Tag: John Hutton

Below is the text of the speech made by John Hutton, the then Work and Pensions Secretary, on 14th June 2007.

Earlier today we launched the new Employer Skills Pledge. A public and voluntary commitment made by 150 leading employers to train all their staff to at least level 2 in the workplace. Recommended by Lord Leitch in his report last December, the pledge – backed by Government and including all central Government departments – will guarantee employers access to a skills broker through Train to Gain and embed a new partnership with business for improving skills in the workplace.

It will pave the way for the full Government Response to Lord Leitch’s report later this Summer – and mark the beginning of a radical step-up in the investment made in the skills of the British workforce.

If we are to reach our goals of a record 80% employment rate and the eradication of child poverty in Britain, it simply can not be done without taking action to raise the skills base of an economy where today there are 4.6 million people without qualifications and a further 1.5 million with qualifications below level 2; and where Leitch predicted that the demand for low skills is likely to continue falling with some 850,000 fewer low skilled jobs by 2020.

But in an increasingly globalised labour market, we can not conduct the debate about skills in a vacuum; we have to consider it also in the context of the dramatic changes in demography and in the global economy of which we are a part.

To consider the implications for our skills base of an ageing society – where in the UK today there are now more people over State Pension Age than children. And the question of how we develop a managed approach to migration – that will allow us to reap the benefits from the skills which migrants can bring, but which also helps more of our own people compete successfully for the growing number of jobs in the British economy.

Certainly our country is changing. New figures from the Office for National Statistics last week showed that foreign-born mothers accounted for 1 in 5 babies born in England and Wales last year, helping to put the birth rate at its highest for 26 years.

The debate around migration is often polarised and stark. The prospect of migration can provoke uncertainty and sometimes fear. People want security – and rightly so.

But deep down they know, too, that our future as a successful economy will depend on our ability to work through these changes, not turn away from them. We must be an open not a closed society. The same is true for our economy.

At a point when the integration of our communities has perhaps never been more important, it is absolutely right that we recognise the significance of the changes in our society.

But we also need to keep these changes in perspective. To be rational and clear in our assessment of the challenges facing both our society and our economy; and above all to find a way forward that promotes our values; that asks how we can best support every single Briton – regardless of background or origin – to make the greatest possible contribution to our society.

In doing this we first need to overcome a number of popular myths and misconceptions about migration. I think there are four that stand out.

First we need to be clear that migration is not a new phenomenon. As Europe boomed in the post-war era, so major European countries looked to migrants to satisfy unquenchable labour demand – first within what were to become EU countries, then in former colonies.

While immigration slowed in the 1970s and 1980s, it has subsequently increased dramatically – from half a million in 1998 to over 1.5 million a year in each of the three years up to 2005.

So migration is a long-standing global phenomenon. And Britain is no particular magnet for migrants. Between 1990 and 2005, the USA gained 15 million migrants. By contrast Spain and Germany each gained 4 million; the UK just 1.6 million.

Secondly, we should acknowledge that migration is actually a two-way process. Today an estimated 5.5 million UK nationals are taking advantage of the opportunities to live and work abroad – with the largest groups in Australia, Spain, USA, Canada and Ireland.

Thirdly, that Britain is not being populated by large numbers of migrating families. Rather this current wave of migration into Britain is markedly different from anything we have seen before. Unlike the migration to America at the beginning of the 20th Century, or to the UK in the middle of the 20th Century, this early 21st century migration is in essence transient – in that it is often characterised by people coming to work in the UK for short periods before they return home.

Since 2004, around 450,000 people have come from A8 accession countries to work in the UK. But rather than bringing their families to settle, as many as half of those economic migrants did not stay. They came to work and save money for themselves and their families.

Fourth and perhaps most significant of all is the myth that this temporary economic opportunism is a threat to British jobs. As the TUC acknowledged at their conference last year:

“If migrant workers are treated fairly and paid a decent wage, they represent no threat to the livelihoods of people who are already living and working in the UK.”

The economic benefits of migration are clear. Recent migration has had a positive impact on our economy – accounting for up to a fifth of economic growth between 2001 and 2005. With independent research showing that migrants are contributing more than their share of taxes, migrant workers are in fact making a net contribution to the exchequer. And the Bank of England concluded that overseas workers have played a significant role in boosting the pool of available labour and helping to ease labour shortages.

The Government’s decision to introduce a new points-based system is a radical and progressive approach to manage the flow of migrants coming to the UK. A case-by-case system to attract the brightest and best from across the world while being robust against attempted abuse.

This is absolutely the right decision for our economy. Together with the new Migration Advisory Committee – which will advise on skills and labour market shortages – we will help to ensure that migrants continue to fill the gaps in the labour market – increasing investment, innovation and entrepreneurship in the UK.

But we also know that migration brings real challenges too. First and foremost, we have to know who is coming and going in Britain. Managed migration has to mean exactly that. Next week the Government will be publishing its strategy to build stronger international alliances to manage migration. It will focus on strengthening our borders, ensuring and enforcing compliance with our immigration laws and facilitating quicker and easier legal migration for those we seek to attract.

Migration also creates new pressures on local services, on local schools, on hospitals and housing. Challenges for active labour market policies and welfare systems. For communities experiencing immigration for the first time.

As today’s report from the independent Commission for Integration and Cohesion highlights, we must go further in helping these communities to adapt to such change and in promoting and supporting local solutions to improving the integration of migrants within strong, resilient and cohesive local communities.

We can not make decisions on managing migration in isolation from these social factors.

Two years ago, when we made the decision on the 8 European Accession countries, business leaders were calling for us to open the labour market.

At the end of last year, when considering the question for Bulgaria and Romania, the economic imperative was not as strong while it was ever more important that we ensured our local authorities and public services could continue to manage the existing A8 migration. It is critical that we continue to balance these factors as we continue to make decisions on the best way to manage migration.

We know that many migrants are today working in what are traditionally seen as “hard to fill” – but predominantly low-skilled jobs. The question is – why are many of these jobs so hard to fill?

With 4.5 million people still on out-of-work benefits in the UK, the right response is not to get defensive; to retreat – or talk of pulling up the drawbridge on migrants. But rather to ask how we can raise our game in helping UK citizens to compete in today’s labour market?

We’ve made tremendous progress in helping people into work over the past decade. Yesterday’s labour market statistics marked ten years of progress – with a reduction in the claimant count of three quarters of a million and employment up by over 2.5 million; the best performance in the G8.

Helping individuals to acquire the skills, confidence and ambition to progress up the career ladder has to be a core ambition of a dynamic welfare system. The old “Labour Exchange” of the past – where labour seeking work met employers anxious to hire – must now become the skills exchange of the future.

Achieving this will mean finding a new place for skills at the heart of a renewed welfare contract for the 21st Century. A new approach to skills, based on a simpler, clearer and more coherent system of delivery – that meets the needs of both businesses and individuals.

The new Commission for Employment and Skills – led by Sir Michael Rake – will be at the forefront of this new approach. A demand-led skills system that will ensure that the skills employees develop are economically valuable – not just to get into work – but also, critically, to support sustained employment and progression through the workplace.

I want Jobcentre Plus to play a crucial new role in helping to ensure the maximum possible employer engagement at local level. That is why we will be establishing a series of Local Employment Partnerships whereby people claiming long-term benefits will receive job trials and mentoring from sponsoring employers – and at the end of the programme will be guaranteed a job interview.

