity benefit. I have read and understand them, in so far as the information is available. They are a logical progression from the steps that we have taken already on assisting disabled people into work and in work, and there are other good reasons for supporting them, to which I shall come in a moment.

Let me state, categorically, what these proposals are not. They are not proposals for cutting benefits for anybody who already claims existing benefits. As the proposals stand, only new claimants would be affected by the three-year rule. The proposals will not, therefore, affect the 2.3 million existing incapacity benefit claimants in any way. They will not affect disability benefits in any way.

I make a distinction between incapacity and the genuine disability benefits. The disability living allowance is a disability benefit. It is a sum that people get to compensate them for the effect that their disability has on their lives. Incapacity benefit is designed to be a moderate compensation for a loss of earning capacity related to a disability. If someone has an inherent need, which he or she needs to have addressed in order to live his or her daily life, there are disability benefits to address that. Those benefits, such as the special disability premium disability living allowance, are not mentioned, not touched, not threatened, not axed at all. For hon. Members to stand up in the House yesterday and talk about the effect on disability benefits was, understandably, frightening for many people. We are talking about one single benefit. It is a work-related, income-related benefit and not principally a disability benefit.

The average person on IB today is on that benefit for more than five years. In some cases, people are on it for life. If the average is just over five years, suggesting that we review that after three years may involve a large

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number of people. However, it is not the end of the world, when one considers that so many of those people are on incapacity benefit for five years or less.

The Secretary of State also made it clear that those with the most severe disabilities, those with the most permanent disabilities, those who have the smallest prospect, under any circumstances, of earning a sustainable amount, would be exempt from the review. Therefore, they would not have to go through that indignity. It is important that we understand that someone who goes on to incapacity benefit for a stress-related reason, for example, or as the result of an accident, has the prospect of getting better. A person who has lost a leg does not have the prospect of growing another one, but someone with a stress-related problem, who claims 15 or 20 years down the line that the cause of the same stress still exists should have a review. A review is justified in the case of someone who has had an accident and has gone through rehabilitation, as it can show whether that rehabilitation has helped and, if not, more appropriate rehabilitation measures can be put in place. Only those with severe long-term or permanent disabilities can make a case to be removed from the review.

Will the Minister consider a question about the future of incapacity benefit? If there is to be a review after three years but, for administrative reasons—I have the Child Support Agency at the back of my mind in asking this—it does not take place for three and a half years, please will he not let the outcome of that review be backdated? Let us say to individuals affected that, if they lose benefit as a result of the review, we shall not backdate it to the three-year point; we shall give them a few more weeks on benefit so that they have time to make new arrangements and become accustomed to their new circumstances, rather than finding themselves out on their ear with a bill for back payments.

Those who oppose the measures must answer three questions. First, given the variety of in-work benefits available to people who work for 16 or more hours a week—the working families tax credit, disabled persons tax credit or whatever—would not many people who receive £80 a week incapacity benefit be better off in work, even if only part-time? In some cases, the answer is no, but I am sure that in the majority it is yes. When we consider the amount of assistance, support and advice from skilled, experienced people available for such workers, and the legal obligations that employers have to facilitate the employment of disabled people, the answer has to be yes: in the cases where people can work, they will be better off in work.

Secondly, did the number of people who were so ill that they were incapable of any work really double between 1979 and 1997, or is that just a smokescreen to hide rising unemployment? As the Minister said, at that time, levels of health in the country were not worsening, so we must ask why the easy, the hidden, way of removing someone from the work force on to incapacity benefit was taken in so many cases.

Thirdly, is it really the case that anyone who claims incapacity benefit today is really incapable of all work of any kind for ever—as the present incapacity benefit status seems to suggest—despite the wide range of advice and technical support that is available? The answer must be no. However, some within the disability movement suggested yesterday that disabled people

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may be seen as a sorry lot of miserable people who stay at home because they are incapable of doing anything else. That is not the image that I have of disabled people. It is not the image to which disabled people and many of their organisations aspire, nor is it the image that is put forward by the Disability Rights Commission, which says that a million disabled people in this country want to work but feel, for one reason or another, that they cannot engage in the world of work. Almost half those people, 400,000 of them, say that they could work relatively easily given the right support. That support is essential. It is in the support that there has been a change, which is perhaps why we did not have similar arguments on the Welfare Reform and Pensions Act 1999. Even in the past three years, things have changed, and that has made it much easier for people to succeed in work with financial and technical support, as well as advice and rehabilitation.

