BBC On The Record - Broadcast: 23.06.02

Interview: DAVID WILLETTS, Shadow Work and Pensions Secretary

describes who the vulnerable are and what the Conservatives want to do to help them.

JOHN HUMPHRYS: David Willetts, when your leader, Iain Duncan Smith, says that you will help 'the vulnerable' who does he mean by 'the vulnerable'. Who's included in that? DAVID WILLETTS: We mean people who live in our most deprived communities, where public services simply aren't delivering what they need. We mean people, who when faced with the sort of shocks that we could all face, of bereavement, or sickness, or crime, because they don't have the network of social contacts and perhaps also the financial resources they're more hard hit by them, and we mean people who are just not getting a good enough deal from public services that should be at their service, but instead feel that they are on the end of a bureaucracy that isn't taking account of their interests. HUMPHRYS: So you ought probably in that case to stop talking as you've been doing, collectively I mean, about drivers being vulnerable to congestion, constituents being vulnerable to asylum seekers in their midst, businessmen being vulnerable to taxes for heaven's sake. The suspicion is that you are broadening the agenda as it were, so as to make it, this use of the word vulnerable, effectively meaningless. WILLETTS: Well in a sense, we are all vulnerable when government policies don't work. But yes, we need to focus on this, on particular groups of people who are part of society, to whom we all have obligations, and who are clearly not able fully to participate in the sorts of quality of life that you and I take for granted. That's what we talk about when we say we want to help vulnerable people. HUMPHRYS: But when people like you talk, as you talked about the end of Thatcherism, in the sense that, that this is no longer the time for Thatcherism, you've always said it was fine for its time but now we have to move on from that. Even though you have theoretically moved on from that, your position is still, New Labour position as well for that matter, a hand-up and not a hand-out. WILLETTS: Yeah, I don't want to see people trapped on welfare dependency and in all the visits I have paid in the council estate in Birmingham, going through twenty-four hours London, seeing London through the night, in Kent, looking at their Social Services project, no person that I've spoken to has ever said, the solution for our problems is more means-tested benefits. And that I'm afraid, is the way in which the direction of social security spending is going under this government. So we've got to break free of that sort of old way of thinking and look at better ways of helping people most in need. HUMPHRYS: But helping people, you usually add on to that, helping people to help themselves and that's the essence of this argument isn't it? Do you accept that there are some people who cannot do any more than they are doing to help themselves and therefore who need more help from the state to improve their lot? WILLETTS: I accept that this is not, just sort of 'pull your socks up, you can do better on your own without any help'. We've moved beyond that. These are people who are facing quite appalling adversity and just telling them 'pull your socks up' simply won't do and governments do have an obligation to design better public policies. I mean let me give you an example, Gordon Brown said at the time of the last election that one point two million children had been lifted out of poverty. We now know that wasn't the case. In fact, at best it was half a million and that was probably just caused by improving economic circumstances. The problem is that he's got such a complicated benefits system that families aren't getting the benefits to which they are currently entitled. And I know that Bob Holman for whom I have great respect... HUMPHRYS: ...we heard him in that film. WILLETTS: Yes exactly, and he makes some very powerful points but he, I know, would recognise that designing ever more complicated systems which is what has happened in the past few years, which aren't then taken up by people, doesn't help them at all, we need something much more simple and direct and workmanlike. HUMPHRYS: Ah well indeed. And the simple and direct solution that Bob Holman had was that you, the state that is, give more money to many of these people who can't help themselves, put more money into their pockets. Are you saying that a future Conservative government would give more state aid directly to these people. Put aside all the helping themselves and... WILLETTS: ...I certainly hope that we would operate a better and more effective benefits system and that's what, in my role... HUMPHRYS: ...not quite what I'm asking you though is it. The better benefit system might be simply a more efficient benefit system. I'm asking you whether you would give them more money? Just as simple as that. WILLETTS: Let me give you a practical example John. We had a Bill before the House of Commons earlier this year, in which the Labour Government wanted to spread means testing to yet more pensioners. And I've worked with Frank Field the former Labour Minister and with the Liberal Democrats and we said, pensioners don't want even more means testing, this would have taken over fifty per cent of pensioners into means tested benefits. We said, let's try a different approach and we proposed jointly that instead the money should go in a higher rate of pension for older pensioners because older pensioners tend to