Our ambition is for this to go sector-wide. And in a world where the premium on high skills is only set to increase, this must not be simply about helping people into low-skilled jobs.

It must also then be about the way that employers are helped to access and deliver the support that will enable employees to progress to middle and higher levels within their organisations.

Our welfare to work system must therefore raise its game. Training British workers for British jobs will be crucial not just for our future economic prosperity but also for our ambition of a fair society.

The growth in world trade presents all of our economies with huge opportunities, if we are prepared to take them. But to do so will mean we have to invest in all our people – in their skills and talents.

One part of this must be an earlier and more focused assessment of the skills needs of those out of work. The need to get action on early skills assessments is highlighted by the evidence on basic language training. A study of over 500 learners and 40 teachers carried out by the National Research and Development Centre found that the longer someone lives in the UK before taking ESOL courses, the slower their progress in learning the language.

And at the Centre for Employment, Language Training and Integration in Copenhagen, language training as part of Denmark’s Adult Vocational Training Programme combines modules of basic language training in the morning with vocational training in the afternoon. So in addition to a foundation of basic language skills, trainees also learn the sector specific vocabulary that will enable them to develop their trade.

With language skills so crucial to the integration of our society – and with a persistent ethnic minority employment rate gap of 14% – such interaction between skills and employment support could play a crucial role in helping us to build a fairer and more inclusive society, with employment opportunity for all and prosperity for Britain in a world of global opportunity.

To achieve our goal, we must stay true to our shared values – of solidarity and social justice – of security but liberty – with tolerance, understanding and respect of others. To embed the social partnership that says we are not merely individuals fighting in isolation from each other, but members of a community who depend on each other; who benefit from each other’s help; who recognise their obligations to each other.

There is no greater challenge facing us today. But equally, I believe, no greater prize within our grasp.

Below is the text of the speech made by John Hutton, the then Work and Pensions Secretary, to the Women’s Enterprise Project in Bethnal Green, London, on 28th February 2007.

On a day when the final report of the Equalities Review has brought the challenges of achieving true equality in Britain into ever sharper focus – I am grateful for the opportunity to join you to discuss the barriers that still too often prevent women in Britain’s ethnic minority communities from finding employment.

Ten years of progress in employment and welfare reform has made a real difference to Britain today. Record investment in Jobcentre Plus and the New Deal means there are now more people in work than ever before; over 2.5 million more than in 1997 and nearly a million fewer on benefits.

Ethnic minority communities have benefited from the progress we have made. Jobcentre Plus, for example, has helped nearly a quarter of a million people from ethnic minorities move into work over the last few years.

As today’s Equalities Review acknowledges, Britain now has more advanced and effective equality legislation than most other countries; our equality commissions and the forthcoming Commission for Equality and Human Rights represent a framework to tackle discrimination that is unrivalled in Europe. And in just the last three years, we have managed to cut the employment rate gap facing ethnic minorities by nearly 2 percentage points – including improvements for the vast majority of ethnic minority groups.

Yet despite this progress, the employment rate gap between ethnic minorities and the UK as a whole, still stands at around 15% – and a young British Asian women starting out in work today, will have to wait until her retirement before she can expect to see the employment rate for ethnic minorities at the same level as the UK average.

The employment rate for ethnic minorities in East London is less than 50%; and here in the borough of Tower Hamlets – where the percentage of ethnic minorities as a proportion of the working age population is the second highest of all local authority districts in Great Britain – the employment rate is less than a third.

And the rates for women are significantly worse. The unemployment rate for Black Caribbean women in Tower Hamlets, at 11%, is almost double that for Bradford. And across the five Olympic boroughs the employment rate for Pakistani and Bangladeshi women is less than 1 in 5.

We can not hope to have a socially cohesive society unless we are prepared to challenge these wide differentials in employment rates.

But these statistics are not just a scar on Britain’s society today; they are the enemy of Britain’s prosperity and progress for the future.

In London over the next 20 years, ethnic minorities are expected to account for around three-quarters of the growth in the potential workforce.

I do not believe we can have an economically competitive and skilled labour force in the future, if the lower employment rate of ethnic minorities today consigns many children – tomorrow’s workforce – to growing up in poverty. Because poverty is the breading ground for low aspiration and low achievement.

Today, that is the reality for over half of Black British children – and over two-thirds of Pakistani and Bangladeshi children. The question for all of us is whether we believe we can change the future for these communities and for the young people within them.

In fact – such are the barriers to equality in our society – even being in work doesn’t always necessarily mean escaping from poverty. When ethnic minorities on average earn a third less than their white counterparts; when Pakistani and Bangladeshi children in households with at least one earner are still statistically more likely to be in poverty than not; And when working Pakistani and Bangladeshi households are more likely to be in poverty than workless white households.

If we are going to succeed in changing the future, then we can start by challenging the myths and the misperceptions.

What Account 3 and the Women’s Enterprise Project are showing is that the old sterotypes are simply not true.

Many women from ethnic minorities want to work. Many husbands and fathers actually support them to do so.

Often the support offered by local organisations working at the heart of the community doesn’t just help the individual; it transforms opportunities for the whole family. Take, for example, the lady whose family was on benefits. But after training with Account 3 was able to get enough money to support her husband to train to do the Knowledge; and when he qualified they were able to go on and get their own flat. Later they set up their own business; the opportunities they were able to offer their children transformed in only a few years.

As is so often the case; success fuels further success. The achievements of one family inspire another – raising ambition across the community. And there is perhaps no greater example of this growing ambition than with those setting out in business on their own. Today the Women’s Enterprise Project is creating around 35 new businesses a year – working with more than a hundred women in the local community; enabling them to test out ideas in a safe environment and providing support well beyond the creation of the business itself.

The next generation are looking to push the bar even higher. We should encourage them to do so. An Equal Opportunities Commission report found that 90% of Bangladeshi girls surveyed did not agree that their parents would expect them to get married and have children rather than follow a career.

One respondent – a 16 year old Black Caribbean girl said:

“I intend to work hard and get the job I want. I also intend to be successful and to make me and my parents proud.”

The idea that success at work would make her parents proud says a lot about how wrong many people’s assumptions are about attitudes to work amongst minority communities.

In fact, in the Equal Opportunities Commission report, one in five young Pakistani and Bangladeshi women employees are now aiming to be their own boss, compared with only one in ten young white British women employees.

And of those in employment, Black Caribbean, Pakistani and Bangladeshi women under 35 are now more likely to aspire to senior positions when they have dependent children than white British women.

So it is about how best to support the fulfilment of this ambition – that I want to discuss with you today. And I’d like to offer a few thoughts about how we can start this discussion.

Firstly, I believe we need to make significant changes to the nature of the support on offer to help people from ethnic minorities move into work.

This is one of the principal reasons why I have asked David Freud to review our welfare system as part of the wider policy review process currently being led by the Prime Minister.

The hallmark of this Government’s welfare reforms has been our movement away from the passive one-size-fits-all benefit dependency of the past towards the creation of a more active approach tailored to the specific needs of individuals.

If we are to provide better help and support to those furthest from the labour market we have to build on this progress – moving further away from the traditional approach – based on what type of benefit someone is claiming – to one based on individual needs.

An approach that offers new and ever more tailored support in return for individuals taking up the responsibility to do all they can to help themselves.

We are now beginning to devote more resources in this way. But this doesn’t necessarily mean expanding State provision. Rather it means drawing on the expertise and contribution of providers in all sectors – whether public, private or voluntary.

