Speech to Conservative Party Conference 2002
We have had a lively debate this afternoon and there's more to come. We are concentrating our attention on how we can best help vulnerable people like poor families and pensioners. I doubt if 10 or 20 years ago we would have devoted so much time at Party Conference to issues like this so, yes, the Party is changing.
Take lone parents. I'm pleased that we've been addressed today by the Director of the National Council for One Parent Families. There are 1.8 million one-parent families. One million are divorced or separated from their spouse. The evidence is overwhelming that it is better if possible for children if they are brought up by their two parents in a stable marriage. But many lone parents are caring for their children, after they have been abandoned by their partner. They are doing the responsible thing in the circumstances.
So let me make it absolutely clear: The Tory war on lone parents is over. The real Tory battle is to support and strengthen the nation's families. They come in all shapes and sizes. Too often they are struggling in a hostile environment. When they are not being ignored, they are being blamed. When they are not being blamed, they are being taxed. Our approach will be very different. We'll support them and value them and, above all, we'll back them.
One Nation Hearings
Over the last six months, Iain Duncan Smith, and all of us in the Shadow Cabinet have been seeing at first-hand the problems in our most hard-pressed communities. We have called them One Nation Hearings to remind us of a great Conservative tradition. Let me tell you what I've seen in the past year.
I've talked to homeless people out on the streets, a stone's throw from Labour's Rough Sleepers Unit which was supposed to help them, but had let them down.
I've talked to a couple in Birmingham driven out of their house by a violent gang because the word got out that they told the council they thought their neighbours were engaged in welfare fraud.
I've talked to a disabled woman and when I asked her how long it took her to fill in her benefit claim form, she said the questions were so complex and intrusive that it took two days, and a box of tissues because it was so distressing.
Britain doesn't have to be like this. We can make it better. This afternoon I want to set out three things we can do.
· Back our good neighbours;
· Build a better benefit system;
· Tackle the pensions crisis.
It's all part of our agenda for a better society.
We want to release the energies of the decent people of this country who are often the ones best able to tackle our social problems. I think of the former drug addicts now helping to run one of our most successful programmes to tackle drug abuse. I think of someone who has managed to get off the streets himself and now runs a hostel for homeless people. I think of charities which give money with a care and a subtlety that the state can never match. They are the real heroes.
We need to liberate these people because at the moment they are trapped in a regime that could have been deliberately designed to take our good neighbours and force them to behave like distant bureaucrats. Have you tried to apply for lottery funds? Or tried to get support for a community project? I bet many people in this hall have. You know what it's like. It's not a matter of forms any more, it's box loads of paper. It's a nightmare.
This morning Iain Duncan Smith spoke to over 70 voluntary organisations setting out an imaginative new approach to the voluntary sector. We're going to overhaul the system so that our volunteers get a better deal than ever before.
So the first thing we are going to do is give a helping hand to our volunteers, learning from people like Sandy Bruce-Lockhart. But they can't do it all on their own. We need to reform our welfare system too. That's our second proposal.
Escaping The Benefits Maze
Last year, I reported on Gordon Brown's tax credits. Let me give you an update. So far, he has:
abolished Family Credit;
introduced the Working Families Tax Credit;
introduced the Childcare Tax Credit;
introduced the Employment Credit;
abolished the Married Couple's Allowance;
introduced the Children's Tax Credit;
and introduced the Baby Tax Credit;
Are you with me so far? Now let me tell you what he is going to do next. There's just six more changes to come. He's going to:
abolish the Working Families Tax Credit;
abolish the Children's Tax Credit;
abolish the Baby Tax Credit;
introduce the Child Tax Credit;
abolish the Employment Credit;
and introduce the Working Tax Credit.
It's like the six wives of Henry VIII, divorced, beheaded, died, divorced, beheaded, survived.
Let me be clear here. I don't criticise Gordon Brown's motives. He is genuine in his desire to tackle child poverty. I admire him for it. But I don't admire the way he has set about it. That fiendish complexity means that millions of families and pensioners don't get the help they are entitled to.
