There is a saying in Welsh, which I hope that you will allow me use, Mr Robertson: “Hael yw Hywel ar bwrs y wlad,” which means it is very easy to be generous with other people’s money. When I hear of local authorities in Wales that are thinking about taking that course, I ask them to reflect on where the money comes from in the first instance; because 75% to 80% of local government expenditure in Wales is from general taxation, so lower

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paid workers in other parts of the economy will be contributing to enabling councillors to feel good about themselves. The aspiration should be for people on comparatively low pay not to have to pay significant amounts of tax. Therefore the increase in the personal allowance, coupled with the 10p tax rate, would make a huge difference.

I support the aspirations behind the debate today, but we must consider the issues in the context of the complexity of the tax system, and the challenges to the Government in dealing with the deficit. However, a challenge that is equally crucial is to set out plans to introduce a 10p tax rate and deal with a tax system that is no longer progressive in the way it collects taxes from families. That may be something for a second term, but I am confident that there will be one. I am sure that after 2015 a Conservative Government will be able to deal with the anomalies and ensure that the tax system is fair to all—whether those at the lower end of the tax spectrum or a family earning perhaps £40,000 or £50,000 per annum.

John Robertson (in the Chair): I hope that the hon. Gentleman is ready to help the Hansard people with his speech.

3 pm

Martin Vickers (Cleethorpes) (Con): I hope not to be as challenging for the Hansard reporters as my Welsh colleague, my hon. Friend the Member for Aberconwy (Guto Bebb).

It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate my hon. Friend the Member for Harlow (Robert Halfon) on securing the debate. He is a worthy champion of such issues and I hope to give him my support.

Although my Cleethorpes constituency is best known as the premier resort of the east coast, it is a highly industrial area that takes in a large section of the Humber bank. Although there are highly skilled and well-paid jobs in some of the factories, my constituency, and indeed the region, is an area in which pay is considerably below the national average.

Seaside resorts are heavily reliant on part-time, often seasonal work. In some cases, that is not necessarily what people would like, but it is what is available. For other people, the work fits perfectly with their family responsibilities and is a useful supplement to the family income. The Conservative party has traditionally been the low-tax party, and so it should and must remain, but it must be low tax for all, with the emphasis on the low-paid. The coalition Government have done an awful lot in that respect, most notably through the massive increase in personal allowances. However, as my hon. Friend the Member for Harlow pointed out, we risk jeopardising much of the political benefit if we allow our opponents to paint us wrongly as the party of the rich and privileged.

Mr Andrew Smith: The hon. Gentleman refers—rightly, I am sure—to the importance of part-time, often low-paid workers in his constituency, but does he accept that the coalition’s withdrawal of working tax credit from part-time workers has hit those workers very hard and represented a disincentive to work, which is contrary to his argument?

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Martin Vickers: I acknowledge that that has not been welcomed by many of my constituents, but what is important is the balance the Government have achieved to support and supplement the incomes of the lower-paid.

My hon. Friend the Member for Harlow is to be congratulated on keeping this issue high on the political agenda. Indeed, it has been a theme of Conservative thinking for decades and, in recent years, it was taken up by my noble Friend Lord Forsyth, who argued strongly in favour of simplification in the tax reform commission’s report. Paragraph 6.1 of that report states:

“The personal tax system should be characterised by low tax rates and simplicity. Allowances, reliefs and loopholes should be cut where possible and compliance costs reduced. The least well-off in society should be taken out of tax altogether. Many of the lowest paid pay tax while receiving benefits and tax credits. This recycling of money is a waste of resources. It is a waste of time for the individuals and the government. It should be reduced and eliminated where possible. Personal tax rates are also too high.”

The abolition of the 10p tax rate by the previous Government in 2008 represented a tax rise of £232 for working people. For someone earning today’s minimum wage, the reintroduction of that rate would be the equivalent of a tax cut of some £250 a year.

Reducing the rate of tax is the most effective way in which the Government could contribute to achieving the living wage without forcing employers to pay more or creating further barriers to employment. It would also ensure that working people would keep more of their money in their pockets. When considered alongside the universal credit, a 10p tax rate would enable more people to escape their reliance on benefits. Of course, I recognise that achieving the 10p tax rate would have a significant cost—£6 billion, I understand—and I appreciate that Treasury Ministers must balance that cost against the potential boost to the economy derived from any tax cut, but a commitment to movement in that direction would be most welcome.

Today, in an excellent article on the “ConservativeHome” website—I am sure that Opposition Members have read it—my right hon. Friend the Financial Secretary to the Treasury, who, like many Government Members, has impeccable working-class credentials, says:

“We must be the party of ordinary working people. The party of people who want a decent job to support themselves and their families; the security of a home of their own where they can be stable and settled; reliable back-up from well-run, caring public services; and enough money left in their pay packets to afford a car, a holiday, savings for a rainy day and a reasonable pension in retirement.

These are not the demands of those who think the world owes them a living. It is an attitude to life distinguished by quiet responsibility, mutual reliance and family loyalties. That which is asked of government is…to provide a shield from risk and turbulence—instead of adding to life’s uncertainties.”

I would say that they are very Tory views, and I echo them 100%.

My parents were proud to describe themselves as working-class Tories. They came from the generation that had seen the war and the post-war years of austerity. It was a generation of self-reliance, and my parents took great pride in the fact that they were self-reliant. Whatever label we use—working-class Tories, blue-collar Conservatives or whatever—the policy advocated by my hon. Friend the Member for Harlow is a rallying cry that we can all welcome.

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A commitment to a 10p tax rate would send the clear message that we are indeed all in it together. It would further cement in the minds of voters that Conservatives now, as always, represent all members of our communities, and it would also emphasise the damage done—if I may misquote Harold Wilson—by 13 years of Labour misrule. Such a commitment would send a clear message to my constituents in Cleethorpes and people elsewhere that in the future, as in the past, it is the Conservatives who can best help working people.

3.7 pm

Catherine McKinnell (Newcastle upon Tyne North) (Lab): It is a pleasure to serve under your chairmanship, Mr Robertson.

I commend the hon. Member for Harlow (Robert Halfon) on securing this debate on what is undoubtedly a crucial issue, not just for families on low incomes, but for our society and economy as a whole. We both share a great passion for promoting the importance of apprenticeships, and I believe we were among the first Members to employ an apprentice in our offices. Given today’s debate, it also seems that we share a passion for ensuring a fair distribution of wealth, for eliminating poverty and for creating incentives to work. That is why I am delighted that he secured the opportunity to debate this important subject, and particularly the benefits of a living wage, although I fear that our views diverge on the solutions that we would pursue to achieve those aims.

I commend hon. Members who contributed to the debate. The hon. Member for Strangford (Jim Shannon) made a powerful speech about the plight of low-paid workers and the striving private sector in his constituency. The hon. Member for Aberconwy (Guto Bebb) also made a comprehensive and powerful speech, although I dispute some of the issues that he raised, and particularly something that many hon. Members have talked about today—the idea of taking money away and giving it back.

No one, however, mentioned the impact of some of the Government’s changes. The strivers’ tax that was voted through by Government Members last night will have a devastating impact on many women across the country. Huge support is given to help women to cope with their child caring responsibilities and to support them to stay in work by making work pay, despite the significant costs of child care and taking maternity leave. That seemed to have been completely overlooked in the debate, so I wanted to draw attention to it.

Mr Rob Wilson (Reading East) (Con): Will the hon. Lady let us know whether the Labour party is in favour of a 10p tax band or against it?

Catherine McKinnell: At the moment, the key issue is the impact of the Government changes, particularly on low-paid workers. The Government present the rise in the personal allowance as a benefit for some of the lowest-paid workers, but the reality is that several of the measures announced in the Budget and the recent autumn statement are impacting on those very workers whom Government Members profess to want to support. After one does the maths, there is huge concern regarding making work pay for those people.

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The hon. Member for Cleethorpes (Martin Vickers) talked about the withdrawal of tax credits and keeping more money in people’s pockets, but Government Members have overlooked the major issue of the increase in VAT, which has had a massive effect on many people’s pockets. There is talk about how people should be required to make a contribution, yet low-paid workers throughout the country are making a contribution every day because of the additional VAT that is levied on them.

Mr Rob Wilson: Will the hon. Lady give way?

Catherine McKinnell: I want to make a bit more progress on setting out our position.

I challenge the hon. Member for Harlow on his approach, given that he, along with Government Members, yesterday voted through a measure that is effectively a real-terms cut for millions of striving families throughout the country. He voted for £6.7 million in working-age benefits and tax credits to be taken away over the next four years, thus cutting such support in real terms. I will be interested to hear the Government’s response to his contention that the reintroduction of the 10p tax rate would be the solution to the devastating impact on many families of such changes.

We are all too aware that the economic situation in which we and the Government find ourselves is challenging, to say the least. As a result of the Government’s failure to generate jobs and growth, they are set to borrow £212 billion more than planned, and the Chancellor has had to admit that he is set to miss his target of getting the national debt falling by 2015. The Office for Budget Responsibility has revised social security spending up by £13.6 billion by 2015-16, which is the price tag of higher unemployment. Although it is welcome that the unemployment figures have fallen recently, if we look behind the headline numbers, we see that long-term unemployment is not coming down, and that unemployment rose in a third of England over the past month.

People are struggling to make ends meet due to a combination of under-employment, stagnating wages, rising food, fuel and child care costs, and the hike in VAT. The situation is leading many people to a point at which they are increasingly using food banks and are often forced to work two or even three jobs just to keep their heads above water. Only yesterday, an alliance of 100 energy companies, charities and businesses joined forces to warn the Prime Minister that Britain is heading towards a fuel poverty crisis as a result of the Government’s failure to tackle that problem properly, with perhaps up to 9 million homes affected by 2016.