be the poor ones. That I believe would have been a better way than the one that the government brought through into law. So it's not just the matter of the total, it's also a matter of how you design it. And also, we mustn't forget, that alongside the state, there is society, and one of the things that comes across very strongly when you visit these deprived areas, is some of the best and most effective projects are done by volunteers in the charitable sector. HUMPHRYS: Sure, but to go back to that pensions thing, in other words what you're saying is, take some of the universal benefits that might benefit people who are reasonably well, well-off pensioners who are reasonably well-off, and give it to those people, directly to those people, increase the pension, the state pension of those people who are the worst off, and you'd be very happy to do that. WILLETTS: That was a proposal that, together with Frank Field and the Liberal Democrats we put forward as an alternative to Labour's means testing, more means tested benefits for pensioners, and it's an example of what we're trying to do. We're trying to work out ways in which given that of course governments do have responsibility. better ways of discharging that responsibility. Let me give you another example... HUMPHRYS: ...just before you give me another example, just finish dealing with that one, if that meant that extra money needed to be put into the pot to help those most vulnerable people, extra in addition to that which you have as it were redistributed from the better off, more taxpayers' money, you'd say if that's what they need, sobeit, we would do that. WILLETTS: Well we've already made clear that when it comes to public services as a whole and I'm not now just thinking of benefits, when it's talking about public services as a whole, reform of public services will take priority for the next government, over the next Conservative Government, over the question of tax cuts. I mean we obviously hope in the long term to be able to bring down the burden of taxation, but Michael Howard the Shadow Chancellor, has made it clear that what he wants to do, above all, is to reform the public services and that'll be the priority. Now within that, on benefits, I want to have a better benefits system that doesn't trap people in dependency, 'cos all too often this benefit expenditure that Labour ministers boast about, has become part of the problem, not part of the solution. HUMPHRYS: You mentioned child poverty earlier and this government has made a great deal on its targets to halve child poverty I think it is by 2010 and then eliminate it altogether by 2020. Do you sign up to those targets as a party? WILLETTS: I certainly want to see child poverty reduced. I think the trouble with the definition... HUMPHRYS: would... WILLETTS: ...yeah, but the trouble with this definition is when Labour says that, they must have a very narrow financial definition of poverty. They're thinking that by designing complicated benefits structures in the offices of the Treasury, on Ed Balls' computer they can announce they've eliminated child poverty. Are they saying that children are not going to see crack needles in the alleyways outside their estate? Are they saying that people are not going to still be suffering from mental illness? Are they saying that families are still not going to be under pressure? HUMPHRYS: ...they're saying those families are going to be so much better off that the kids won't be poor, that's effectively what they're saying. WILLETTS: And my view is that anybody, and Bob Holman certainly believes that, you've got to have a much more, much more complicated and much more sophisticated understanding of poverty, and in these deprived areas, there are lots of charities that understand that poverty is not simply a financial matter, and one of the other matters, one of the other things we're trying to do, and this is another practical example of what we're learning, as we address these important problems, they all say they spend all their time bidding for penny-packets of money under a whole host of different government schemes, each initiative launched by a different ministry in order to get forty-eight hours headlines and in some of these deprived areas, the people who are there trying to help, are now spending all their time bidding for money under twenty or thirty different grant schemes, we're looking at a much simpler and more direct way of helping those communities so their energies are not absorbed in dealing with intricate schemes, each one of which may be very well intentioned, but their overall impact is to divert an appalling amount of energy away from the real help that people need. HUMPHRYS: But to go back to poor children, the most direct and obvious way to help them is to make sure that their family has more money. What you were describing, the needles in the gutters and all that sort of thing is social depravation and of course, that is something that every party will work towards eliminating. But what I was asking you was whether you sign up to the notion that you eliminate child poverty in the sense that you simply give the families more money? Bob Holman says more money in their pockets. WILLETTS: Well I want to see families with better incomes, with higher incomes, yes. I want to have a more effective benefit system. Again, let me give you another practical example. Gordon Brown is very proud of his family tax credits, but we've established that for the Working Family Tax Credit, for some groups the take-up rate is a low as