Five years ago, a disabled person knew that if he were looking for a job, he would be competing against many unemployed people in the labour market. There was no new deal for people with disabilities and no disabled persons tax credit to make working life better paid than not working. A vacuum existed between the Benefits Agency and the Employment Service, a black hole into which disabled people could fall. At the same time, the disabled did not trust what they saw as a system of medical assessment for incapacity benefit that seemed to depend on the doctor, not on a fair and objective measure of a person's ability to work. If they tried work and it did not succeed, they would go back to the end of the queue and have to start the benefits system over again.

All that has changed. Unemployment has fallen and will continue to fall. Job vacancies are high, and anyone who wants to work should be able to find a vacancy somewhere. Measures are being introduced to help people whose disabilities and physical conditions gradually become worse to stay in work, which is one way to prevent people from taking incapacity benefit. The new deal provides special help and guidance on finding work and staying in it. The Benefits Agency and the Employment Service are coming together—only possible under the new departmental structure—to ensure a seamless service of benefits, employment advice and personal assistance. On a recent visit to the jobcentre in Glossop in High Peak, I was astonished by the change in atmosphere that has taken place over the past few years, and by the positive, involved and helpful attitude of the staff.

The test of eligibility for incapacity benefit is now fairer. The Government have established a new medical discipline of benefits-related medicine, to provide a system of qualification and training for doctors involved in benefits. It ensures a consistent approach across the country. No longer do individual Benefits Agency medical service doctors behave as though the money was from their own pockets. The aim is to ensure a consistent scientific approach to the measurement of people's capability to work.

If people come to the end of their three years and find that they will not continue on incapacity benefit, under the proposed rules they will not be left without anything

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at all. They will transfer to jobseeker's allowance and be able to receive the advice from the Employment Service that is available to other disabled people.

We have already made another crucial change to the linking rule. In the past, if a person went off incapacity benefit and unsuccessfully into work, he was nowhere. Now such a person has up to a year to give a job a good chance of succeeding. If it does not work, he not only goes back on to incapacity benefit but goes back on to the higher level if he was on it previously. He can carry on from where he left off if he re-qualifies for incapacity benefit, for up to a year after leaving it.

In the past, disabled people were rightly fearful of the unknown. They had a bad, inconsistent and ungenerous deal, and they were often without hope. Through the changes that we have made to the benefits system, the swifter implementation of the Disability Discrimination Act 1995 and the establishment of the Disability Rights Commission, all that has changed. Those who seek to whip up fear about such issues, from whatever Benches, media or organisations, do disabled people a great disservice. We will not leave sick and disabled people alone. We have an obligation to help them to maximise their dignity in life and their contribution to society.

The speech that my right hon. Friend the Secretary of State for Work and Pensions made yesterday was about the future of his Department, as was today's speech by my hon. Friend the Minister. New opportunities now exist for disabled people in work, but they can succeed only through the success of joined-up government. Connections must be made in sensible places. The new Department exemplifies such action. It will set up structures that are potentially sympathetic to disabled people. I am sure that its services for such people will go from strength to strength. It will overcome its temporary difficulty of presentation, and we shall deliver for disabled people as we will deliver for everyone else.

6.15 pm

Malcolm Wicks : I now know that the only difficulty in initiating a debate on the Department for Work and Pensions is that it will develop into a wide-ranging debate. If I had the time—which I do not, because I am watching the clock—I could pick up many of the broad-brush, but detailed and proper, points that have been made. I thank all hon. Members for the way in which they have contributed to the debate and their serious discussion of the issues.

The hon. Member for Altrincham and Sale, West (Mr. Brady) began his speech by thoughtfully discussing the pros and cons of the new Department, vis-à-vis issues about education and skills. Coming from the Department for Education and Employment, I understood his argument. However we divide up an organisation, whether it is concerned with local or central Government, and however we slice the Whitehall cake, we must ensure that we properly join up the responsibilities. As has been acknowledged, the advantage of the new Department is that it joins up employment and social security, which is important for people of working age. It makes possible the setting up of the new organisation, jobcentre plus, although it will depend critically on IT, which is a great disadvantage. I was asked whether my Department joins up with the new Department for Education and Skills; the answer is

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yes. I reassure the Opposition spokesman that we are fully aware of that and that we are doing our best, at both ministerial and official level, to have the joined-up government that we all seek.

