Here are Chris Grayling’s answers to the questions put forward by CoffeeHousers:
Marcus Cotswell
“What are your plans for reducing the incidence of means-testing in the benefit system, with particular reference to the impact on incentives to save?”
None of us would have wanted to see means testing spread as far as it has throughout our benefits and tax credits system under Gordon Brown. However once a system is in place, it’s much more difficult to change things without creating losers amongst the most vulnerable in our society. So initially our focus will be on simplification. I am, for example, extremely concerned about the number of elderly pensioners who are finding it too difficult to apply for help, at a time when the cost of living pressures on them are acute.
However we will have to address the issue of means testing, particularly in the pensions arena. The Government is in the process of introducing a new type of pension for people on lower incomes, called personal accounts. It will involve them contributing 3% of their annual income – but in many cases that will not be sufficient to raise them above the means testing threshold. So they are in real danger of saving but gaining nothing from doing so. We have identified a number of possible solutions to the problem, but we do not, in opposition, have sufficient analytical tools to assess these. The Department for Work and Pensions is the only organisation with a modelling system that can do this properly.
We have told the Government that the current situation is unacceptable, and they have agreed to produce an options paper of different possible solutions. Whether they actually do something is quite another story, particularly given Gordon Brown’s track record in this area. So we will have to wait to see what they produce, and we may have to wait until we are in Government before we get proper access to the system that will enable us to do the analysis properly and take firm decisions.
Diana
“Is there a place for Frank Field in your ministerial team, come a Tory government?”
I don’t think he’d accept! Frank is in the enviable position of being someone who has a huge influence on policy on both sides of the political spectrum. Although David Freud rightly gets a lot of credit for providing a significant amount of the thinking behind the most recent Labour and Conservative welfare reform proposals, Frank Field’s influence has been substantial as well. I think he enjoys being able to play a part in helping drive the debate without being constrained by front bench responsibilities. He likes to be able to say what he thinks.
forlornehope
“What are you going to do about the fact that those of us in the private sector have to pay more for public sector pensions than we do for our own?”
This is clearly a real issue, and one which the current Government has ducked. We have tried very hard to get a clear statement from ministers about the absolute scale of the liability that is being built up – without success. We have argued that the Government should revisit the controversial agreement over public sector pensions that was reached with the unions two years ago. While we believe that many public servants do an extremely difficult job and deserve security in retirement, it is difficult to see that someone entering public service today is going to be able to retire on the same basis as someone now approaching retirement. But we will not be able to offer a definitive view until we have full and accurate information about the scale of the liabilities.
AndyS
“Chris. Do you think it likely that the public sector Unions, in their current muscle flexing mood, would allow the wholesale transfer of benefit claimants to private companies tasked with managing their transition back in to work? Ideological anathema to an unreconstructed socialist I’d have thought. Which begs the question why is Purnell proposing this or similar? Is this an application to join the rather lonely “Frank Field” wing of the Labour party? It seems an odd platform from which to launch a bid for the leadership. What do you think he is up to?”
James Purnell has always been closely associated with Tony Blair, and my assumption is that the welfare Green Paper produced by the Government – which largely reflected the proposals which we had published six months earlier – put in place the things that Mr Blair would have liked to do but which Gordon Brown would not allow. Such is the weakness of the Prime Minister now that he will take on board anything which appears to allow him to claim that he has outmanoevured David Cameron – even if it means taking on policies he has previously rejected.
However the Labour Party and the Unions will not like the proposals, and I certainly do not now believe that James Purnell is planning to stand for the leadership. He’s shot that fox with the Green Paper. I expect Mr Purnell to need Conservative support to get his proposals through the House of Commons in the face of a fair sized rebellion from the Labour left.
The irony is that it is now too late to make a real difference before the next election. It will probably take two to three years to get the new system up and running, and all Mr Purnell is doing now is laying the groundwork for the next Government to do the job properly. So if we win the election, this is all a big help to us.
Philip Wright
“Over the course of a first term Tory administration, say 4 years, what would you project are the potential costs, savings and numbers of people moved off the Invalidity Benefit roll likely to be? If there is a net saving will this be applied to further welfare schemes / projects or sunk in the general Treasury pot?”
Initially the proceeds from moving people off welfare into work would be cycled into paying for the programmes that got them there, using the system of payment by results which means money only changes hands once the independent providers have succeeded in placing a claimant in a job. However once the fee is fully paid, and as long as that person remains in work, the savings can then be used for other purposes. To this end, we have set ourselves a goal of realising sufficient savings from moving people off benefits and into work to end the so-called couple penalty in the tax credits system. The penalty has the effect of leaving some couples better off if they split up rather than stay together – something that is completely absurd given the problem we have with family breakdown in our society.
Even hitting the Government’s own target for Incapacity Benefit would be equivalent to a cumulative saving of £3 billion a year by the end of a five year Parliament. This alone would be sufficient to meet that commitment to eliminate the couple penalty in the tax credit system.
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