We heard several interesting contributions about the living wage, especially from the hon. Member for Harlow. To some extent, they built on the debate earlier this month that was secured by my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) which, like the hon. Member for Strangford, I read with great interest. The living wage campaign has been around for just more than a decade, but events of recent years have meant that the policy has come of age and is now right at the top of the political agenda. There is no doubt that Labour’s national minimum wage transformed the lives of millions. The policy not only affected people’s personal

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finances, but meant that the Government had made a clear statement that there was a line under which pay for an hour’s work would be unacceptable.

Mr Rob Wilson: The hon. Lady is being generous in giving way and I hope that she will not mind me restating my question, but I have not yet heard the answer. I am not asking for a policy, only whether, in principle, she and the Labour party are in favour of a 10p tax band or against.

Catherine McKinnell: The hon. Gentleman is well aware that Labour introduced the 10p tax rate. In the context of levelling out income tax and the personal allowance, the tax rate went from 22% to 20% and the 10p rate was abolished. There were various debates about winners and losers at the time, and there is no particular move at the moment to reintroduce the 10p rate. We are more concerned about the impact of the Government’s economic measures on low-paid workers, which the hon. Member for Harlow was discussing.

The Labour party’s approach has been clear—to tackle issues of low pay and to ensure that work always pays. We therefore want support for those who need extra help to make work pay, to keep them off benefits and to ensure that they can afford necessities such as child care so that they can stay in work. We have made our policy clear and we are therefore proud of what we achieved through the tax credit system.

George Eustice: I am grateful to the hon. Lady for giving way on this obviously difficult point. Having been in opposition, I fully understand her difficulties with people trying to bounce her into writing a manifesto commitment for the next election, but can she say whether the Labour Government made the right decision to abolish the 10p rate or, with hindsight, was that a mistake?

Catherine McKinnell: I appreciate the hon. Gentleman’s concern, but I am trying to discuss the premise proposed for debate today by the hon. Member for Harlow, which is people on low pay and the living wage campaign, so I will return to my point on the national minimum wage, which transformed the lives of millions. The policy is now taken for granted, but it was implemented in the face of often strident opposition, in particular by members of the Conservative party. Despite significant opposition at the time, however, it now seems to be universally accepted as an important aspect of our economy in ensuring fairness across the board.

The squeeze on people’s incomes and the ever-increasing cost of living, of which we are all aware and which we have all seen among our constituents, mean that for many the national minimum wage is simply not enough to make ends meet. Thus, a higher rate of £7.45 per hour outside London and £8.55 per hour inside the capital has been calculated by the Centre for Research in Social Policy as the level required to enable people to provide for themselves and their families.

Guto Bebb: On the minimum wage, although I was not in this place for the debates, my recollection is that the issue was about the scale and level of the minimum wage. My real concern was that the state was imposing a minimum wage on small businesses but also helping

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itself to tax from that minimum wage. Surely it is a good thing that the coalition is ensuring that people on the minimum wage are now paying significantly less tax.

Catherine McKinnell: Could the hon. Gentleman repeat his premise about how the Government are helping people on the minimum wage to pay less tax?

Guto Bebb: The point is simple. The Labour Government brought in a minimum wage, and yet the Government of the day helped themselves to significant amounts of tax from that minimum wage. In other words, small businesses in constituencies such as mine felt that they were being forced to pay higher levels of wages in order for the Government to be able to help themselves to tax. Surely this Government, by increasing the personal allowance so significantly, have reduced the tax take from those on the minimum wage.

Catherine McKinnell: I accept that the Government have increased the personal allowance, but their other policy changes have impacted on those very people whom they purport to be helping, with a real-terms effect on families up and down the country. In fact, the hon. Member for Cleethorpes admitted that his constituents are certainly not happy about some of the changes and their impact. I know for certain that my constituents would agree, but the shocking fact is that almost 5 million people across the UK are currently paid less than the living wage, and 3 million of them are women. The Government may believe that the way to motivate people on low incomes is to pay them less, and the way to motivate those on the highest incomes is to pay them more, but the Labour party believes that this is an issue of dignity at work and social justice.

Mr Andrew Smith: My hon. Friend is doing a very good job of batting off the attacks from Conservative Members. Does she agree that the hon. Member for Aberconwy (Guto Bebb) must not be allowed to rewrite history? The Conservative party argued vigorously against not just the level of the minimum wage, but its very introduction. It said that it would destroy jobs, but after it was introduced, 1 million extra jobs were generated in the economy. I think the Government now accept the point, but the hon. Gentleman must not be allowed to get away with rewriting history.

Catherine McKinnell: I thank my right hon. Friend for making that important point. I said that there was fierce opposition, particularly from Conservative Members, when the national minimum wage was introduced, and he has given some colour to the debate that took place at that time. We are moving on to the next stage, and the Labour party is backing the living wage campaign, which is a perfect example of how we can deliver a one-nation economy in which everyone has a stake, and prosperity is fairly shared. That is why Labour councils are delivering a living wage throughout the country, despite straitened economic circumstances for many and in the face of swingeing Government cuts. We believe in doing the right thing for low-paid employees. Those local authorities include Islington, Lambeth, Wigan, Camden, Oxford, Preston, Southwark, Hackney and, from November last year, my city council, Newcastle, which is meeting the cost of paying the living wage entirely from a reduction in management costs.

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Labour councils are paying a living wage because it is a powerful symbol of the change that the Labour party wants to see in our economy. We do not want the race-to-the-bottom approach backed by the Government, who seek to erode workers’ rights and make it easier to sack staff. We want to aim for a higher skilled, higher waged and more productive economy that can genuinely compete on the global stage so that workers are not forced into several jobs with no chance of spending proper time with their families.

It is vital that the Government, both central and local, take a lead, but it is not enough, as hon. Members have said, for just the public sector to implement the living wage. It is great news that around 140 private sector employers have taken that step, including notable firms such as KPMG, Barclays, Deutsche Bank, PWC, Lush, Westfield shopping centres and InterContinental Hotels Group. Many of those firms have been clear about the positive impact that paying a living wage has had on their companies. KPMG has reported higher employee morale, motivation and productivity alongside a reduction in staff turnover and absenteeism since the policy was implemented.

Mr Andrew Smith: Does my hon. Friend agree that the really important commitment is not just that large organisations commit to the living wage, but that they require their contractors and subcontractors to do so? Otherwise there is a risk that they will simply outsource their low-paid jobs while taking credit for paying the living wage to their direct employees. We want everyone to have it.

Catherine McKinnell: My right hon. Friend raises an important point, and I will come to the Government’s approach to procurement in the private sector as the ripple of understanding of the benefits that the living wage can bring spreads to employers throughout the supply chain.

Robert Halfon: The hon. Lady mentioned some companies that have supported the living wage. That is all well and good, but they are big corporate companies that can afford to pay it. The issue for me is that smaller companies will find it much harder to afford to implement it. Surely the best way to help the lower paid is what the coalition is doing—cutting tax for low earners and taking 2 million lower income people out of tax all together. Is that not a much more effective way of helping the lower paid?

Catherine McKinnell: As I have said, the impact of the Government’s changes and the raising of the personal tax allowance have provided some help for those on the lowest wages, but the real impact has been detrimental. The figures from the Institute for Fiscal Studies show clearly that a family with one working earner will be worse off, on average, by £534 by 2016 because of all the tax and benefit changes that have been pushed through. I take on board the hon. Gentleman’s point, but the Government’s policies are hitting lower paid workers, not helping them.

Robert Halfon: I thank the hon. Lady for being so generous. She is right if she takes the benefits changes by themselves, but if she then looks at the lower tax for lower earners, the council tax freeze and other measures the Government have introduced, lower income workers will not be worse off in the way she describes.

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Catherine McKinnell: That is certainly not the case in the studies that I have read on the overall impact of the tax changes that the Government have pushed through. The hon. Gentleman raised the important point about the best approach. I am sure that he is aware that the analysis by the Institute for Public Policy Research and the Resolution Foundation suggested that introducing a living wage could lead to a net gain to the Treasury of more than £2 billion a year when the costs of paying it throughout the public sector are set against reduced benefit and tax credit payments, and higher income tax and national insurance receipts.

As the living wage campaign takes hold, wins the arguments and wins over more and more companies, including those throughout the supply chain and smaller companies, it will improve the economy as a whole, and help to put more money in people’s pockets to spend in the local economy. That is vital when so many high streets and local companies are struggling. We have seen many worrying examples of high street shops closing. That compares with the suggestion of the hon. Member for Harlow to reintroduce the 10p tax band, which the Library estimates would cost around £6 billion a year. The cost of the hon. Gentleman’s approach is indeed high, particularly when set against the gains made to the Treasury from its ill-thought-through cut in support for low-paid families that was voted through last night.

The hon. Gentleman has set out his suggested approach for supporting low-paid workers. The Government’s approach needs a little more inspection at this stage. Last night, the striver’s tax was voted through, and according to the IFS, 7 million working households will lose an average of £165 per year. Indeed, its calculations show that the impact of the changes announced in the autumn statement between now and April 2015 will be to reduce the real-terms income of a one-earner working family by £534 on average by 2015-16. We know that a further 200.000 children will be pushed into poverty as a result of the uprating measures that were voted through last night.

Despite what the Chancellor may like to believe and some of the rhetoric from hon. Members on the Government Benches, it will not be so-called shirkers who suffer the impact of the changes. The Children’s Society has calculated that up to 40,000 soldiers, 300,000 nurses and 150,000 primary and nursery school teachers will lose out as a result of the 1% uprating decision. I have mentioned the impact of the mummy tax on women. The Government are not content that two thirds of those affected by the 1% uprating of benefits and tax credits will be women; they want to impose an effective tax cut of £180 on working women through their real-terms cut in statutory maternity pay.

Those are just a few examples of the Government’s warped priorities for workers on lower incomes, and there are many more. People are angry that they are being asked to pay the price of the Government’s economic failure when they are already struggling to get by, and when—all credit to the hon. Gentleman for raising this—the Government have decided to give a tax cut to millionaires. They need to neutralise the perception that they are giving tax cuts to the rich.