I was touched that the hon. Gentleman had dug out of a library a volume that I wrote some years ago, which is, unfortunately, no longer available in all good bookshops. I am nervous that he may read other pages that I wrote when I was a young academic. However, among other matters, I suggested that the Inland Revenue and the Department of Social Security should integrate one day. Well, that has happened for the purposes of national insurance and tax benefits. The hon. Gentleman may learn some other insights. The book may help the Opposition and I recommend that they read it.

On specific points, I was asked which Department is now responsible for age discrimination issues. They now come under the remit of the Department for Work and Pensions.

Mr. Brady : I am grateful to the Minister for clarifying that matter. It was not as I understood the position. Can he confirm what other aspects of discrimination legislation are the responsibility of the Department for Work and Pensions? Under whose remit are those that are not the Department's responsibility? What is the rationale behind such decisions?

Malcolm Wicks : Not all aspects of discrimination legislation are my Department's responsibility. The Home Office is still concerned, for example, with racial discrimination. I shall write to the hon. Gentleman and give details of where the different aspects are located. He said that we needed to pull together certain general themes and I am conscious of that.

The hon. Gentleman referred to the stakeholder pension. We are determined that it will be a success. Forty-seven schemes have already been set up. In terms of information dissemination, we are doing our best to ensure that we move in the right direction.

The hon. Gentleman raised an important point about the security of our staff. We recognise that in bringing together the Benefits Agency and the Employment Service, we are bringing together two different traditions, services and cultures. It is our intention that jobcentre plus will deliver its services in a predominantly unscreened environment, but we are also looking diligently to safeguard the well-being of staff. Too many of our staff have been attacked, and in difficult cases—such as those involving the social fund in which emotions tend to run high—we will deliver the service through a screen wherever possible. The welfare of our staff is paramount.

In our ONE pilot projects that are testing issues for jobcentre plus—I believe that Suffolk may be an example—we have found a willingness and enthusiasm for Benefits Agency staff to work without screens. I am hopeful that we can move forward with change while being careful to ensure the safety of our staff.

There has been some argument throughout the Chamber about the new deal for young people. We believe that it is a success. It has helped 299,000 young people into work—a success by any measure. The average cost of helping a person on the new deal is

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approximately £2,200. Half of all participants have found work, so the cost per job is approximately £4,000. Research by the National Institute of Economic and Social Research shows that long-term youth unemployment would be twice as high without the new deal. No doubt these important matters will be discussed in future.

The hon. Gentleman asked about the mobility of civil servants between the Departments. Those from the former DFEE and the DSS are now working happily together in the new Department for Work and Pensions. Staff up to and including grade 3 from the former DFEE have joined what was the DSS. That is the logic of it, because the employment chunk of the DFEE has come over to the new Department. As a Minister from the DFEE, arriving at what was the DSS, I immediately saw many former colleagues. There is a level playing field. Now that I have improved the standard of coffee in my private office, I am happy with the seamless transition.

The hon. Gentleman also mentioned some important matters about the annual report.

Mr. Brady : I also pressed the Minister on whether, in addition to mobility between the Departments, the overall level of costs and establishment was being maintained, or whether there had been an increase in establishment at DWP without an entirely equal decrease in establishment at DFES.

Malcolm Wicks : Would the hon. Gentleman forgive me if I write to him on that matter? I am not trying to avoid the question. I know that I have the data somewhere, and I should like my answer to be accurate.

The move toward resource accounting in the most recent annual report of the DSS makes it difficult to compare the information with that for previous years, for technical reasons. My right hon. Friend the Secretary of State provided more information during parliamentary questions and answers in May. I will bring the problem to his attention, if he has not already dealt with it. He also promised to reflect on how best to provide information in future annual reports, so the point was well made.

I enjoyed a sunny day during the election campaign with my hon. Friend the Member for Plymouth, Sutton (Linda Gilroy), and I am sure that the six or seven leaflets that I handed out at the bus station ensured her fantastic victory. Although I regard myself as a keen follower of the Select Committee, I was touched that my hon. Friend made the effort to get hold of a video recording of one of the sittings that she missed, as I have never gone to such lengths. I would like to borrow that video during the summer recess because if, on a wet evening, I cannot decide whether to watch "Casablanca" again or an episode of "The West Wing", I might choose instead to watch the Select Committee, starring the nice Archy Kirkwood.