fifty per cent. And there's another complicated set of changes due next year. And what I want to see, is a reliable system that works, rather than ever more ambitious and complicated changes, each one pronounced as being a contribution towards ending child poverty, but so complicated that everybody in the local Citizens Advice Bureau and all the people like Bob Holman who want to be helping the local community, spend their time helping them fill in complicated claims forms. There are better ways of helping children and families in poverty than that, and that... HUMPHRYS: ...I'm sorry, I was going to say if I can ...... move on to pensions, hugely important at the moment, always important but particularly so at the moment, and a very simple question really, do you still believe that, do you believe, we'll leave the 'still' out, that the state benefit should be increased, state pension should be increased? WILLETTS: I certainly believe that we've obviously got a statutory commitment to rise in line prices and as I mentioned earlier John, we had quite an imaginative proposal for helping the older pensioners who tend to be the poorest... HUMPHRYS: ...that is to roll in all the benefits, all the different sorts of ... WILLETTS: what I was thinking of is a more recent debate we had on these means tested benefits when we proposed a higher rate for older pensioners. But what we want, we agree with the government, the government's objective, they say, is that instead of forty per cent of pensioners' incomes coming from the state... coming from the... HUMPHRYS: ...private sector. WILLETTS: ...private sector and sixty per cent from the state, they want to reverse that, and they want to see sixty per cent of their incomes coming from the private saving and forty per cent from the state. We completely agree with that objective and our criticism of the government is that everything they have done in the past few years has taken us further away from that objective, and in particular, Gordon Brown's five billion pound a year tax on the pension funds has been one of the main causes of the crisis in occupational pensions... HUMPHRYS: you rescind that? Do you rescind that, put it back? WILLETTS: ...well, I mean I wish we could, the trouble is the money is already being spent. We'll have to look at how we can encourage people to save and we've already announced some practical proposals. We want to see less red tape and regulation on occupational pensions, we've proposed a bold reform of annuities so that people aren't obliged to buy them at the age of seventy-five. We've proposed reforms to the way this new accountancy standard is imposing burdens on business, and on Thursday, Iain Duncan Smith and I are convening a Pensions Summit of fifteen major organisations involved in pensions, TUC, CBI, National Association of Pension Funds, Age Concern. We're coming together in the most broad meeting on the subject of this pensions crisis since it began, to hear practical proposals from our guests about how they would like to see us tackling it. HUMPHRYS: And one of the things that you want to do as I understand it, is change the way the state pension is funded. At the moment, it isn't funded in a sense, because you and I pay for our parents pensions, assuming you're not of pensionable age, I'm not quite yet. The difference you would like to see is that pensions would be funded out of present income that, maybe as investment of the stock market or whatever, big, big change. I mean, in the early stages of that it would mean effectively us paying twice, wouldn't it? WILLETTS: Well we want to see people with more funded pension savings. How we achieve that is something that we are going to listen and learn about at events like the meeting on Thursday. HUMPHRYS: ...immensely difficult because we've still got to fund our parents' pensions. WILLETTS: It is difficult and of course the problem is that it gets ever more difficult as we go backwards. One of the problems we've had is that the government has been quoting figures that sadly are not accurate. They say that we are saving billions of pounds a year, the figures show that we are twenty-seven billion pounds a year short of the amount of income that we need to be saving in order to generate a prosperous retirement. We are heading for more welfare dependency amongst pensioners, I want to see pensioners enjoying a prosperous retirement. HUMPHRYS: And what would you do today, and I'm not talking about what you would do in five years, what do you think the government should do now to heal the crisis, to prevent the crisis in occupational pension schemes, we are seeing Final Salary schemes disappearing and a lot of people facing poverty in their old age, that they had paid not to have. WILLETTS: Yes and I think a lot of people have been very shocked by the closure of Final Salary Pension Schemes. As I said I think we need to reform the accountancy standard, we need to reform annuity law and we need bold measures to cut back on the burden of red tape and regulation on pension schemes, because of course pensions are a good example of the wider point. People don't want to be dependent on benefits in their old age, they want to have provision for themselves as part of a society which cares for their pensioners, they don't just want more means tested benefits. HUMPHRYS: David Willetts, many thanks. WILLETTS: Thank you John.
NB. This transcript was typed from a transcription unit recording and not copied from an original script. Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy.