Social Security Benefits Up-rating Order 2012

My Lords, I am happy to add that to my long list of things that I will be taking to the Deputy Prime Minister from time to time. I am pleased to make a short intervention in this debate. I, too, was massively relieved that the full uprating undertaking was delivered. It must have been very difficult for Ministers. I was frightened to death that the pressures on them would make them buckle and I am genuinely pleased, as well as massively relieved, that the commitment was held to. It is a very important signal. I do not care who gets the credit in the coalition. Ministers did well and I want to recognise that openly. I have a couple of technical, almost philosophical matters with which to worry the Minister. We always have these arguments. I know that this is a pay-as-you-go system and that this is not money just lying in a bank. The thing that has changed for me is the table at item 6, where the Government Actuary is looking at projections beyond April 2013. The balance in the National Insurance Fund goes from 55 per cent in 2010-11 to 30 per cent in 2016-17. That is a dramatic drop. Can the Minister explain that? It may be a deliberate contribution to deficit reduction, but the balance in the National Insurance Fund has been quite high for some time. Perhaps that reflects the buoyancy of the economy. I am not an actuary, but perhaps the Minister could say a word about that. If he cannot, a letter would do. The Committee would like to hear a little more about going from 55 per cent to 30 per cent in that relatively short space of time, because we may want to return to it. The Chancellor made the interesting comment, almost as an aside because there are so many other things happening at the moment, that he was going to look at how the national insurance contributory system fitted with income tax and all that. It may have a significant effect on the orders in front of us this afternoon if that work was to mature any time soon. It may be too early to say anything about that, but I encourage grown-up consideration of what can be done. That plays into the absolutely sensible point made by the Minister, who brings a fresh mind to all this. All this stuff is too ineffably complicated to make any sense. This is not just about domestic violence. You need to study algebra to understand this document, with 20 pages of different rates and changes at different times. I know that that is part of the Minister's core reason for getting up in the morning, and I encourage him to see what he can do to consider how we simplify all that. I am sure that universal credit will help, but the Minister should look at going beyond that. I serve on the council of the IFS, which made the important point to me the other day about how these benefits change over time. It is hard to anticipate how the relativities change over a 30-year period and, year on year, to get a grip of that. We should have an indexation policy that is rational and simple. If we want to change benefit rates, we should change the level, not the uprating. That would be a much more transparent way to orchestrate debates. I have concerns about the working poor. We would have a much better grasp of the costs and benefits, the winners and losers, if we looked at levels rather than upratings over time to change how those big spends are made. The quantities of money are also very confusing for ordinary people. The noble Lord, Lord McKenzie, was quite right to say that this is inflation-proofing, but to the man and woman in the high street these are colossal sums of money and people get frightened. The terms of the debate can be skewed unreasonably, especially when the press get hold of the raw figures, because they are enormous sums of money that frighten people. The consumer prices index versus the retail prices index debate is not yet finished. I am pleased that the Government have recognised that with local housing allowances. It is absolutely correct that we should look at that for three years. I am confident that the Minister will be as good as his word, because otherwise people will find themselves priced out of all sorts of housing markets. The debate that continues to be held with statistical authorities needs to play into the consumer prices index, with all its attendant dangers. It is correct to say that, over a long period, the relativities go poorly against low-income households. The very least we need to do is continue the work on housing. Owner-occupied housing costs within the consumer prices index is still a work in progress and I am not yet entirely convinced that the CPI is the right measure for a number of reasons. I am sure that the Government are alive to the fact that these arguments will continue, but I would settle for coming back and looking at these things over the longer term. As I say, the Minister brings a fresh approach to some of this and he has not been daunted by taking on universal credit. I hope he will not be daunted when he turns his attention to the importance of simplification so that we have a debate that ordinary people can understand. That is now the important thing we can do beyond looking at the facts of benefit levels, pressures on the squeezed middle and so on. I am confident that, if the Minister can find the time, he could do a lot of technical work on these, and I will support him. It might be hard territory because there will be winners and losers, but we should be brave about it so that the debate becomes more intelligent and future policy-makers can make rational choices. I support these orders and, again, I am relieved beyond belief that we have managed to get the full uprating delivered. That is a massive accolade to the work of Ministers and I am pleased to acknowledge it.