It’s about providing greater flexibility for local community based organisations to work together to find local solutions. It means Government simplifying the existing myriad of short-term funding contracts, in favour of a clearer funding structure. It means moving towards providing more support for innovation with longer-term payments based on clear outcomes, and more flexibility for local organisations to determine the best approach to support for their people.

What does this mean for the hardest to help? It means exploring outcome-based funding to reward successful welfare to work providers – that places a higher priority on these groups; that offers providers greater rewards for helping those who are furthest from the labour market – including specific individuals or ethnic minority groups. Not just overcoming the barriers to finding work and then pulling up the drawbridge of support; but rather overcoming the barriers to staying in work and progressing within the workplace too.

It means recognising that the State is not always the best vehicle for providing support. That community organisations – like the Women’s Enterprise Project here in Bethnal Green – have a unique ability to build relationships and inspire trust – that goes far beyond what the State can sometimes do.

And there should be more room in our welfare system for local flexibility and freedom.

The City Strategy brings together a consortia of local stakeholders to improve the co-ordination and delivery of support for jobless people in key areas across the country – including in here in East London.

We believe that by freeing resources from Whitehall and giving power and responsibility to local communities, we will achieve better outcomes for local people. But this has to translate into results. And in many City Consortia areas – including in East London – that has to mean better employment outcomes for ethnic minorities, and especially for women.

Through this partnership-based approach, together with improvements in training and skills – such as the increased emphasis on English language training for benefit recipients we announced earlier this month – I believe that we can offer new and unparalleled support to help people from ethnic minorities acquire the skills and expertise to realise their ambitions in the workplace.

But our success will depend equally on women who are out of the labour market actually taking up the opportunities available to them – with the same ambition and commitment that we see showcased by groups like the Women’s Enterprise Project on a daily basis.

Of course, also fundamental to our success will be whether we can deliver a step change in tackling workplace discrimination.

Analysis suggests that potentially up to half of the ethnic minority employment gap could be explained by employer behaviour.

Currently, Black Caribbean, Pakistani and Bangladeshi women are more likely to be graduates than white British women and men. Yet Pakistani female graduates are over four times more likely to be unemployed than white female graduates. And those in work are less likely to reach senior positions than white British women – despite being more highly qualified.

We need to understand more clearly the factors that are driving this discrimination.

Alongside Trevor Phillips’ Equalities Review, my Department is today publishing a new research report which for the first time presents clear evidence of a Muslim employment gap. It analyses the probability of being in employment based on different combinations of ethnic and religious group. It finds that for women, Muslims of all ethnic backgrounds – whether Pakistani, Bangladeshi, Indian or even White – face a higher employment penalty than any other religious group. It’s even the case that a White Muslim, faces a higher employment penalty than a Pakistani of no religion. The analysis also suggests that Muslim men of all ethnic backgrounds face similar employment penalties.

Of course, there will be those who suggest this is simply a cultural issue.  And this may play a part in the calculations of the employment penalty. There is some evidence in the Equalities Review today that some people don’t aspire to enter the labour market.

But we also know that such generalisations are a poor excuse for avoiding the fundamental problems of inequality and discrimination. Or for ignoring the other constraints that ethnic minorities often face – such as lack of access to childcare.

We simply can not afford to ignore the very real possibility that specific discrimination based on religious practice could be an important part of the challenge we face in breaking down barriers to work for Britain’s ethnic minorities.

The Equal Opportunities Commission report, for example, found that compared with their white counterparts, working Black Caribbean, Pakistani and Bangladeshi women under 35 are three times more likely to be asked about plans for marriage and children at job interviews; much more likely to experience negative attitudes because of their religious dress and 50% more likely to have difficulty finding a job.

It is vital that we work together to better understand and address this problem. Whatever the underlying causes, this employment gap is entrenching deprivation in Muslim communities and can only exacerbate the social tensions and alienation that we all want to tackle.

There are many forms of ethnic, religious and cultural discrimination – some long entrenched, others are newer and worrying trends. We have to find a way to work with business to eliminate this discrimination – whatever religious or ethnic guise it takes.

Since the 2001 amendment to the Race Relations Act, public authorities have a statutory duty to take proactive steps to eliminate unlawful racial discrimination and to promote equality of opportunity and good race relations.

As Trevor Phillips has argued today, we must now build on this to ensure that our partners do more to promote equality and to highlight the importance of tackling racial discrimination in the workplace.

But we should be absolutely clear about one thing. This is not about positive discrimination or quotas. It can not be onerous on business; the argument is rather about the increasingly crucial value that promoting equality brings to business, not the costs it imposes. It’s about Government leading from the front and asking those supplying Government to adopt the same principles.

We must also go further in changing the way we address equality issues across Government. Replacing the silos of individual departments with a new cross-Government commitment that better co-ordinates Government action on equality issues.

As part of this we need to re-shape the Ethnic Minority Employment Task Force to make it a more pro-active strategic body, focusing on specific measurable objectives. Earlier this month, the Employment Minister Jim Murphy wrote to all Task Force members to propose a more focused set of priorities around procurement and employer engagement – including tackling employer discrimination, not just in recruitment to the workplace but also in progression through it.

I have today asked Jim and the Task Force to report back to me with a set of specific and practical proposals in these areas – ahead of a Ministerial summit in May. In doing so, I want them to consider the specific issues around discrimination based on religious practice. And to consider the issues of how best to promote and support aspiration – including addressing concerns such as affordable childcare.

I want them to draw on the recommendations of the forthcoming reports from the Business Commission and from David Freud’s review of our welfare system. And to engage with both business and ethnic minority communities augmenting the membership of the group as necessary to achieve a much greater representation from ethnic minority communities – with leading ethnic minority men and women drawn from both the business and voluntary sector.

I want to spend the rest of the time this morning listening to you – to hear your perspective on the challenges we face in breaking down barriers to work – and tackling inequality and discrimination in the workplace.

So let me just conclude by saying that too often people have believed these problems are so engrained in our society that they can never be overcome.

The French author and playwright Honore de Balzac, once wrote:

“Equality may perhaps be a right, but no power on earth can ever turn it into a fact.”

Today we are entitled to be more optimistic. There is a power on earth that can turn equality into a fact. It is the strength of our collective ambition as a society. The progressive force for good that says someone’s origins – whether ethnic background or social class – need no longer determine their destiny. I have no doubt that the vast majority of people in Britain share this belief in fairness and equality. That is one more reason to believe that together, we can change the future.

Below is the text of the speech made by John Hutton, the then Work and Pensions Secretary, on 16th January 2006.

I’m grateful to David and the Work Foundation for hosting today’s event. It’s very appropriate that a speech about the future of welfare should be here at an organisation focused on work. Because ensuring people have the right to work is a fundamental responsibility of any modern Government. It’s a central tenet of Beveridge’s original Welfare State. And it’s the foundation upon which the Labour Party itself was built.

The challenge we face now in Government, is to find the best way of ensuring that this fundamental right can be exercised within an economy that is changing more rapidly and profoundly than at any time since the industrial revolution. To meet this challenge we do not need a big state with more and more centralised bureaucracy. Instead, we need an enabling state – one that empowers local institutions to develop local solutions. Where we mobilise the resources not just of the public sector; but of the private and voluntary sectors as well in a new drive to extend opportunity and prosperity.