My hon. Friend raised several important issues with regard to the Pension Service, and I cannot respond to all of them. We want to move towards a service that makes the best use of the new technology. I have watched the video that demonstrates where we in the Department want to be in relation to the issue. Many older people will feel more comfortable if, when they make a telephone call, they hear a human being talking

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to them, rather than a machine. We will have local outlets where that is necessary. To offer the diverse service that some people need, there will be outreach in libraries and community centres—and why not in supermarkets, too?

The point about the difficulty of transforming the technology has been well made. I hope that we have learned the lessons of what we referred to as NIRS2. I remember visiting my hon. Friend's constituency with the Select Committee. The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) was in the Chair when the staff proudly wanted to demonstrate the system to us, but it had crashed that morning. Therefore, I am aware of the difficulties, and I am sure that we are all aware of the ambitious nature of what we are introducing in terms of IT.

The hon. Member for Somerton and Frome (Mr. Heath) asked the question about NIRS2, and I have now given a brief response to it. He also raised several other issues that I cannot discuss. He mentioned ConneXions. Of course the ConneXions service that is starting to roll out will want to make links with the jobcentre and other agencies. However, given the endeavours of that new service, it will often be trying to persuade young people of up to 19 years of age and older to pursue training rather than to enter work. At a later date, questions will need to be raised about the jobcentre and jobcentre plus.

I shall move on more rapidly than courtesy demands, because time is limited. With regard to the matter that the hon. Gentleman raised about the staffing levels of the Pension Service, a key aim of our plans for the new organisation has been, and will continue to be, to ensure that all present staff have a job in the Department at, or within reasonable travelling distance of, their current place of work. We are concerned about that matter. In answer to the hon. Gentleman's question about the taxation of child benefit, I reiterate the Chancellor of the Exchequer's clear statement. Child benefit will not be taxed, it will remain universal, and it will rise in line with inflation.

With regard to incapacity benefit, a couple of hon. Members raised the point about Sema and the medical services. We are aware of the difficulties that have arisen, and we have responded to the Select Committee with regard to those issues. We are determined to overcome those difficulties, because the quality of that medical service and the test are crucial to our progress.

Questions were raised about pension credits and means tests. Over half of all pensioners—that is, 5.5 million people—will benefit from the pension credit. I am familiar with the debates about the definitions of means testing: the pension credit will be based on income assessment. Therefore, it is more like the tax assessment that many of us are used to than the old-fashioned weekly means test.

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My hon. Friend the Member for Corby (Phil Hope) made a thoughtful contribution about old people, and made specific points. I was particularly aware of his argument that we must accord older people the status and dignity that they deserve in society, and that we must consult them more often about the services that they need. I commend his work in his constituency.

The right hon. Member for Roxburgh and Berwickshire—[Interruption.]

Mr. Kirkwood : Alas, not yet.

Malcolm Wicks : Whatever his formal rank is, the hon. Gentleman has a very high status in my eyes.

The hon. Gentleman made many of the points on which I touched about the administrative task that we face. He did not exaggerate when he said that the matter was a huge upheaval in terms of administration and information and communications technologies. I had better not compare that to the second world war—although the outcome in that was okay for us—but it is one of the biggest organisational changes and information technology challenges in Europe. I am not using any form of exaggeration. We are convinced that we can stick to our timetable, and I listened to the hon. Gentleman carefully.

On the social fund, we will respond to the Select Committee shortly and, obviously, before the end of the summer term. I should not say much more about that, but the social fund will clearly take full account of the new jobcentre plus and the Pension Service. Much of that will apply to people of working age, but other aspects are better organised in the Pension Service. That will become clear in due course.

If I may hurry on without mentioning every point, I shall now mention the arguments by my hon. Friend the Member for High Peak (Mr. Levitt). I do not think that I have missed anyone out—I am sure that I have not. I welcomed his comments and support for the logic of the Department's reorganisation around the Pension Service and people of working age. We are all aware of his track record on disability, and his reasoned and thoughtful comments on incapacity reform were very well put. I wish that more people were debating the issues in that thoughtful manner. We must bring rationality and reality to the debate, and my hon. Friend did that well.

I thank everyone who has participated in the debate. As you have mentioned, Mr. McWilliam, it was unfortunate that we had to go and debate more trivial matters about other scale rates and housing benefit schemes in the middle of it. However, we have returned full of energy. I shall examine the Official Report, and if I owe hon. Members more explanation and data, I shall write to them.

Question put and agreed to.



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