Have you seen the claim form for the Children's Tax Credit? It was introduced last year and is to be abolished next year. So it has lasted quite well for one of Gordon Brown's schemes. I've got the instructions here.
"if you ticked box 16.20 and either box 16.22 or 16.23, copy box w132 to w133, or
boxes 16.20 and 16.24, enter half of box w132 in box w133, or"
Need I go on?
[boxes 16.20 and 16.25, enter zero in box w133, or
boxes 16.21 and 16.24, enter half of box w132 in box w133, or
boxes 16.21 and 16.25, copy box w132 to box w133."]
Not exactly straightforward is it. In fact, it's the first benefit claim form that entitles you to membership of Mensa as well.
I sometimes think Gordon Brown's credits are like those dubious letters you get announcing you have won £5000 but then you discover you have to endure a two-hour sales pitch for a time share apartment before you have even a chance of getting the money. No wonder millions of families and pensioners who are entitled to help aren't getting it.
We are trapping families and pensioners in a maze when we should be providing a ladder up to prosperity. These tax credits are spreading means testing to more and more people - 25 million on the latest estimate. They penalise people who have saved. They penalise people who earn a bit of overtime. They penalise people who want to settle down with a partner. In fact, just about every step to make your life better comes with a penalty. The message is, don't save, don't work harder, don't settle down. No wonder welfare dependency has become part of the problem in our most hard-pressed communities. That's why reforming welfare matters so much. We will create a better system that is simpler, more straightforward and goes with the grain of human nature.
By next year, more than half of pensioners will be dependent on means-tested benefits. Mervyn Kohler and Help the Aged are right to be worried about this. Labour say it's the only way to help the poorest pensioners. We say there is another way, a better way. We know that poorer pensioners tend to be older. Pensioners over 75 have an average income £80 a week less than younger pensioners. So what we proposed earlier this year was to put the cost of the new means-tested benefit, the Pension Credit, into a higher rate of pension for the older pensioner. Instead of that measly 25 pence when you become 80, we would have offered something really worthwhile to recognise the extra needs of older pensioners. You see, we can have a better social security system that is targeted on real need without having more and more complicated means tests. That's the Tory way of helping poor people.
The Pensions Crisis
So, first, we are going to release the energies of the good neighbours of our society. Then second, we are going to create a better benefits system based on fairness, simplicity and dignity. But there is a third challenge as well, perhaps the most important of the lot. Here's a clue and I quote: 'Many pension funds are in substantial surplus and at present many companies are enjoying pension holidays, so this is the right time to undertake a long-needed reform.' Those were the words used by Gordon Brown in his 1997 Budget to describe his £5 billion a year tax on our pension funds. A lot of people would describe it rather differently. They might call it the biggest single attack on the savings of millions of people that most of us can remember. It has already taken £25 billion out of our savings and it's growing every year. And now the chickens are coming home to roost.
Our pensions aren't growing in value any more, they are falling in value. The other month, they cut the official estimate of the value of our pension funds by more than £100 billion. No explanation. After we pointed it out, they put the figure right. They said it was just a statistical error and that the money hadn't really been lost, just kind of mislaid. But temporarily to mislay an amount of money roughly equal to the entire GDP of Portugal doesn't exactly inspire confidence.
We've got used to the idea that every generation retires a bit better off than the previous generation. But those comfortable assumptions are about to change. Tackling this crisis must be a top priority.
We now propose a bold reform of annuities. At the moment you have to convert your pension savings into annual income when you reach the age of 75. This forces many people into what, they fear, is a bad deal. We say that once you can show you are not going to depend on benefit, then you should be free to decide what you do with your own savings.
We also want a big reduction in the burden of red tape on pension funds. One of the reasons why companies are closing them down is that there's so much hassle running them. The government set up a review and we co-operated with them on it. After all, pensions planning needs stability and we ought to try to reach a consensus across the parties so that pension funds can plan ahead. But do you know what happened after they launched the review to cut down the amount of red tape? They produced another 251 pages of regulation. That's an extra page of regulation for every day of the deregulation review. It's no good promising to go on a diet and diving straight into a chip shop.
We will continue to press for reductions in this enormous burden. But we need to do more to get to the heart of the problem of low savings. And today I can announce to this conference an important new initiative.
At the moment you get tax relief if you save for your pension. But that means you can't get at your money until you reach retirement. It's a one-way street into the fund with no means of getting your money out.
You also get tax relief if you save in an individual savings account, an ISA. You can withdraw that money freely, but once you've done that, it can't be replaced. You can't put that money back in. So it's a one-way street out.
This is a very inflexible system and it deters people from saving.
Wouldn't it be far better if you could save without having to pledge not to touch it until you reach the age of 60?
And if you did draw on your savings for a rainy day, wouldn't it be better if you could put the money back in later without penalty?
And wouldn't it be a real incentive to save if the Government put in a contribution alongside your own, available when you retire?
And wouldn't it be even better if once you have built up a fund, then you would be able to pass it on to your children as the basis of a fund of their own?
Well that is what we are proposing. We are calling it a Lifetime Savings Account. It will enable everyone to build up their own personal pot of savings to draw on as they wish. I am publishing today a consultation paper on our proposal. We will be consulting the financial services industry over the months ahead because we want to create a framework into which they can slot a whole range of products. This is a radical proposal. It tackles a problem at the heart of our savings culture. We want people to enjoy the independence that comes from building up their own personal pot of savings.
It's the next stage in the Tory vision of a property-owning democracy.
That's a great expression. It was first used by Tories more than fifty years ago. Perhaps Bill Deedes coined it. I am delighted that he has accepted our invitation to speak at this conference because he's one of the wisest and gentlest of men.
And of course his very presence reminds us that we shouldn't waste the talents and abilities of millions of people aged over fifty who still have so much to offer. They keep our charities going. They help their children and grandchildren. And they offer a lot to the economy as well. Bill is 89 and he shows no sign of taking early retirement. It's absurd that we've still got so many rules and regulations stopping people working just because they have reached a certain age. That's something else which a Conservative Government will tackle.
So there we are: Backing our good neighbours, building a better benefit system, and tackling the pensions crisis.
Just about every delegate at this Conference contributed in one way or another to the work of the Conservative Governments from 1979 to 1997. You stuck with it, through thick and thin. Yes, we made mistakes, but we left our country in 1997 in far better shape than we found it in 1979. Every person here can take pride in that achievement.
We transformed Britain. London became one of the most diverse and dynamic cities in the world. Over 2 million more women were in employment. The number of students in higher education more than doubled. Deference to the old ways of doing things declined. And I'd rather be living in Britain today, for all its social problems, than the Britain of a generation or two ago, for all its social cohesion.
None of this would have happened but for the liberation of the economy which we brought about. Many people's lives have been transformed for the better by the economic and social changes we ourselves brought about. Yet we who delivered all these changes appeared not to understand the very social forces we had unleashed.
We've got to recognise and understand social change. There's no point twitching at the net curtains as our society changes around us. We must engage with society as it is today. Then we can put all our efforts into the problems that need to be tackled.
High up on just about everyone's list of today's problems is the state of the Health Service, and our schools, and rising crime. Behind these problems in our public services there lie even deeper worries, about the quality of life of our older people, the well-being of our families, and the future of our children. These are today's challenges. People want us to tackle them with the same energy and vigour that we tackled the problems of the 1980's. That's precisely what we will do.
We are proud of being the party of national defence. We are proud of being the party of enterprise. We are proud of being the party that speaks up for the countryside. But we should also be proud that we are the party of social reform. We are the heirs to a great Conservative tradition stretching from Disraeli and Shaftesbury through Butler and Macleod to Keith Joseph and beyond. Now the time has come to add another chapter to that great tradition.