When Keir Hardie led the fight against unemployment in the early years of the 20th Century it was not State benefits that he sought – but the opportunity and the support to work. He knew that with work would come autonomy, dignity and self-fulfilment. And that through work, the Labour movement could achieve its ultimate goal – to tackle poverty and build aspiration for every member of our society.

Forty years on, the welfare state – designed by William Beveridge, created by Clement Attlee’s government – recognised the right to enter the world of work as fundamental to forging a decent society by allowing people to exercise personal responsibility to support themselves and their families.

Beveridge’s welfare state was envisaged as an active, empowering force. It sought to provide government help to slay the Five Giants – want, disease, squalor, ignorance and idleness – through universal health and education, decent housing, and a benefit system that would provide security for those who could not work with help in finding a job for those who could.

Beveridge did not think that security from his five giants could be provided by the State alone. Personal responsibility – empowered by government action – was key to how security could be provided in each area.

Want was to be defeated by providing security when sickness, unemployment and retirement meant an end to earnings. But to have this security people had to work and contribute through their National Insurance.

Disease was to be defeated by the NHS. That organisation would be free – but the part played by the individual would be to maintain their own health.

Ignorance was to be defeated by the extension of secondary schooling to all. The State and churches would provide the schools – but ignorance could only be overcome when children and adults did the hard work at school.

Squalor was to be defeated by a combination of council housing and house-proud tenants. If the tenants failed to look after the housing they would reduce their own environments back to squalor. Again, collective provision of housing would be important but the family had to play their role in lifting themselves out of hardship.

Idleness was to be defeated by a combination of full employment and people being prepared to work. The provisions in Beveridge’s plan for unemployment benefit were clear. The task of the unemployed person was to keep themselves “fit for service”. Beveridge assumed that the work ethic would be reinforced by the benefits system and that the individual unemployed person would be prepared to work if they had the opportunity to do so. By combining effective management of the economy with individual effort, people would have greater security against idleness – but only if they played their part in taking work when it was made available.

So from education and health to unemployment benefit and welfare – the Beveridge plan had security at its heart – but with work as the main driver.

And since the main pillars of our modern welfare state were established, there have been huge strides forward. Our society is fairer. Opportunities as well as prosperity have been more widely distributed. People live longer and healthier lives. More people are benefiting from a University education. None of these advances would have been secured without the political courage and determination of previous generations of Labour politicians. But in all these areas, it is the need of today’s society, the rising aspirations of this generation that we have to respond to. And the bar is going up not down.

Our predecessors – Hardie, Atlee, Wilson, Callaghan – would have been horrified to see how the notion of personal responsibility gradually became obscured over the decades as parts of our welfare system trapped people between the twin vices of benefit dependency and poverty. Once inside the benefits system, it was often difficult to get out. People were frequently better off on benefit than in work. There was little help on offer to acquire new skills.

In particular, the legacy of Thatcher’s Britain was one of passive benefit dependency as a means of managing industrial decline. In a world where discrimination already scarred the lives of many disabled people and older workers – we saw millions of people written off onto benefit – with no expectation of a return to work. While Britain got steadily healthier as a nation, the numbers on Incapacity Benefit trebled between 1979 and 1997. The number of people claiming unemployment benefits rose by 50 per cent whilst the number claiming lone parent and incapacity benefits more than trebled. Overall, by 1997 there were 3 million more on benefits than in 1979.

And with benefit dependency came poverty. By the mid-to-late 1990s, the UK suffered higher child poverty than nearly all the other European nations. Over a period of 20 years, the proportion of children in relative poverty had more than doubled and by 1997, one in every three babies born in Britain was born poor. By 1997, nearly six million adults in this country were dependent on benefits to survive.

Far from indicating the success of welfare policies, these figures reveal their most abject failure. Because as we all know, the best form of welfare comes from the security of having a decent, well-paid job. Not from the myth that being on benefit alone can provide this level of security.

Even if our economy could support keeping people on ever higher benefits with little expected in return, which it demonstrably cannot – where would be the value in that? Worklessness can decimate and demoralise families and entire communities.

The clear link between benefit dependency and poverty is shown by the simple fact that half of the most severe pockets of deprivation in the country are contained within the hundred parliamentary constituencies with the highest numbers of incapacity benefit claimants.

So by creating a welfare state where rights properly match responsibilities we have the potential to end the ignominy of a system that can trap people in benefit dependency rather than helping them into work. While the solutions we apply may be different to those of 1945, New Labour is seeking a modern reflection of the true nature of the original Beveridge and Attlee reforms. A system of welfare built on the solid foundations that Beveridge laid down, but delivered in new ways that reflect the needs of our modern society. To restore the original Beveridge ethos of the welfare state as an enabler – empowering people to fulfil their potential, their hopes and their expectations. As the Prime Minister said on Saturday, empowerment is the theme running through this Government’s whole reform programme.

We have already taken great steps to replace the one-size-fits-all world of benefit dependency with an active service where tailored support to help people back into work is matched by the obligation for people to do everything possible to help themselves. Adopting a more individual approach is vital to the New Deal which has taken us far beyond the concept of the traditional labour exchange where employers looking for labourers were simply brought together with men and women looking for work.

In today’s labour market the acquisition and updating of skills are essential pre-requisites for success. It is estimated that by 2012 over two-thirds of all new jobs will require qualifications at or above level 3. So it is not just labour that employers are looking for – it’s skills.

And because of the decisions we have made on the economy and the reforms we have already delivered, including making work pay, we are today making good progress in tackling these real challenges. There are more people in jobs than ever before; 2.3 million more than in 1997. With almost three-quarters of the working age population in work, our employment rate is the highest of the G8 countries. And youth unemployment has fallen dramatically – with long-term youth unemployment down 90% since 1997. The numbers on benefit have fallen by around a million.

By supporting people in work and providing financial security for those who can’t work, we have lifted 2.1 million children and 1.9 million pensioners out of absolute poverty since 1997.

And we’ve tackled discrimination – with last year’s Disability Discrimination Act completing the most far-reaching programme of disability rights legislation that any European country has put in place. When we came to office, despite 14 previous attempts to produce legislation, only the most blatant forms of direct discrimination against disabled people had been outlawed and there was no protection at all for disabled employees of small firms or for disabled pupils and students.

Last year’s Act fulfilled our manifesto commitment to deliver enforceable and comprehensive civil rights for disabled people and represented a major landmark on the road to a world in which disabled people can be empowered to live independently, fully recognised and respected as equal members of society.

Our New Deal for Disabled People has seen nearly 75,000 job entries since its launch in 2001 – with 200,000 disabled people helped into work through our total package of New Deal programmes.

And we’ve developed new approaches – such as the cutting-edge Pathways to Work pilots – which bring together Jobcentre Plus, the Health service, GPs and employers to improve the package of support we offer to people on Incapacity Benefit.

In the first year of the pilots the number of recorded job entries for people with a health condition or disability had almost doubled compared with the same period the year before.

Yet massive challenges remain.

The need for Britain to compete in the ever-changing global economy means it is essential we do more to get everyone who is able to work to do so. Global trade is doubling every decade – China’s trade doubling every three years. The economies of developed nations that can not adapt to the pace of change risk falling further and further behind.