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Paul Uppal (Wolverhampton South West) (Con): That point is well worn and made continually, and I am sure that all Members are aware of the top rate of tax being cut, but there is an element of financial amnesia here. As even people who only have a rudimentary understanding of economics will appreciate, the main way that wealthy people accumulate wealth is through wealth creation, rather than income, which is always variable. If we look at capital gains tax, the current rate is 28%, which is in stark contrast to the previous Labour Government, where venture capitalists were paying capital gains tax at a rate of 10%—often much lower than the cleaners who were cleaning their offices.

Catherine McKinnell: I appreciate the hon. Gentleman’s point. We always have to support business growth and creation. Unfortunately, many of the Government’s policies are impacting on individuals and on consumers who will buy the goods that such companies make. In reality, that is resulting in stagnation and no growth in the economy, which is taking the country backwards, not forwards, but I take his point on board.

I suggest that a simple and effective way of pulling off an image neutralisation attempt would be by not going ahead with that tax cut for the rich, and by not pushing through real-term cuts for people in work, but on low pay. The hon. Member for Harlow has put forward his alternative argument—the restoration of the 10p rate of income tax on income between £9,205 and £12,000. However, as he notes in his early-day motions, restoring the 10p rate of income tax would move workers on the minimum wage only

“about halfway towards earning the Living Wage”,

and that would be at a cost to the Exchequer of around £6 billion a year, according to the Library. I can see alarm bells potentially ringing in the Minister’s head at that prospect, particularly when the Government are forecast to borrow £212 billion more than they planned to borrow two years ago and are failing one of the key economic tests that they set themselves.

In conclusion, the Government have repeatedly stated that they support the living wage and encourage businesses to take it up where possible. That is laudable, and the Opposition agree that the living wage should not be mandatory, but we encourage as many companies as possible to implement it. I would be grateful if the Minister could provide us today with examples of measures that the Government have taken to encourage the uptake of the living wage, as well as specific examples of what firms are now doing as a consequence of the Government’s actions.

I know from my work on apprenticeships that the use of the public procurement system in encouraging take-up has been a particular area of interest for the hon. Member for Harlow. My right hon. Friend the Leader of the Opposition has suggested that we can learn from local government procurement to see whether central Government can use their buying power to insist that large firms winning major public contracts commit to being a living wage employer. I suspect that the Minister may cite EU procurement rules as preventing that from becoming a reality, but the European Commission has stated:

“Living-wage conditions may be included in the contract performance clauses of a public procurement contract ‘provided they are not directly or indirectly discriminatory and are indicated in the contract notice or in the contract documents’.”

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Will the Minister clarify whether the Government have any intentions of taking that idea forward?

Finally, I would be grateful if the Minister outlined which Departments are now living wage employers and which are not. It is absolutely vital that the Government show leadership on that issue. Will he clarify whether the Treasury pays the living wage to all its staff?

Once again, I applaud the hon. Member for Harlow for securing the debate, and for highlighting the plight of low-paid workers and the squeeze on families in these straitened times. I am interested to hear the Minister’s response to the suggested approach; how that can be reconciled with the squeeze on low-paid workers that his Government forced through Parliament last night; and what his Government will do to encourage more businesses to pay their workers the living wage.

3.34 pm

The Exchequer Secretary to the Treasury (Mr David Gauke): It is a great pleasure to serve under your chairmanship, Mr Robertson, and to respond to this debate. I congratulate my hon. Friend the Member for Harlow (Robert Halfon) on securing it. He has such a reputation for being a strong representative of his constituents that it is not surprising that the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) might even believe that his constituency was named after him—I know that Harlow is a new town, but a change of name might not be appropriate. However, he does a splendid job on behalf of his constituents as a whole and he does a particularly good job of representing hard-working, low-paid people up and down the country. If I may, I shall describe them as strivers, and my hon. Friend represents them very well. He sets out the case for a 10p rate clearly, with great eloquence and understanding, and I hope to respond to his points.

I thank other hon. Members who have participated in the debate, particularly those who have made speeches: my hon. Friends the Members for Aberconwy (Guto Bebb) and for Cleethorpes (Martin Vickers), and the hon. Member for Strangford (Jim Shannon). I also thank other hon. Members who have participated through their interventions.

During my remarks, I hope to set out what the Government are doing to help the very people that my hon. Friend the Member for Harlow identified as being in need of support: those hard-working, low-paid individuals who are taxed in circumstances where they do not have a lot of money. None the less, they have income tax deducted from their salary, and I will set out what we are doing to help such people.

I would like to take us back to the abolition of the 10p rate, which has obviously featured heavily during our debate this afternoon, and set out a little more information about the arguments that were made at the time and perhaps discuss some of the difficulties that those of us who were in the House had in getting to the truth of the impact of the 10p rate’s abolition—perhaps I should say the doubling of the 10p rate of tax, because that, in truth, is what happened.

In 1997, the Labour party’s manifesto stated that it was Labour’s long-term objective to have

“a lower starting rate of income tax of 10 pence in the pound.”

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In the 1998 Budget, the then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), confirmed his intention to bring in such a starting rate

“When it is right for the economy”.—[Official Report, 17 March 1998; Vol. 308, c. 1104.]

The measure was implemented from April 1999, with taxpayers paying only 10p in the pound on their first £1,500 of taxable income. The rationale was to put work first and to ease the poverty trap, whereby people on low pay were discouraged from climbing the earnings ladder due to high marginal deduction rates. The 10p rate remained in place until the announcement in the 2007 Budget, which was the last to be delivered by the right hon. Gentleman. Those of us who were there will remember that the intention behind the abolition was pretty clear. It was a theatrical coup to conclude the last Budget by that Chancellor with a reduction in the main rate of income tax from 22% to 20%. Other measures were taken with regard to the indexation of personal allowances for those aged 65 and above and the retention of the 10% rate for savings income, but what was clear was that great, theatrical moment just before the then Leader of the Opposition stood up, not able to see all the details, and there was this surprise tax cut. Of course, questions then started to be asked about how that was to be funded in what was a fiscally neutral set of tax measures.

At the time, it became clear, once we saw the Red Book, that the Government estimated that the removal of the starting rate of income tax would yield the Exchequer an additional £7.3 billion in 2008-09, so where would the extra cash come from? It was a little difficult to get all the answers at the time. The Budget book at the time set out a list of all the people who would be winning from the changes, and the Budget statement said that four out of five households would either gain or remain in the same position as a result of the Budget measures, but we did not get much detail on the one out of five households that would lose.

The IFS confirmed that 5.3 million households would lose. A senior Treasury official, giving evidence to the Treasury Committee—I should inform hon. Members that I was a member of that Committee at the time—confirmed that that number was in the right ball park. The very next day, the Chancellor of the Exchequer came along to answer questions on the Budget. He was asked five times by my right hon. Friend the Member for Sevenoaks (Michael Fallon) about the 5.3 million households that were going to lose out, and five times he refused to confirm that number. There is a lesson to be learned from that whole episode. We should be more transparent about the impact of policy decisions, and the present Government have taken significant steps to do that.

Mr Andrew Smith: In the light of that commitment to transparency, will the Minister give us his estimate of how many people lost out through the vote last night?

Mr Gauke: The reality is that one has to look at all the measures that we are undertaking, which is what I would seek to do. It is worth pointing out that working households will gain an average of £125 in 2013-14 as a consequence of all the measures that we are undertaking. The right hon. Gentleman raises an important point—I

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shall return to the 10p rate in a moment—but let us remember the context in which we are having this debate now about the steps that we can take.

I will set out a case about the way in which the Government have taken substantial steps with regard to the personal allowance to help low-paid workers. We have done that at a time when we inherited an enormous deficit, and we have had to make difficult decisions about how we reduce that deficit. We have been clear in the distributional analysis of where the contributions are coming from. The facts are very clear. The top 20% of earners are making the biggest contributions, not just in cash terms but in relative terms, to reducing the deficit.

Let me return to the people who lost out from the abolition of the 10p rate of income tax. People under the age of 65 with non-savings income between £5,435 and £19,355 would have paid more, because they lost more from the abolition of the 10% rate than they gained from the cut in the basic rate. It is worth reminding ourselves that a Labour Government took that measure and that those low-paid workers would have paid more tax. The loss was greatest, at £232 a year, for someone earning £7,755—the top of where the 10% band would have been. Those most affected by the abolition of the 10p rate appear to have been those below the age of 65 with an income under £18,500 who were in childless households. The effect was greatest on those households where no individual was above the age of 60, because the household would not then benefit from the higher winter fuel allowance. That is the legacy of the last Budget of the right hon. Member for Kirkcaldy and Cowdenbeath.

Let us now consider what we have done in this difficult financial situation. We should remember that 2007 was still the age of apparent plenty; we have been in a much more difficult situation. Rather than reintroducing the 10% rate of tax, we have taken steps by increasing the personal allowance; we have taken real steps towards making the first £10,000 of income free from tax. I am grateful to a number of hon. Members for supporting that policy this afternoon. Since 2011, we have announced successive increases in the personal allowance, totalling £2,965. That includes a £1,100 increase announced in the 2012 Budget and a further £235 announced in the autumn statement last month. Following those announcements, the personal allowance rises by £1,335—the largest cash increase in history—to £9,440 from April 2013. Taken together, those changes will benefit 25 million individuals and provide a real-terms gain of £443 to most basic rate taxpayers in 2013-14. More than 2.2 million individuals with low incomes will have been taken out of income tax altogether.

I shall give some more examples of how the changes work. Let us take the context of the national minimum wage. My hon. Friend the Member for Carlisle (John Stevenson) referred to the personal allowance matching the national minimum wage for full-time employees, but let us examine what has happened to a person on the national minimum wage in full-time employment. In 2010-11, someone earning the national minimum wage would have had earnings of £10,979 and paid income tax of £901. In 2013-14, someone earning the national minimum wage will have estimated earnings of £11,691 and pay estimated income tax of £450. In other words, their bill will be halved. Another way to look at it is

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that, in 2010-11, such a person would have been able to work only 22 hours a week tax free; they can now work 29 hours a week before starting to pay income tax.

Another way to look at the situation is by comparing the approach that we have taken in increasing the personal allowance with the approach that the previous Government took in doubling the 10p rate of income tax. I talked about those who earn £7,755 a year and lost the most—£232 a year—as a consequence of the doubling of the 10p rate in 2008-09. In that year, an individual would have paid £344 in income tax. Under the present Government, in 2012-13, such an individual, with income adjusted for inflation to £8,299 a year, will pay about £39 in income tax—not £344 but £39 in tax, which is a saving of £305. In 2013-14, again with income adjusted for inflation, such an individual will pay no income tax at all. That is a contrast that I am very happy to highlight.

Catherine McKinnell: The Minister is setting out an interesting argument. Is he therefore making the case or suggesting that the Government will support the hon. Member for Harlow in his call for the reintroduction of the 10p tax rate?

Mr Gauke: The argument that I am making is about the contrast that can be drawn with the approach taken by the present Government, who have focused on reducing the tax bill for low-paid workers. That could be done in different ways, but we have undoubtedly, as a Government, reduced the income tax bill for low-paid workers. That compares favourably with the approach taken in the last Budget of the right hon. Member for Kirkcaldy and Cowdenbeath, in which he introduced a measure that increased pretty substantially the amount of income tax that low-paid workers had to pay. It is worth highlighting the point that we as a Government have done more, in very difficult circumstances, for those low-paid workers than the previous Government did.

I think that my hon. Friend the Member for Harlow agrees that we should meet the £10,000 target. The debate is then about where we go next. I will not be drawn into going beyond the firm commitment that we have in the coalition agreement and that has been evidenced by the steps that we have taken at every Budget and in the last autumn statement to make progress towards meeting that £10,000 target for the personal allowance.

My hon. Friend has set out very clearly the case for focusing on reintroducing a new lower rate. There are pros and cons of such an approach, and the debate on that will continue. As he would expect, I will not make any commitments on the matter. Clearly, there is a substantial fiscal cost in reintroducing a 10p rate of income tax. However, the Government’s values are clear. The overall cost of the personal allowance by the end of this Parliament will be around £9.5 billion a year as a consequence of the measures that we have taken. Clearly, where we can, we have been prepared to take substantial steps, at quite significant cost, to reduce the income tax bill for those on low earnings. That is something of which we should be proud, and as a number of my hon. Friends have said, we should be communicating that out there, because it demonstrates our values.

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George Eustice: I give credit to the Government for everything that they have done to help those on low incomes get out of the tax bracket altogether by increasing the thresholds. I entirely understand that the Minister will not want to predict what might happen in the future, but, looking to the recent past, will he explain what the Government believe the advantages are of lifting thresholds as an alternative to a 10p tax rate? In other words, why did the Government decide to lift the thresholds rather than reintroduce a 10p rate?

Mr Gauke: There is a case for simplicity in focusing on the increase in the personal allowance. My hon. Friend the Member for Cleethorpes quoted the Forsyth Commission, which looked into this matter, and there is a question why we should ask people who are on quite low wages to be contributing income tax. I appreciate the arguments that everyone should make a contribution, and I do not in any way dismiss them, but when we are asking people earning such relatively low amounts to pay income tax, there are the significant questions of work incentives and simplification. The Government must bear those in mind when considering whether to reintroduce the 10p rate. There is a debate to be had on both sides. There are pros and cons both to personal allowance increases and to a new lower rate. In our coalition agreement, we rightly set out our determination to get to £10,000. Fiscal drag had brought more people into income tax than was right, and we have rightly made it our priority to address that.

Robert Halfon: Does the Minister accept that raising the tax threshold to £12,500—the minimum wage—would cost around £14 billion, whereas reintroducing the 10p tax would cost between £6 billion and £7 billion?

Mr Gauke: I should perhaps check the numbers, but I believe that my hon. Friend is in the right area. Those are, I think, the realistic costs. I am not here to make any further commitments beyond what we have said in the coalition agreement, but it is right that we have this debate. It is also right that we acknowledge that we are all trying to do the same thing, which is to reduce the tax burden on those hard-working, low-paid workers who have to pay more tax, partly as a consequence of a specific decision taken by the previous Chancellor in 2007 to double the 10p rate.

Catherine McKinnell: We are nearly at the end of the debate, and I am conscious that the Minister has not really addressed any of the issues that relate to the living wage and what the Government might do to promote that policy as well.

Mr Gauke: The Government are supportive of the living wage, which the hon. Lady has described as commendable or laudatory. However, unlike the Opposition, the Government do not believe that it should be mandatory. She appears to be in search of a dividing line on that

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issue. [


.] I am pleased to see her shaking her head. There is cross-party consensus that the living wage has a useful role to play. We support it; we welcome it when organisations adopt it; but we do not believe that it should be mandatory. There are risks involved. In some circumstances, it might increase the cost to the taxpayer in higher salaries, and in others, it might result in higher unemployment. That is why we do not think it should be mandatory and why, I assume, she feels the same way, unless she has a different rationale.

Catherine McKinnell: I was seeking clarity on the questions that I raised and whether the Government are taking positive steps to promote the living wage.

Mr Gauke: It is very much for organisations and institutions to determine their own remuneration policy. We support such a wage in principle, but we will not make it mandatory, and there is cross-party consensus on that.

I turn now to the other steps that we are taking to support the low-paid workers whom my hon. Friend highlighted so well in his remarks. We have helped local authorities to freeze council tax for three years in a row, and we are proposing to set the council tax referendums thresholds at 2% for 2013-14.

I cannot, of course, go through a debate with my hon. Friend without referring to fuel duty. He is a keen campaigner on that point and he will be well aware of the steps that we have taken to ensure that average pump prices are currently 10 pence per litre lower than if we had implemented the fuel duty escalator. They will remain at least 10 pence per litre lower over the remainder of the Parliament than they would have been had we stuck to the plans that we inherited. In practical terms, it will cost £5 less for a typical motorist to fill their tank today and £8 less by the end of the Parliament.

We are taking numerous other steps to ease the load on those on low and middle incomes. We have capped average regulated rail and Transport for London fare increases at RPI plus 1% for the third year in a row. We have increased the basic state pension by £5.30 last year, which is the biggest cash increase ever, and we have introduced a triple guarantee, to ensure that it will increase each year using the increase in earnings, prices or 2.5%, whichever is highest.

I am conscious of the time, so let me say that I congratulate my hon. Friend on securing the debate and all the other attendees on their excellent contributions. As I have said, I think that my hon. Friend and I agree that the Government should reduce the tax burden on people on the lowest incomes. Our focus has been on increasing the personal allowance. I am confident that our policies, both on the minimum wage and the personal allowance, are exactly the right ones to achieve that.

3.58 pm

Sitting suspended.

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Dementia Services (Gloucestershire)

4 pm

Richard Graham (Gloucester) (Con): In the dementia debate in the House a fortnight ago, sadly I was tail-end Charlie and time prevented me from contributing a Gloucestershire perspective, so I am very grateful for this opportunity to put that right. I am also very grateful to the Minister for coming to Westminster Hall this afternoon.

Dementia can be an emotional topic. In that earlier debate, many Members—mostly female Members—from all parties in the House talked about the very human side to the disease. It was a reminder that we are no more and no less than a reflection of those we serve; a mirror of the human sadness and strength that are part of the disease of dementia. Perhaps it is not given to men to be as open or as eloquent as women in discussing our experience of family suffering. However, I will embarrass my father briefly, for he looked after my mother at home through many years of dementia. And after my mother’s death, when I said that I could not have done what he had done, my father replied quietly, “You never know what you can do until you have to.” It falls to our generation to “have to” do something about dementia, before we too—one in four of us, including one in four of us in Westminster Hall today—are overtaken by this disease.

In Gloucestershire—an ageing shire—the need is even more pressing. So there are three areas that I would be grateful to hear my hon. Friend the Minister’s views about in this brief debate, and two on which I would like to share our practice in Gloucestershire. Then I will finish by issuing an invitation.

The first area is research. It is good that Government research expenditure has doubled, and that the Aricept brand of new drug can delay the speed at which the disease spreads. However, although that is valuable—not least for giving families a chance to plan—Aricept may not work for much more than a year. Furthermore, although the Government have recently invested £22 million in research into 21 new products, can my hon. Friend the Minister confirm that it may be years before we know if any of them are successful? Since the goal of a cure is such a precious one—way beyond even the estimated heavy financial cost of treating sufferers, which is about £19 billion a year—can he also say if any drug development is close to the stage where the NHS could really financially back its development? On this issue, surely everyone would love to see science and Government working together to back a winner.

Jim Shannon (Strangford) (DUP): I will intervene, if for no other reason than to give the hon. Gentleman a chance to catch his breath.

In Northern Ireland, dementia diagnosis is at 63%, which is well above other parts of the UK. The support services are not as high; in other parts of the UK, support services are much higher than they are in Northern Ireland. Does the hon. Gentleman agree that it is time there should be a UK strategy that takes all the diagnosis and support services together, and that develops a strategy not only for Gloucestershire but for Northern Ireland and the rest of the UK?

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Richard Graham: I am grateful to the hon. Gentleman for that intervention. I know his constituency well, and I am sure that there are points on which we could exchange information. My hon. Friend the Minister will have heard and noted his comment: it is probably a subject for a separate debate, and we may come back to that issue another day.

Secondly, I want to talk about diagnosis. Currently, less than half of people with dementia in England are formally diagnosed with the disease, even as dementia affects more of us. Gloucestershire is the county with the highest number of people with dementia in the south-west, and it has one of the highest diagnosis rates in the region. However, although the number of people diagnosed with dementia in Gloucestershire rose by 12% last year, to 4,037, another 4,800 people in the county are thought to have the condition but have not yet been diagnosed. Consequently, although the diagnosis rate of our primary care trust is good regionally, at 46%, one can see that we have a long way to go in absolute terms, especially if the county council is right that our population of people over the age of 75 will increase by 30% by 2022.

Where is the best practice currently in the country? Could my hon. Friend the Minister tell us from whom we can learn best how to drive up diagnosis rates within tight budgets? As the Alzheimer’s Society says, low-ish diagnosis rates prevent sufferers from accessing support and medical treatments that can help them to live better with the condition.

The third area is care. In the main debate in the House a fortnight ago, other Members spoke about the link between dementia and care, and about the growing need for a “fair” solution to the problem of caring for an ageing population. Again, it falls to our generation to resolve this situation. Across the country, the number of people over the age of 65 is set to double during the next 20 years, and in counties such as mine the rate of growth will be worse, and faster.

I know that, in the wake of the Dilnot commission’s proposals, the Government will make formal proposals shortly about how they believe this issue can be settled. I wonder if my hon. Friend the Minister can say anything today about whether dementia will have a part in that process, and whether it will perhaps encourage the speed of implementation of the plans that the Government are considering.

At the same time, will my hon. Friend the Minister join me in congratulating Gloucestershire county council for entirely ring-fencing its budget on adult social care during these difficult years of local government spending freezes? In the last debate in the House on dementia, we heard from several Members whose authorities were not doing that, and it would be interesting to know how many other authorities are doing the right thing for the most vulnerable—a group that definitely includes dementia sufferers—as Gloucestershire has been doing.

I have promised to mention two local initiatives on dementia, as I believe they show that Gloucestershire may be leading the way. First, I pay tribute to the development in Gloucestershire of the community dementia nurse, or CDN, service, which was launched in December 2011 by the 2gether NHS Foundation Trust. The CDN service provides specialist and direct dementia support to GPs, with each surgery in the county being allocated such a nurse.

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Secondly, we are fortunate to have a local charitable foundation, the Barnwood Trust, and it is working closely with the Gloucestershire clinical commissioning group, which has won £500,000 from the NHS dementia challenge to create dementia-friendly communities. That means having community workers who are trained as dementia link workers—people who are connecting to local communities.

Rebecca Harris (Castle Point) (Con): On that point, does my hon. Friend agree that it is quite often the local voluntary community groups such as the Mickey Payne Memorial Foundation, which was set up by my constituent Caroline Dearson, that are leading the way in spreading best practice, support networks and awareness within their communities?

Richard Graham: My hon. Friend is absolutely right. Community groups, such as the one in her constituency that she has mentioned and championed, are exactly the groups of people that are driving forward best practice at the local level. Of course, if they are able to win funds from the NHS dementia challenge then so much the better, because those funds would enable them to spread their good deeds further.

In Gloucestershire, we also benefit from local charities. The Guideposts Trust’s dementia web for Gloucestershire is a web-based support site that provides information for people with Alzheimer’s and other forms of dementia. We also have two very good-value day centres, one run by Age UK Gloucestershire and the other by Gloucester Charities Trust. They enable people to stay in their own homes for longer, while at the same time enabling them to meet friends and access general facilities, and enabling their carers or loved ones to leave them safely for a couple of hours while they go shopping.

Lastly, there is a very helpful purple butterfly recognition scheme for dementia sufferers that the Gloucestershire Hospitals NHS Foundation Trust has introduced in both its hospitals, Gloucestershire royal hospital and Cheltenham general hospital. Therefore my constituents are benefiting all round from an increasing range of services and ways of managing and dealing with dementia better.

However, that is not to say—as my hon. Friend the Minister will understand—that all is perfect, or that we are necessarily doing all the best things that can be done. The important thing is that the barriers are down. All of us can talk openly, in my county and across the country, about dementia. There is no stigma and no shame, just shared sadness and sometimes that surprising strength that I alluded to earlier.

I am sure there are other things being done elsewhere that I would like to know more about and that my constituents would benefit from. So I would be grateful today if my hon. Friend the Minister could do a favour to us all—I mean all parliamentarians—by giving some ideas of the best practice that he has noticed in different ways of handling the disease and managing the suffering that goes with it. Even if he cannot do so comprehensively today, perhaps he can do so later by letter.

Sometimes, too, our own cities and towns need to widen our eyes, stretch out beyond us and allow us to see ideas from further afield that we can bring back,

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and the Minister can help to steer us. What role, for example, is there for faith groups? Who is doing the best work across different ethnic minorities? Are there particular extra sensitivities, such as elderly immigrants reverting to the languages of their youth, of which we need to be more aware? What more can be done to support GP surgeries in diagnosing dementia? How can people be enabled to stay in their own homes for longer without that feeling of helplessness if something goes wrong?

Finally, like all good pitches must, this speech ends with an invitation for the Minister to visit Gloucestershire to see what is happening; to meet the Barnwood Trust and hear its ambitions and vision for what it might be able to do; and to share with us what he likes, what he has seen across the country and what we can perhaps do more of. I would be delighted if the Minister can accept my invitation, because dementia matters very much to all of us in Gloucestershire, as it does to him, and we want to continue being adventurous by pushing the boat out and actively considering new ways to help people living with this ghastly disease and their families, who are so intimately affected by all elements of it. As I said at the start, we never know what we can do until we have to do it, and we must do it.

4.11 pm

The Minister of State, Department of Health (Norman Lamb): It is a pleasure to serve under your chairmanship, Mr Robertson.

I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing the debate and on speaking about his family’s experience—about his mother’s experience of having dementia, and about the role his father played caring for her and the strength that he gained when the moment arose to cope and get through it. My hon. Friend’s speech was moving, if somewhat breathless at the start—it was excellent to see him arriving in the Chamber just in time.

My hon. Friend is committed to ensuring that his constituents have access to high-quality care whenever and wherever they need it. He has demonstrated his commitment through his work as a member of the all-party group on dementia, which does really good work to raise awareness of the condition in Parliament and beyond.

We know that some 800,000 people in the UK have dementia, and that number is expected to double over the next 30 years. The consequences of that growth will be substantial, so we must recognise the scale of the challenge that we face. The Government are committed to meeting that significant challenge by providing high-quality care for people with dementia combined, crucially, with strong support for carers.

My hon. Friend talked about the role of carers, and we often have to stop and remember the impact on a loved one of someone getting dementia and then having that loss of recognition. We must understand how distressing it can be for someone to cope with that, and sometimes with changing and challenging behaviour, when they may have been married for a long time. We owe an enormous debt of gratitude to the army of carers who continue to give their care, love and support, sometimes under difficult circumstances. We will transform dementia services, achieve better awareness of the condition, and offer high-quality treatment at every stage and in every setting.

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I will not go over much of the ground that I covered in last week’s debate because I know that my hon. Friend is well versed in many of the things we have achieved nationally. I should recognise the fact that some good work started under the previous Government, who produced one of the first dementia strategies in the world. The work that we are doing means that we are one of the leading countries on this but, as my hon. Friend said, we must recognise that there is much more to do.

My hon. Friend will be conscious of the dementia challenge that the Prime Minister announced last March, but an awful lot has happened since then. For example, we have set aside £54 million for the NHS to support dementia diagnosis in hospitals. We have asked local areas, through the NHS mandate, to set ambitious targets for improved dementia diagnosis over the next two years. Each area must understand its position on undiagnosed cases and set about dealing with the gap.

We have set aside a further £50 million to make health and care environments more dementia-friendly. We have launched a national advertising campaign to raise awareness, to reduce the stigma attached to dementia and to encourage people to contact their GP if they experience symptoms of dementia. Such contact often involves having that first, difficult conversation with a loved one about the need to see their GP to explore whether there might be dementia.

Jim Shannon: Does the Minister feel that lessons could be learned from the other regions of the United Kingdom, such as Northern Ireland, where a clear dementia care plan and strategy are in place? If the lessons learned there are beneficial for Gloucestershire and other parts of the United Kingdom, why should we not exchange information?

Norman Lamb: I think that the hon. Gentleman said in his earlier intervention that the diagnosis rate is quite good in Northern Ireland. I applaud the work that is done there, but the support services might not be as good as in some parts of England, Wales and Scotland. We are learning about these things together, and there must be close collaboration between England, Northern Ireland, Wales and Scotland. Scotland has done good work to achieve high diagnosis rates. It has also introduced the concept of dementia advisers, which my hon. Friend the Member for Gloucester talked about in relation to his county. We need to be willing to learn from anywhere and, critically, not to reinvent the wheel, so I am absolutely up for collaboration with colleagues in Northern Ireland. Just a week ago, the Secretary of State announced a year of dementia awareness to improve understanding of the condition and diagnosis rates nationally.

Let me deal with research. My hon. Friend the Member for Gloucester said that the Government are doubling the amount we spend on research, although it must be said that that is coming from quite a low base, compared with other conditions. One of the difficulties is that we cannot just make a massive increase to the amount that we spend, because building the research community’s capacity to do the work has to happen hand in hand with any increase.

There were several things I was unable to cover in detail during the recent debate granted by Backbench Business Committee because we ran out of time—my

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hon. Friend was a victim of that. One of them was research, on which we have genuine cause for optimism. A lot of the media narrative has been about high-profile failures of research, but there is positive and encouraging news out there.

Before I give some examples of that, however, I should mention one thing. My hon. Friend talked about the importance of the scientific community and the Government collaborating closely to meet the challenge we face. Last autumn, I spoke at a conference that brought scientists from not just the UK, but around the world, together with the Government and interest groups, such as charities that campaign on this issue. Such a useful gathering is a way of bringing the best brains to bear on this subject, so that collaborative work must continue.

On 21 December, the Government made £22 million available to 21 pioneering research projects to boost dementia diagnosis rates and to trial groundbreaking treatments. The funding was designed to cover all areas of scientific activity that are relevant to dementia across the fields of care, cause and cure, including prevention. For example, we can do a lot to prevent the condition of vascular dementia from ever starting, so if prevention is possible, we must be much smarter. We have also provided £36 million for a new National Institute for Health Research dementia research collaboration to work on better treatments and care for, and understanding of, the condition, as well as £9.6 million to expand the UK Biobank. Last year there were potentially interesting developments in treating early-stage dementia, particularly in Alzheimer’s disease.

As drug companies continue to invest in research, there is now a real prospect of a treatment within the next decade—that seems to be the time frame we are dealing with—that could have an impact on helping to slow or prevent the disorder, if it is caught early enough. For instance, there have been key recent developments from Eli Lilly, which is conducting an additional phase 3 study of a new drug for patients with mild Alzheimer’s disease. I have also heard about promising plans to expand the testing of a drug for patients with pre-dementia.

My hon. Friend rightly emphasised the importance of sharing best practice, of avoiding reinventing the wheel and of encouraging innovation, which is vital for improving dementia care. I am delighted that Gloucestershire benefited from the additional funding of £10 million from NHS South West. It is by learning from the innovative projects that he describes that we will find out what works and how we can improve services.

My hon. Friend asked me to highlight examples of best practice of people taking the lead on dementia. One involves the fire and rescue service, which has made a pledge to take action to increase the safety of people with dementia. That is a critical area, because someone living with dementia can be at risk, and the fire and rescue service can do a lot to help them to remain safe. The service has made a commitment to raising awareness among staff. Already 28 services have signed up, and I applaud them for that work. In addition, Tesco has made a commitment to increase dementia awareness and understanding among its staff and worked with the Alzheimer’s Society to produce a DVD to achieve that. The moment when a customer gets confused about change or forgets their PIN is the one when a caring and

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understanding approach from the checkout operator who is coping with them is particularly important. It is encouraging that companies such as Tesco are prepared to do such work.

When my hon. Friend mentioned the demographics in his constituency, that rang true for me, because my constituency, similarly, is rural with an elderly population. I am pleased that the diagnosis rate in Gloucester has risen from 40% to more than 45% in the past year but, as in many places, there is still massive room for improvement to match the best performing areas, such as Islington, where the diagnosis rate is 75%. There is an enormous gap between the best and the worst, and a long way to go. We have developed an analytical tool to support the NHS to achieve an increase in local diagnosis rates, and we are working with the Royal College of Psychiatrists to assure and improve the quality of memory services when the actual diagnosis takes place.

I join my hon. Friend in paying tribute to some of the excellent work in his area, which is in many ways mirrored by that of the Norfolk and Suffolk Dementia Alliance, which is led by an inspiring guy called Willie Cruickshank. He demonstrates the difference that can be made by bringing all parts of the system together. In his area, there is now a comprehensive, multidisciplinary memory assessment service that provides support to primary care and outreach to communities. We must ensure that we bring down waiting times, which are far too long in some areas.

Community dementia nurses and advisers are working closely with GPs throughout the country. Last week, I met a group called Uniting Carers, which is part of Dementia UK, which talked about the fantastic work of Admiral nurses in many parts of the country.

Rebecca Harris: Sometimes the problem for carers arises when they reach the point at which they admit that they can no longer look after their loved one who has dementia, because it can be difficult to choose the right kind of care home or environment. The gap at such a point might need to be filled by the voluntary sector or Admiral nurses, as the Minister was describing, to help people to ensure that they are putting their loved one into a suitable and dementia-friendly environment.

Norman Lamb: I absolutely agree, and that is a role for an Admiral nurse or equivalent, or for dementia advisers, who are now in place in Gloucestershire, my own county of Norfolk, Suffolk and other parts of the country. It is of real value if someone is able to go into the home to provide practical advice to the carer and the person with dementia.

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Fantastic work is ongoing to bring district councils, volunteers and community groups together to establish a network of memory cafés. The care home support team supports staff with training, development and management guidance. There is county-wide education for carers and a carer emergency respite scheme, which provides an agreed plan of personal support to the cared-for person.

My hon. Friend the Member for Gloucester raised the important issue of ethnic minorities and faith groups. At last week’s meeting, I met an Indian woman who spoke movingly about how she and her father were cast aside by their local community once he had received a diagnosis of dementia. It is critical that stigma is challenged in all communities. She also explained how her father had reverted to his mother tongue, which further complicated his care arrangements and made a difficult situation more difficult.

I want to consider how we can give specific help to people such as that woman. There is a role for everyone in society to improve the lives of people with dementia, which includes faith, community, and black and minority ethnic groups and charities. My hon. Friend is aware of the plan to sign up 1 million dementia friends by 2015, which will have dramatic effect on spreading awareness throughout the community. All such groups have a role to play in creating the dementia-friendly communities we want to see. Only through all of society—not just government—coming together will we improve the lives of people with dementia and their carers.

Regarding my hon. Friend’s kind invitation to visit, he may be interested to know that the Secretary of State and I are between us embarking on a road show to every region in the country, involving conferences and visits, to bring people together to drive change at a local level. I will certainly pass on my hon. Friend’s suggestions to the team that is planning the visits and the south-west regional event, and I will ensure that he is kept updated.

I am encouraged by the commitment shown in Gloucestershire, as in other parts of the country, to tackle the problems that we face. I was pleased to hear that Gloucestershire county council had ring-fenced funding for social care so that money is prioritised in that most critical of areas. We are expecting an announcement soon on funding for and reform of social care, and that will start to help people to cope with dementia and the costs incurred as a result of it. Although the challenge remains great, the collaborative effort demonstrated by the NHS and its partners in Gloucestershire, including businesses, community groups and volunteers throughout the county, is showing how concrete steps can be taken to improve dementia services and to enhance the day-to-day lives of people with dementia and, crucially, their carers.

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Under-occupancy Penalty (Wales)

4.29 pm

Jessica Morden (Newport East) (Lab): Thank you, Mr Robertson, for the opportunity to have the debate.

Before Christmas, social tenants in my constituency were sent a letter telling them that under Government changes in April they will have to pay more rent or move on, because the Government have deemed that they are under-occupying their home. They are victims of what is now called the bedroom tax. As all hon. Members know, such letters have gone out throughout Wales and the rest of the United Kingdom, and they have caused huge fear in my constituency.

I asked for this debate because I am horrified by some of the stories that constituents are telling me about what this policy will mean to them, their family, their future and their home. For decades, many people in communities in my constituency have cared for and cherished their homes, where they have brought up their children and cared for their grandchildren. Their homes are full of memories of lost loved ones. The fear is palpable, as the reality of what these changes will mean sinks in. One woman said when I knocked her door during the week that she received the letter from Newport City Homes, “Why did I get this? I thought it was about the scroungers, not about me.”

In April, those tenants face the stark choice of paying £40 to £80 a month more for having one or more spare bedrooms, or moving to a smaller property. There is evidence that many cannot pay as the cost of living and benefits cuts hit them. In a Welsh study, one tenant said that they are already “not living, but surviving”. What is more, there is a chronic shortage of smaller houses, particularly in Wales.

Paul Murphy (Torfaen) (Lab): Will my hon. Friend pay tribute, as I do, to Duncan Forbes of Bron Afon who has highlighted some of the nonsense of this tax, particularly people going into one-bedroom houses? In Blaenavon in my constituency, 85 tenants will have to go into one-bedroom houses to avoid the tax. It will take 17 years to rehouse them.

Jessica Morden: I thank my right hon. Friend for his intervention. He is right. Will the Minister look carefully at the report from Bron Afon in Torfaen, because it highlights specific examples of why the policy will hit Wales particularly hard?

There will be two levels of reduction. Those who are under-occupying by one bedroom will lose 14% of their housing benefit, which is equivalent to a loss of £12 a week. For those under-occupying by two or more bedrooms, there will be a 25% reduction, equivalent to a loss of £22 per week. In Wales, 46% of all housing benefit claimants of working age in the social rented sector will be hit, compared with a UK average of 31%.

The Department for Work and Pensions says in its own impact assessment that 40,000 tenants in Wales will be affected by the bedroom tax with an average loss of income of £12 per week. Like many of the Government’s benefit changes, this is hitting Wales disproportionately hard. With tax and benefit changes to be implemented

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by 2014-15, households in Wales can expect to lose 4.1% of their income on average or about £1,110 per year on top of rising food and heating costs.

Some 1,794 Newport City Homes tenants have received letters telling them that they will be affected, and a further 421 who rent from Monmouthshire Housing Association have received letters in communities like Caldicot, which is in my constituency. With 4,220 on the Newport common housing register and 2,536 on the Monmouthshire common housing register, it is not rocket science to realise that there is not enough social housing for people to move to. Of the Newport City Homes tenants who are affected, 359 have two bedrooms too many and 1,435 have one bedroom too many, 916 of them will be looking for one-bedroom houses or flats and 823 will be looking for two-bedroom properties.

Newport City Homes has only 1,264 one-bedroom properties in total and 2,680 two-bedroom properties. This week, just 36 properties are advertised on the Newport housing options website, so people have very few choices. Whole estates in Wales have very few one or two-bedroom houses.

Mr Mark Williams (Ceredigion) (LD): The hon. Lady is making the case clearly for the urban context, but does she agree that in rural areas such as mine, which have faced a housing crisis for years, people face even less choice? I am sure that she will mention the fears that people living in houses with adaptations for disability have raised. Although more money is coming from the Government, it is less than clear how it will reach our constituents.

Jessica Morden: I thank the hon. Gentleman for his intervention. I will come on to mention that later in my speech. Other hon. Members have raised the issues of people with disabled children and of rural housing. As he says, there is very little housing stock available for people to rent anyway.

Let me talk about the Underwood estate, on the outskirts of Newport. It has 138 three-bedroom properties, 45 two-bedroom properties and no one-bedroom flats, apart from 12 that are reserved for pensioners and disabled people. In the past, we needed larger properties, so that is what councils built. Wales will be hit hard because of a relative shortage of smaller housing. Newport is clearly not alone, as many housing associations across Wales face the same issue. Scarcity of larger properties is a problem in big cities in England, but in Wales, there is a scarcity of smaller properties.

Guto Bebb (Aberconwy) (Con): I congratulate the hon. Lady on securing what is undoubtedly an important debate in a Welsh context. The point that she makes about the shortage of smaller properties in Wales is one that I fully accept. Does she share my surprise therefore that the Wales and West Housing Association has decided that the coalition Government’s policy will be imposed on all tenants regardless of whether or not they are on housing benefit? Surely, that is a restriction on people who might be willing to pay the going rate for a three-bedroom house.

Jessica Morden: I am here to talk about under-occupancy and housing benefit. I appreciate what the hon. Gentleman is saying, but I want to continue to press my point.

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Even if someone is able to move from a community such as Underwood, they will often leave behind family who are able to care for their children while they work. I cannot be alone in often meeting people in my surgery who seek houses near their parents precisely so that they can have help in looking after their children. Those with two children of the same sex under 16 could have to move to a two-bedroom property. In somewhere such as Underwood, the likelihood is that the children would have to move schools, with all the disruption that that would cause.

Chris Evans (Islwyn) (Lab/Co-op): My hon. Friend is making a powerful point, and I congratulate her on securing this debate. Does she agree that there is an inflexibility in the system? Children of the same sex but far apart in ages might have to share a bedroom. Single parents are also penalised, because they often do not have rooms for their children to stay in.

Jessica Morden: I agree with my hon. Friend and I will come on to make those points. Again, the study by Bron Afon in Torfaen highlights such cases.

Faced with no social housing and the need to stay in a community, it is hardly surprising, but none the less shocking, that one of the findings of a survey of social housing tenants by Bron Afon was that some tenants had concluded that the only possible solution for them was to eat two meals fewer a week to make up the shortfall. They felt that that was the only area on which they could economise.

Nia Griffith (Llanelli) (Lab): Does my hon. Friend not think that realistically many families are going to fall behind with their rent, with the result that they will find themselves moved into smaller properties or, at the end of the day, homeless? What does she think that our local authorities can possibly do with their limited resources to deal with a sea of people who will have nowhere to go?

Jessica Morden: I thank my hon. Friend for that point. It is true that housing associations, local authorities and the Welsh Assembly will be under stress because they will not be able to mitigate the effects of this policy.

With a chronic shortage of available housing, many tenants appear to feel that there is no alternative but to be forced into arrears or to resort to desperate measures such as payday loans or loan sharks. Families will be forced into financial difficulty and rent arrears. Steve Clarke, chief executive of the Welsh Tenants Federation, estimates that 10% of tenants who will be affected are already indebted to their landlords who are seeking repossession orders. The double whammy of rent arrears and the increases could mean that 4,000 present themselves as homeless. This is against a backdrop of food banks in Newport giving out hundreds more parcels a month and food crime up 26% over the past two years. We are talking about people stealing washing powder.

The Government appear to think that people will find it easy to get extra hours of work or to find an elusive job. They think that lone parents with small children should go out and seek lodgers. In fact, the findings of the hotline of Community Housing Cymru—

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“Your benefits are changing”—found that 13% of people who rang would consider downsizing and 8% might consider a lodger. However, 79% said that taking on a lodger or moving were not suitable options and that they would apply for discretionary housing payments.

I believe that £7 million has been allocated to Wales, which faces a potential loss of £25 million. That is the Government’s answer to those who cannot move. There is a limited amount of money from the Government towards those payments, but once it has been used, no other payments can be made. I take the point that was made earlier about the fact that there has been no clarification of how the money will be spent. The deserving might miss out if they happen to be in need when the fund has been exhausted. There has been no compelling analysis of the impact that the changes will have on individuals, and the Government’s response of setting a finite budget without knowing whether it will be sufficient is as callous as the bedroom tax itself.

Ian Lucas (Wrexham) (Lab): Does my hon. Friend agree that one of the most telling aspects of the legislation is the fact that there are no exemptions for severely disabled people? The fund that is available will be quickly used up by, for example, adults with severe learning disabilities who, in all genuineness, cannot take lodgers, because their needs and circumstances are not conducive to sharing accommodation.

Jessica Morden: I agree with my hon. Friend’s important point, which we have to bear in mind. Those who have had disabled adaptations to their property would, if forced to move, need another set of disabled adaptations, and it is not clear what will happen with discretionary payments in such circumstances.

Paul Murphy: I am grateful to my hon. Friend for giving way for a second time. She has referred to the report by Bron Afon, which states that the total budget for discretionary housing payments in Torfaen is just under £53,000, or £6.62 per housing benefit claimant.

Jessica Morden: My right hon. Friend makes a telling point. When that money has gone, it has gone, and it is a small amount of money; it is a drop in the ocean compared with what is needed.

With no money to spare and no chance of social housing, tenants might look to the private rented sector. If the stated aim is to save money, the policy has no logic. In many areas of Wales, the policy encourages tenants to move to more expensive accommodation in the private rented sector, which will increase expenditure, even with a reduced local housing allowance. In Torfaen, for instance, every private rented property is more expensive than the Bron Afon rented properties. The situation is clearly ridiculous, and a cursory look on the websites for private rented accommodation in my constituency tells that tale.

Those arguments are well rehearsed, but they are becoming more pressing as the policy becomes more real for many people in Wales. I visited a constituent before Christmas who lives in a small two-bedroom house in the community in which he grew up and his family still lives. He was made redundant last April from his manufacturing job of 20 years, and he now finds himself on housing benefit. He is a proud man

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who has lost his job and now faces losing his immaculate home of many years. He currently pays £321 a month, and there is only one one-bedroom property in Newport on the housing options list for which he could possibly be eligible to rent this week, and that would cost him £350 a calendar month. If he is still unemployed, that increased rent would still be covered by housing benefit at a cost to the public purse of an extra £341 a year.

One Bron Afon tenant is a former serviceman with post-traumatic stress disorder, and his benefit has been cut because he is deemed fit to work, even though he has serious depression. His daughter hopes to go to university, but her decision will be heavily influenced by what happens to her father’s benefit. The spare rooms of those in our services are not out of the policy’s scope, which will have a huge impact in south Wales.

I have met a divorced father who has his kids to stay at the weekend. One of the hardest-hit groups will be parents who live in two-bedroom houses and who have access to their children. If they are under 35, they will be expected to share accommodation, which may be the only housing left to them, with all the child protection issues that raises. That is a whole other subject.

In Wales, registered social landlords expect a large loss of revenue, and those running large arrears will be under pressure to make people homeless. That in turn will put pressure on local authorities to house people presenting themselves as homeless. The Welsh Assembly has made money available under the homelessness grant programme to assist financial inclusion work and projects with Shelter, but that will not be able to mitigate the very real impact of the reforms in Wales.

There are so many unintended consequences for individuals such as foster carers, people with disabled adaptations and parents of disabled children. I am sorry that there is not time to do them justice.

A constituent from Alway specifically asked me to say that he considers the Prime Minister to be Dick Turpin without the mask. Many in the Government think that paying an extra £20 a week towards rent will be the difference between going out for dinner and staying at home, but for many on low incomes, it will be a case of heating or eating. People will have to pay up when they cannot afford it and then get into debt or move out and away from their community. This is a policy that in the long run cannot cost less in Wales and will do nothing to help local housing pressures, as the pressure is on the smaller properties already.

Regardless of the rhetoric, the fact is that the people worst affected are parents who share access to their children; grandparents who provide essential child care for their grandchildren, allowing parents to go to work; and even the brave men and women serving in our armed forces. The Government simply do not understand how this policy will affect people, and what is worse, they do not seem to care. We used to talk about the poverty trap; we are now talking about the property trap.

4.45 pm

The Minister of State, Department for Work and Pensions (Steve Webb): I congratulate the hon. Member for Newport East (Jessica Morden) on securing the debate. It is good to see the number of hon. Members

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who have taken part. I will try to respond to the points that she has raised. In general, I will take interventions from her but not from other hon. Members, until we get near the end of the time.

Let me set the context. Obviously, we want to focus on the impact of the policy on Wales, and I want to respond to some of the particular points made by the hon. Member for Newport East, but for the record, the Government are seeking to take £18 billion a year of what we spend on social security and tax credits because of the vast amount of borrowing that we had to deal with. It is not that the Government woke up one morning and thought, “Wouldn’t it be nice to cut people’s housing benefit?” We have to stop a situation in which for every £3 the Government were raising in tax, they were spending £4. That is unsustainable. It is not fair to the children whom we are expecting to pay our debts. That is why the Government are looking to save money on social security.

Housing benefit is a vast and rapidly rising bill and inevitably had to be looked at, so within the housing benefit budget, what can be looked at? We have looked at private sector rent. We have looked at shared accommodation for younger people. Within the social sector, there are two reasons why spare bedrooms—where they are spare bedrooms—need to be looked at. The first is the unfairness between social tenants and private tenants. At present, a private tenant cannot have housing benefit for a property with spare bedrooms. They can have housing benefit only for a property of the size that they need. However, a social tenant living next door can have housing benefit for a bigger house. That is an unfairness. At a time when we are trying to take costs out of the system to deal with the deficit, being fairer to private tenants and not giving social tenants an advantage over and above the advantage that they already have through a subsidised rent is an issue of fairness.

There is also an issue of fairness in the system in relation to people who are overcrowded. There was absolutely no mention in the hon. Lady’s speech of people who are living in overcrowded accommodation. If we have a limited social housing stock—frankly, successive Governments have failed to build enough social houses; it is a finite stock and a social house, with a subsidised rent, is a very valuable thing—we owe it to those who are overcrowded to make maximum use of the housing stock.