Maximising employment is equally essential for Britain to cope with the demographic challenge of a nation where people are living longer and healthier lives. By the late 2020s, nearly half of the adult population will be over 50. Over the next forty years or so, the numbers of pensioners will increase by 50%. Originally there were ten people of working age for every pensioner. Now there are four for every one pensioner; By 2050, two of working age for every one in retirement. Unemployment levels for people over 50 are relatively low, but economic inactivity rates are high and many people leave work early because of ill health. The economic consequences of these trends could be serious unless we take action now.

It is for those reasons that we have set ourselves the aspiration of working towards an 80% employment rate – reducing the numbers on sickness benefit by one million, and getting one million more older people and 300,000 extra lone parents into work.

To do that we must extend the principles of active, tailored welfare across the entire welfare state – providing help and support to the key groups that remain left behind.

Incapacity benefit remains one of the greatest barriers to social justice in Britain today. While 80-90 per cent of people coming onto the benefit expect to get back to work – many never do. After two years on the benefit, someone is more likely to die or retire than to find a new job. This is just not good enough.

Our industrial heartlands remain scarred by the Tory legacy of shuffling people off the unemployment lists onto a life of sickness benefit.

Yet the problem is now changing as the nature of our working lives change. As many people seek to balance busy lives which are becoming less physically demanding but more stressful, support that was originally envisaged for people with industrial injuries after long years of manual labour now often goes to people who have quit their office work or profession due to mental health problems.

Indeed, a third of new claimants now cite mental health problems as the main reason for coming onto the benefit, compared to a fifth in 1997.

So the problem is spreading to new areas and new groups of people – there are more incapacity benefit claimants in the South East than the North East, and 40 per cent of claimants are women.

Put simply, rather than the traditional stereotype of male workers off with a bad back, people coming onto incapacity benefit today are increasingly likely to be women or people suffering from stress.

For all claimants, it is the passive system itself that traps people in poverty.

Nothing expected of claimants, and little support is offered.

The gateway to the benefit poorly managed, with some claimants receiving IB before even passing the medical test;

There are perverse incentives to stay on the benefit – you get paid more the longer you claim;

And those who try to plan their return to work through volunteering and training run the risk of proving themselves capable of work and losing their entitlement;

Even the name of the benefit sends a signal that a person is incapable – that there is nothing that can be done

We cannot allow that to continue.

The proposals I will publish later this month will set out the details of a new benefit system for new claimants, the essential elements of which will be in place by 2008. The new benefit will be placed on a new concept of measuring and building up each individual’s capacity rather than writing them off as incapable.

The green paper will introduce new measures to help those on the existing benefit back to work – we must not abandon those who have been failed by the current system.

Let me be clear about one thing. This is not about forcing people to work when they do not have the capacity to do so. I believe that the mis-treatment of disabled people typical of the last century – and still too often the case today – is one of the last great emancipation issues of our time. This Government has pioneered both legislation and support to tackle this. Matching rights with responsibilities will not mean doing anything to undermine this.

But equally – when people do have the capacity to work they have the right to expect support to achieve this and not to be written off onto benefits. Helping disabled people and others with health conditions is in fact fundamental to our ability to take the next step in our pursuit of true equality – to change attitudes in society.

Our Pathways to Work pilots have given us the platform, but we need to aim even higher. The largely voluntary approach of Pathways has been a success, but it is not enough on its own to reach our goal. That is why the increased support we offer to people seeking to get back in the workplace must be matched by increased obligations. A “something for something” approach demands that state help is matched by increased responsibility on the part of claimants to take advantage of the support programmes government can offer.

Radically changing incapacity benefit is critical to giving more opportunity to those trapped by the current system, but the green paper will also seek to do more for other key groups who still face barriers to accessing the benefits that work can bring.

We will set out proposals to do more to help lone parents balance their need to care for their children with the huge benefit to their family that a job can bring.

We will bring forward measures to do more to help older people overcome the barriers to work which make their employment rates significantly lower than the population as a whole.

And we will reform housing benefit so it better promotes personal responsibility and does not hold people back from working.

It will be important to consult fully on these changes, yet we must move forward as swiftly as we can. That is why I intend to bring forward legislation in this session to set in motion the changes we need to make.

I very much hope that all of you here will join with us in examining our proposals over the coming months – sharing with us your expertise and working with us to turn these aspirations into reality.

With these welfare reforms we can harness the power of modern advances in health and employment support and foster a society of genuine equal rights and opportunities for all. We can build a lasting legacy for the future of our children and grandchildren. And we can deliver an active Welfare State that doesn’t simply cushion people from the effects of poverty and unemployment – but prevents these conditions from occurring in the first place and gives them the support they need to rebuild their lives when they do.

Our proposals will set a new direction of travel for our welfare system. They must provide opportunity as well as security. They must promote full employment and the right to work. They must enhance personal responsibility – not undermine it. And we should bring together the public, private and voluntary sector in a new mission to transform some of Britain’s most disadvantaged communities.

That, I believe, is a modern vision of which William Beveridge and generations of progressive politicians that have gone before us, would have been justifiably proud.

Below is the text of the speech made by John Hutton, the then Work and Pensions Secretary, to the Work Foundation Pensions Conference on 7th February 2006.

I’m grateful to Will and the Work Foundation for the opportunity to join you this morning. And I’m very pleased that the Work Foundation is holding this Pensions Conference – because ultimately the opportunity to work will underpin any successful pensions policy and it must play a central role in the way that our society responds to the challenges we face today.

Since 1997 we’ve taken decisive measures to address the most immediate and serious problems that we have faced since coming into office.

Through the Winter Fuel Payment, free TV licenses and a 7% real terms increase in the Basic State Pension, we’ve helped all pensioners. And by targeting resources through the Minimum Income Guarantee and then the Pension Credit, we’ve ensured help for the poorest pensioners; that never again will they have to suffer the indignity of living on as little as £69 a week – a shameful legacy of pensioner poverty to which we must never return. Today we are spending almost £11 billion extra each year on pensioners with almost half of this spending going to the poorest third. And we’ve succeeded in helping nearly 2 million pensioners escape from the poverty line – with figures from the Institute for Fiscal Studies showing that we are now in an almost unprecedented position where pensioners are no more likely to be poor than any other group in society.

The Pension Protection Fund and the new Pensions Regulator are helping to respond to the problems experienced by defined benefit occupational pensions – and acting to boost security for scheme members. The Financial Assistance Scheme offers the prospect of help for those who have lost the most in the past. And the introduction of the Sandler suite and Stakeholder Pensions have been important steps in facilitating low cost private savings.

But we must now go further to build a system that will enable us to meet two significant challenges. Firstly, unprecedented demographic changes where there will soon be more people over 80 than under 5; and secondly, the extent of under-saving, which the Pensions Commission calculated as leaving nearly 10 million people not saving enough for their retirement.

Work is key to meeting both of these challenges. If we are to support an ever-ageing population successfully we need all those who are willing and able to work to do so. That’s why our Welfare Reform Green Paper last month set out to meet our ambition of an 80% employment rate – including encouraging and supporting an extra 1 million older workers into the workplace. And, as the Pensions Commission concluded, a major expansion of workplace savings must be fundamental to meeting the problem of undersaving – perhaps now the biggest issue we face as we look to the future.

You’ve heard from Lord Turner already this morning. His report at the end of last year marked a major new phase in the debate we are now having about the long term future of our pensions system. We believe that the framework of proposals and options set out in the Pensions Commission report is the right basis for this debate – the analysis is comprehensive and thorough; the recommendations radical and far-reaching. It provides us now with an opportunity to build consensus on the direction of travel we should take.

And that consensus is crucial. If we are to lay the foundations for a lasting pensions settlement, we need a system that allows people to plan with confidence – one that will stand the test of time and not be pulled apart by successive Governments. We need to take difficult long-term decisions with not just cross-party support – but underpinned by an enduring national consensus. Because when it comes to pensions, almost by definition, we have to build for the long term.

That is why we are engaging in a National Pensions Debate – reaching into every section of our community – from business and industry to individuals of all ages and backgrounds; and in all parts of the country.

We all face a challenge here. Business and industry must facilitate workplace saving. Government must determine the right role for the State in providing a basic pension, in regulating the savings market and correcting inequalities. Individuals must plan their retirement saving. And as citizens, we must all be involved in deciding the trade-offs and making the choices that are inescapable if we are to succeed in laying the foundations for a new pensions settlement.

In the coming weeks we will be addressing all these issues in the build-up to a National Pensions Day. Later this month there will be regional events in Southampton and Manchester. Industry, Government and, I hope the main political parties, will come together on Tuesday 28th February for an examination of alternatives to Lord Turner’s National Pensions Savings Scheme – in which the industry have responded to the challenge laid down by my colleague Stephen Timms, the Minister for Pension Reform – to design a better model for personal accounts and deliver a simple, portable and flexible product that can enable people to save at low cost.

And in March I will use a series of speeches and events to set out some thoughts on the role of the State, the challenge for employers, questions of affordability, the options for improving the position of women’s pensions; and the trade-offs and balances that we are going to have to strike to achieve a long-term solution which meets my five tests of personal responsibility, fairness, affordability, simplicity and sustainability.

All this activity will culminate with the National Pensions Day – on Saturday 18th March – an innovative consultation taking place simultaneously in 6 cities – Birmingham, Newcastle, Glasgow, Swansea, Belfast and London. Over 1000 people will come together to consider the choices and options resulting from Lord Turner’s report – to build the platform for a nationwide consensus on which we will build our Spring White Paper and ultimately the legislation that will deliver a long-term solution to the Pensions challenge.

I would like to use the remainder of my time this morning to address one of the most difficult issues which will need to be at the heart of that nationwide consensus – namely the length of working lives and the question of the State Pension Age.

In his report, Lord Turner suggested that the State Pension Age should rise broadly in proportion to the increase in life expectancy.

Certainly there is a growing recognition that working longer is going to have to be part of the solution. But the idea of having to work longer is an emotive subject – we’ve all seen the scare stories and the newspaper headlines.

We’re not alone in grappling with this question – the ageing population is a truly global phenomenon for all of the developed economies. In the US the pension age has already started increasing and will reach 67 in 2027; it’s increasing in Japan from 60 to 65. And it has recently been increased in 6 EU countries including Austria, Slovakia and the Czech Republic. I do not believe the UK can remain immune to this process of change.

What matters of course is the effective retirement age – and it’s worth just dispelling a few myths. Although the State Pension Age is a strong signal and determinant of the length of working lives – it’s not the same as a retirement age. Many retire before the State Pension Age – and increasingly others choose to work beyond it.

Our Age Positive Campaign has influenced employers by promoting the business case for age-diverse workforces and this year will see the introduction of legislation which, for the first time, will give people the right to challenge age discrimination in the workplace. A new default retirement age will mean that employers can no longer force an employee to retire before 65, without objective justification. And in 2011 we will undertake an evidence-based review which will consider the abolition of the default retirement age altogether.

What’s striking when we look at effective retirement ages is that there has been a seismic shift in the balance between the proportions of life spent in work and retirement. In 1950, the average male retired at 67 and could expect to spend 10.8 years in retirement. Today he retires on average 3 years earlier – at 64 – but can expect to spend a further 20 years in retirement. Growth in life expectancy at 65 also shows no sign of slowing down. Every year between 1975 and 2005 it grew by 3 months for men and 2 months for women. By contrast between 1950 and 1975 the annual improvement had been of slightly more than half a month for men and less than a month and a half for women.

As unpopular as it may be to talk about working longer – the simple fact is that if we aren’t prepared to consider the option of increasing the state pension age, we will simply pass an ever greater burden onto our children and grandchildren.

Of course there are concerns about the impact of this on sections of the community. There are issues that have to be worked through – but in principle it would be irresponsible for us now not to at least contemplate some redressing of this balance between work and retirement.

Looking at the data and available research on current retirement patterns, I think three things really stand out.

Firstly, with a third of men outside the labour market by the age of 60, for many the debate is not about working beyond 65 but actually having the opportunity to work up to the State Pension Age. There are 8.8 million people aged between 50 and the State Pension Age in private households in Britain. Of these, 2.6 million – nearly 30% – are not working. And 1.4 million are claiming sickness and disability benefits.

Secondly, while life expectancy has risen across the country, it can vary considerably between more and less deprived areas. For example, in the local authority with the highest life expectancy at birth, namely Kensington and Chelsea, average male life expectancy is 11.5 years higher than in the local authority with the lowest, Glasgow.

And thirdly, flexibility is key. A recent research study has found that for 50-69 year olds, most of those in work wanted to carry on working and half of those who were retired would have worked for longer if there had been part-time or flexible work options available.

So what does this mean for pensions policy. Let me suggest a few thoughts.

Firstly, with half of those on Incapacity Benefits aged over 50, last month’s welfare reforms have a crucial role to play in meeting the pensions challenge and in helping those who can and want to work to do so. And of course, the Green Paper also included other important measures to help older workers – with an extension of New Deal 25+ to those aged 50-59; improved back-to-work support for JSA claimants and their dependent partners who are over 50; and more work with employers to extend flexible working opportunities to older workers.

Secondly, we can not look at pensions policy in isolation from wider policy on health and education. While I’m committed to looking at whether there are ways within the pensions system in which we could address inequalities in life expectancy – this would come at a cost of additional complexity and we have to ask whether the pension system could and should address these problems. There is strong evidence that differences in life expectancy are driven by differences in health and education. We’re already working towards a significant reduction in mortality rates by 2010 and a reduction of at least 10% in the gap between the fifth of areas with the lowest life expectancy at birth and the population as a whole. Tackling pensioner poverty today has been our top priority. Tackling it tomorrow – means that pension reform can not be conducted in isolation from whatever measures are necessary to address inequality in life expectancy.

Thirdly – and finally – we need to do all we can to ensure greater flexibility. The 2004 Pensions Act is helping to achieve this flexibility with more generous options for delaying taking up the State Pension and the tax change coming in this April will allow people to take up their occupational pension while continuing to work for the same employer.

These measures combined with the age discrimination legislation I mentioned earlier, will give employees greater flexibility to plan a gradual move from full-time work to retirement. But we can and should look at whether there are other ways to increase this flexibility further. For example, looking at whether there are workable ways to make State Pension Deferral more flexible such as the Pensions Commission proposal to allow people the option of deferring some of their State Pension rather than all of it.

My view is that some increase in the State Pension Age from 2020 is now inevitable. But any rise will only be acceptable to people if it comes as part of a package to improve pension provision in other key areas that Lord Turner’s report addresses. And we must keep in mind that the State Pension Age is a fairly blunt tool for changing effective retirement ages. It can only be one part of the policy response. It needs to be accompanied by tailored support to help people back into work; by greater flexibility to help people plan a gradual move that breaks the cliff-edge between work and retirement. And it can not be considered in isolation from our health and education policies which must support our welfare priorities of tackling poverty and eliminating disadvantage.

Ultimately, increasing the effective retirement age can only be achieved when it is underpinned by a broad consensus about whatever long term pensions settlement we need for the future. One that meets our goals of promoting greater personal saving as well as reducing financial hardship in retirement.

Public attitudes are absolutely crucial – but they must be shaped by the reality of the challenges we face. Any change needs to be seen less as an imposition that forces people to change their behaviour and more as a reflection of the new expectations of individuals and communities in a changing society.

That’s why we are having this National Pensions Debate. I look forward to hearing your thoughts this morning and over the coming weeks. Together we can build that enduring consensus and ensure that we take the right long-term decisions to deliver a lasting pensions settlement for our children and grandchildren – and for the generations to come.

Below is the text of the speech made by John Hutton, the then Work and Pensions Secretary, to the Foreign Policy Centre on 14th February 2006.

The Foreign Policy Centre has established itself at the leading edge of the debate on the future of Europe – so it’s very fitting that they should be hosting this event.

The EU is a union of values, of solidarity between nations and people. It’s a common market in which we trade – but it’s also a common political space in which we live together as citizens.

After the destruction of two World Wars, Europe has enjoyed 60 years of peace, prosperity and progress. A remarkable achievement and one of which it should be justifiably proud. Throughout this – reconstruction and economic growth have gone hand-in-hand with a strong and caring social dimension. And rightly so.

Economic growth and social justice are mutually reinforcing. A fair society and a strong economy are not opposites but outcomes that are inextricably linked together.

But today demographic change and globalisation present Europe with new social and economic challenges.

Rapid demographic change – fuelled by modern advances in healthcare and rising life expectancy – means that the demands on the EU’s welfare systems will be greater than ever before. All of this at a time when the number of people of working age able to support the dependent population will continue to decline.

Over the first 50 years of the 21st Century the dependency ratio in the old EU15 will nearly double – while the average increase in public expenditure on pensions will be 30%. And similar trends will apply to the now enlarged EU25.

Indeed, over the next 25 years the working age population of the EU will fall by 7% while the population aged 65 and over will increase by over 50%. And it is not just our society that is changing. Our economies are changing too.

Globalisation is irrevocably changing the international marketplace. World trade in goods is doubling every decade – and China’s exports to Europe doubling every three years. Twenty years ago just 10% of manufactured goods came from developing and emerging countries – by 2020 it will be 50%.

China’s growth has averaged 9.5% over the past two decades and its wage costs are still just 5% of those of the European Union. But we are not simply competing in low skilled low wage mass production manufacturing.

India’s biotechnology sector will increase fivefold in just the next five years. And China has trebled its spending on research and development in the last five. With 4 million graduates a year from China’s and India’s universities – global competition means high skilled, value added goods too.

Europe’s future success will therefore hinge on its ability to develop policies and institutions that embrace this change, but which are also underpinned by the enduring values that have shaped the union.

We used the UK’s Presidency of the EU last year –to stress that we had to move beyond the old arguments that you were either in favour of the Social Model in its entirety or against it altogether. These were false choices that had bedevilled the debate about the future of the EU.

When European Heads of State met at Hampton Court they agreed that Europe must reform and modernise its policies in order to preserve its values.

And it is only by remarrying these values of our Social Europe with the economic realities of the modern world that we can achieve a modern knowledge-based economy. One that’s underpinned by greater social inclusion – so that the poorest do not once again lose out in the face of social and economic change.

The Lisbon Agenda was launched in 2000 with the 10 year objective of “making Europe the most competitive place to do business in the world.” At its heart was an employment target of 70%. Its achievement will be critical – for individuals; for families and communities; for wealth creation; for economic competitiveness and social justice; for both the Social and the Economic Europe.

But at 63.3%, the EU employment rate increased only half a per cent in the first five years of the Lisbon timeframe. And with 18 million Europeans unemployed and one in every three of working age deemed economically inactive – Europe must reform and reform quickly.

To turn this around, in a climate of ever greater global competition, I believe that Europe needs to address three critical issues. First – improving the skills of its workforce; Second being more supportive to entrepreneurship and innovation as the engines of growth in a global market; and third, achieving greater flexibility – stripping away unnecessary centrist regulation and enabling member states to adopt tailored flexible welfare policies that focus on the specific needs of individuals and which provide the kind of security that enables active inclusion, with work for those who can and security for those who can’t.

I’d like to say just a few words about each.

Firstly skills.

Employment is the key to social protection. But skills are the way to unlock social progression.

In today’s labour market the acquisition and updating of skills are the absolute essential pre-requisites for success.

Skills drive economic growth by improving both productivity and employment. They determine our capacity to innovate and they hold the key to reducing social disparities.

By 2015, China is likely to have become the third largest economy in the world –contributing nearly a fifth of global output. In order to maintain and improve its growth, Europe will need to manage the resulting structural change effectively, allowing workers to shift to more productive and profitable sectors.

Higher skills levels are essential to achieve this overall shift to a modern knowledge-based economy. Here in the UK, it is already estimated that by 2012 over two-thirds of all new jobs will require qualifications at or above level 3.

Most occupations already require higher levels of skills than in the past. Once, IT skills were a specialism – today they are increasingly a core requirement for many jobs.

It means there’s a high premium on transferable skills – the tools that will, for example, enable people to respond to new opportunities by changing career mid-way through their life.

But even if we achieve this shift in skills – Europe can not sit back. Global competition is not going to be a race to the bottom – far from it. India now produces more science graduates than Europe. And only yesterday, the front page of the Financial Times reported the Chancellor of Oxford University planning the first of several recruitment drives to India and China.

So to compete in the global market-place and harness the opportunities that this presents – Europe must build a world class skills base. But skills, while essential, will not be enough on their own. We must also create the right conditions for innovation and entrepreneurship.

India and China are crucibles of innovation – unconstrained by legacy practices and able to introduce new technologies and systems relatively easily.

China has already established itself as a pre-eminent manufacturer of standards based products. And with, for example, the EVD (Enhanced Versatile Disc) as a potential successor to the DVD, China is driving standards and innovation in a highly skilled technology market.

It’s also drawing in global capital with over $1.2 billion invested into Chinese ventures in 2004. 11% of today’s world stock of foreign direct investment is now located in China. Venture capital and private equity firms are helping Chinese enterprises tap into innovative practices, global commercial and capital markets.

But whereas much of China’s success has been driven by foreign direct investment – India has focused on providing a more nurturing environment for its own home-grown entrepreneurs.

In contrast to China, India has begun to back away from micro-managing its economy – ceding its monopoly over long-distance phone services for example, cutting some tariffs and opening a number of industries to private investment, including investment from abroad.

As a consequence, entrepreneurship and free enterprise are flourishing. In a recent survey of leading Asian companies, India registered a higher average score than any other country in the region, including China.

If Europe is to renew itself in this age of global competition, we too must nurture the spirit of entrepreneurship from the classroom to the boardroom. We must support innovation with investment in science and infrastructure; and provide the right incentives to make Europe a centre of excellence for research and development.

Europe needs a dynamic and competitive economy based on open markets. The EU must combine the economic strength of the Member States in a single open European market for the benefit of all of us – to allow us to trade freely with each other – and to ensure the European business is well placed to compete in the rest of the world.

So it is by embracing global market forces and product market competition that we can combine economic efficiency with the delivery of our social justice goals. But here too, flexibility is going to be key.