Getting from here to there is a painful and difficult process. I accept that, but many housing associations and social landlords around Britain have been creative and imaginative—I accept that the position will be different from area to area—about moving people who were in overcrowded accommodation into family homes and finding places for people in under-occupied accommodation to move to. It is not a static case—on the register this week, there are only so many empty properties. Social landlords have to start getting to know their tenants much better than they have in the past. All too often, they have not done that. That process—I accept that it will be a difficult transition—should lead to better use of the social housing stock.

Jessica Morden: Will the Minister accept that it is possible to be creative without being cruel? It would be possible to work far more closely with housing associations

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in relation to asking them to do more about under-occupancy, but the broad-brush approach that will be taken in April will hurt many people.

Paul Murphy: It is about saving money.

Steve Webb: The right hon. Gentleman says that it is about saving money. I do not apologise for the fact that we have had to save money, because otherwise we would just pile up debts for our children, and that is not progressive, wherever someone is on the political spectrum.

On the hon. Lady’s specific point, yes of course, in theory, successive Governments have tried to work with housing associations and social landlords, and it has not worked, because we have the best part of 1 million empty bedrooms paid for by housing benefit at the same time as we have thousands of people in overcrowded accommodation. The challenge is therefore to use the need to save money to create fairness between private and social tenants and to create fairness between people who are living in overcrowded accommodation and those who have spare bedrooms.

Ian Lucas: Will the Minister give way?

Steve Webb: No, I want to respond to the hon. Lady. She said that these are the lifetime homes of some people, and I entirely accept that. That is why we have exempted pensioners as a group. A set of pensioners have spare rooms, living in the home that they have occupied all their lives, and we are not touching them for the reasons she gave.

Those who are below pension age can clearly respond in a range of ways. It will be different for every person. For example, we are often told that some people in social housing or on housing benefit are in work, and the average £12 shortfall in Wales is the equivalent of two hours at the minimum wage, so for some people, as the hon. Lady said, it will be a matter of working a few extra hours. I accept that that is not an option for everyone, but it is for some. Others might have the opportunity to do a part-time job, if they are not currently. She said that some would not be able to take in a lodger or tenant, but some can. I had a constituent ring me up to say, “I am in a three-bedroom house, I live on my own and I have just had one of these letters. What shall I do?” We started talking and she said, “To be honest, my brother and sister-in-law would quite like to move in. Can we do that?” Yes, they can, and that would be using the house to much better effect. That will not be right for everyone, but there will be a range of responses. The system is geared so that if people have a boarder or sub-tenant—most social landlords should allow a sub-tenant, in an organised way—they get to keep at least the first £20 a week of the income. Those are all options, which will not work for everyone, but there is a range of them.

The hon. Lady mentioned Bron Afon and Duncan Forbes. I have looked at some of the case studies. One of them is just wrong. In the case she mentioned of the ex-serviceman with a teenager who might go off to university, provided she is not away for more than 13 weeks at a time, she can have the bedroom. That means that social landlords have to be good at communicating with their tenants. I have seen good examples, although I have also seen some bad ones. The

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other examples may well be true but I saw that case and it jumped out at me, and I thought, “That is not right”, although there is a description of how distressed the man was. Someone has a duty to know the rules—we have to communicate them effectively, but so do the social landlords. I have seen letters sent out by social landlords that are excellent, that explain the rules and what discretionary housing payments are, but I have seen others that do not even mention discretionary housing payments. We have to ensure that social landlords up their game.

I must respond to several points on discretionary housing payments, which are crucial. The right hon. Member for Torfaen (Paul Murphy) cited a figure of £50,000, £54,000 or something. The figure for that local authority for the year we are talking about, when the policy comes in, is not £50,000 but £193,000. That is when the policy comes in. Clearly, the point of discretionary housing payments is not to make up everyone’s shortfall, or we would not make any money out of the policy—we would not be saving any money—but it is for the hardest cases.

There is an issue to do with whether we try to prescribe in primary or secondary legislation the exact categories of people whom we want to help, of which one is people with major disabled adaptations. We could have done that, but the second that is done and we try to define a substantial adaptation, we get someone whom we did not think of just the wrong side of the line and someone whom we did not need to include on the right side of the line. For example, if someone has had stairlifts, extra rooms, widened doors and all the rest, it is pretty obvious, or if someone has had a handgrip, it is pretty obvious, but what about all those in the middle? Rather than us in Whitehall trying to define for every local authority, for every sort of adaptation, that this is in or this is out, we have trusted local authorities.

We have given the money specifically for people who have had disabled adaptations or, to give another example, for foster carers; for some of the other housing benefit changes as well, we have given the councils a pot of money and said, “You know your local people. You can meet people case by case.” Thus, a lone or separated parent who has the kids regularly and needs that room, and nothing else can be done, could go to the local authority for DHP. We were not going to try to prescribe for DHP, however; we were not going to legislate for such things as whether so many nights qualify or whether there are certain arrangements for the kids. The idea is that the local authority treats people as individual human beings and meets their individual needs. The pot is not unlimited—

Ian Lucas: Will the Minister give way?

Steve Webb: I really want to respond to the hon. Member for Newport East, because I have other things to say about the points she made.

We tried not to prescribe in a rigid, central, one-size-fits-all way, but to make substantial extra money available so that people could respond individually.

Jessica Morden: Does the Minister accept that the pot of money is very small compared with the number of people we are talking about? If the aim of the policy is to use the housing stock better and to save money, it will fail on both counts. As we have mentioned—it would be helpful if he could address this point—the

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pressures in Wales are because we have larger properties and few smaller properties, and because people will pay more in private rents.

Steve Webb: On whether people pay more in private rents, a lot depends on where the people who occupy the houses that have just been vacated come from. For example, if someone is in overcrowded private rented accommodation, on which they are claiming housing benefit, and they move in to reduced rent social housing property, that saves us money, so a lot depends on the dynamics. It is not a static situation. The hon. Lady said that this is not much money, but take her local authority of Newport: last year, in 2011-12, Newport got £47,000 towards DHPs, and next year, it will get more than a third of £1 million.

Jessica Morden: It is not enough.

Steve Webb: Of course, it is not enough for everybody who will lose, because the policy is part of trying to reduce the deficit.

The hon. Lady made other points about the lack of suitable housing stock, and that is a long-term issue that needs to be addressed. Housing associations and local authorities, when looking at the future housing stock, need to consider unmet need. Of course, there is a lead time on that, but if we just sit and wait, it will never happen. Yes, this is a trigger to tackle the deficit, but it is also a trigger for a much more rational allocation of the houses we already have, and for a much more rational building policy, so that we build homes that meet the needs of the people we have. All too often in the past, that has not happened, and it is time that it did.

The hon. Lady asked about the impact on Wales, and she is right that we are talking about roughly 40,000 households. The average loss in Great Britain as a whole is about £14 a week. In Wales, because rents tend to be lower, it is about £12 a week.

My hon. Friend the Member for Ceredigion (Mr Williams) mentioned rural communities. We will evaluate the impact of the policy over a two-year period, but with interim reports that we will publish across England, Scotland and Wales, and across rural, urban and suburban constituencies. As a consequence of debates in the House of Lords on the Bill as it went through, we agreed—we were well on the way to doing this anyway—proper evaluation, so if there are particular issues in Wales or in rural areas, we will have the chance to respond, for example, by adjusting the allocation of discretionary housing payments. That allocation has been set for 2013-14 but not beyond, so if we learn things during the year, we can look at whether we need to change the allocation. We could change the rules of the scheme. Obviously, that is a more fundamental change, but we have a fairly flexible lever if we get early signs that there are problems in particular areas.

We are trying to support social landlords, so we have worked with the Chartered Institute of Housing to produce a toolkit for landlords called “Making it Fit”,

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which provides an overview of how different social landlords are responding. The last thing I want to convey is that the change will be easy for people, that there will not be people who find it difficult, and that it will not be disruptive. However, there is a difference when social landlords engage, get in there early and get to know their tenants—for example, those who sit with their tenants and say, “Are you claiming all the benefits you are entitled to? Could you be getting disability living allowance, for example, which would top up the household income?” There is chance to have a constructive engagement with tenants to find out their needs and what is happening. Many social landlords do not know whether their tenants are even there, or whether they are sub-letting. A lot of beneficial things that need to happen could happen as a result.

Jessica Morden: Does the Minister accept that with the report, that is precisely what Bron Afon has done? It has spoken individually to every single person who is affected, and in the report, there are the harrowing personal stories that people have told.

Steve Webb: I accept that Bron Afon has been out and talked to its tenants, and if that has triggered the process, it is a good thing. As I said, I have some doubts about at least one of the case studies, and in terms of some of the other case studies, I hope that the housing association has explained what discretionary housing payments are, because I think, from memory, another one had a disabled adaptation, or something like that, and that is what DHPs are for. It certainly was not a criticism of Bron Afon, but there are social landlords who are upping their game, engaging, and trying to generate extra revenue through benefit take-up. They are being creative, looking at the private market, and they are moving people around. They accept that the change is coming and are not simply saying, “Oh, this is terrible”, but doing something constructive. I welcome any housing association or social landlord that does that, and they deserve credit.

I have mentioned the discretionary housing payment money. The particular people we had in mind are those with disabled adaptations and foster carers, but the local authority has discretion to use it in individual cases. I do not belittle the impact that this significant change will have. We need to save money, but we have the potential to make better use of our social housing stock to deal with not only under-occupation, but overcrowding, and to be fair between social and private tenants. At a time when we are trying to take very large sums of money out of the housing benefit bill to deal with the vast, yawning deficit that was not dealt with, we need to look at this area but manage the process, and that is what our research and use of DHPs is designed to achieve.

5 pm

Sitting adjourned without Question put (Standing Order No.10(13)).