For all China’s rapid growth it is still in the process of freeing itself from substantial legal and regulatory constraints. It was only at the turn of the century that domestic companies were finally granted the same constitutional protections that foreign businesses have enjoyed since the early 1980s.

Currently, although there are already over 60 foreign banks operating in China, they only hold 1.4% of banking assets. Next year, the financial sector will be opened to the full participation of foreign banks.

China will need to manage its own transition as it moves towards greater liberalisation. To manage the transition of workers from state-owned companies in a flexible labour market where there are almost no restrictions on hiring and firing and no major mandatory benefits. And to manage an urban-rural divide that sees for example, per capita GDP in Shanghai at roughly eight times that of some of the provinces.

As China develops greater flexibility – Europe must be careful not to move in the opposite direction.

More than 50% of significant new regulations that impact on UK business now emanate from the EU. Too often in the past, I think the EU has given the impression of regulating first and asking about the impact later. Better regulation does not mean dismantling social standards or cutting health and safety in the workplace. It does mean finding more effective ways to deliver those standards so that they do not place unnecessary burdens on business. So that they don’t drag as an anchor on innovation and productivity.

In all of these areas there has been some progress, with important steps forward during the UK Presidency, when – as Chancellor of the Duchy of Lancaster – I had the pleasure of being the Minister charged with overseeing the better regulation drive. The European Commission under the leadership of President Barosso has shown a genuine determination to change the regulatory culture in Europe, with the decision announced in September to withdraw 68 legislative proposals under its broader initiative to cut red tape. And last October a new Communication on Simplification, repealing, codifying, recasting or modifying up to 1400 legal Acts – a clear signal of intent.

But we shouldn’t pretend that we are there yet – in truth, we’ve got a very long way still to go. We must do more to modernise our internal institutions. To have the confidence to remove unnecessary regulation, to peel back bureaucracy and champion a global, outward-looking, competitive Europe.

But above all, a modern flexible welfare state is crucial in progressing economic reform in Europe.

A Government’s duty to its citizens used to be seen as compensating them through state hand-outs – to lift their incomes above a poverty level. That was perhaps the original deal between Government and individuals – and at the time, a major social advance. Government offered blanket benefit payments to those out of work. There was an understanding and an expectation that those unemployed would try to get back to work but there was limited support or incentives to do so. We must carry on providing this support – but we need to go very much further.

Since 1997, through record investment in the New Deal and Jobcentre Plus – the Labour Government has sought to move the welfare state here in Britain from a passive one-size fits all model to a more pro-active service which tailors support more to the specific needs of each individual.

We have sought to open the door to greater social mobility. Through the National Minimum Wage and tax credits, we created clear incentives to work by making work pay. And by creating an active, enabling welfare state that matched rights with responsibilities, we offered people the opportunity to help lift themselves out of poverty for good, rather than merely trying to ameliorate their condition from within the benefits system.

There are now 2.3 million more people in work; 1 million fewer people on benefits. And 2 million children and almost 2 million pensioners have been helped to escape from living on the poverty line.

The flexibility which has underpinned this approach is central to the reforms of Incapacity Benefit set out in last month’s Green Paper. As well as benefit reform, this included a more flexible tailored approached to welfare delivery – focused on harnessing the resources and expertise of the public, private and voluntary sectors in waging a war on the now remaining pockets of deprivation – areas of the country heavily correlated with the largest numbers on benefit.

Across the EU, each Member State is unique – with its own traditions, institutions and practices. But all are underpinned by shared values – solidarity, mutuality and the ambition to allow everyone to develop their true potential and make their full contribution to society.

We must all find our own way to make this transition in welfare support from the original State benefit hand-out to this new flexible approach where communities are empowered to develop local solutions to address the impact of global change on their own local areas.

But in the years ahead all the nations of Europe must ensure that rights-based and equality-driven European laws and directives do not impede this flexibility needed to achieve our social justice goals.

Too often in the past, Europe has seen labour market flexibility as being somehow the enemy of social justice. It is not.

Modern social policy is not about regulation and job protection in a way that may save some jobs today at the expense of many jobs tomorrow.

Today flexibility can promote a progressive agenda. It can provide the means by which people move between jobs rather than into unemployment or inactivity. It provides the mechanism by which people can receive tailored help to acquire new skills as the fastest route back into employment. And it can provide the opportunity for new and previously excluded groups to enter the workplace and make their full contribution to society.

Today’s labour market – with its flexible hours and part-time options means that working mothers and single parents can now find a way to work whilst meeting their family commitments. Europe must have the resilience not to be tempted into shaping, for example, a Working Time Directive around the old outdated stereotypes of white, male industrial workers. Removing the opt-out would be a truly regressive step. An old-style inflexible policy, stifling opportunity and widening social injustice rather than tackling it.

And we neither should we be fooled into thinking that an inflexible Working Time Directive is about ensuring safety in the workplace. Because if that were true, you would expect nations like Britain, which remains committed to the opt-out, to have amongst the worst health and safety records in the European Union. In fact we have the best.

Europe will be left behind if it insists on maintaining rigid labour markets and one-size-fits-all regulations. Uniformity is now the enemy of progress; Flexibility the key to achieving true equality of opportunity – enabling people to make the best of their lives by offering them tailored choices rather than imposing rigid one-size-fits-all solutions.

As in the past – a successful Economic Europe will depend on a successful Social Europe. A Europe that balances rapid change with proper support for people through the State and together in wider society. A Europe which doesn’t just provide hand-outs but a hand-up to enable people to lift themselves out of dependency and not to fall back. A Europe which invests in skills, rewards innovation and balances regulation with flexibility.

I’m an optimist – I believe we can achieve this. And in doing so, we can harness the opportunities presented to us by the advances in technology and healthcare that underpin the challenges of globalisation and demographic change. Challenges now that offer the chance not just to revive our economic performance – but actually to achieve our ultimate social policy goal; the eradication of poverty and the creation of true equality of opportunity for all citizens within the European Union.

Below is the text of the speech made by John Hutton, the then Work and Pensions Secretary, to the Scope Disability Summit on 9th March 2006.

I’m grateful to Tony and Rachel for the opportunity to join you today and I want to assure you of this government’s commitment to working with you to achieve a Britain free from disablism.

Clement Atlee’s Labour government founded the welfare state not just to protect people, but to empower them. Labour’s Alf Morris, now Lord Morris, led the first drive to change legislation and outlaw discrimination. And last year, through the Disability Discrimination Act, this Labour government completed the most far-reaching programme of disability rights legislation that any European country has so far put in place.

At every stage we have worked to push the agenda forward; to listen to you and to work with you in leading the struggle to root out discrimination and break down the barriers faced by disabled people in our society.

But for all the progress we have made; we still need to achieve a lasting step-change in attitudes towards disabled people. Where meeting the needs of disabled people is seen not as a burden but as an opportunity; where institutional disablism is seen not as an inevitable part of the culture of our country but as a fundamental barrier to our success; And where disabled people themselves must never be consigned to accepting second best but empowered and supported to achieve full equality of opportunity and genuine independence and respect within our society.

So I want to pay tribute to the work of Scope and the DRC for their excellent recent campaigns that have raised awareness to change attitudes – promoting the positive image of disabled people.

Today’s Disablism Audit shows just how important – and how real – those challenges are, despite the legislative progress we have already made.

Disabled people are more than twice as likely to have no educational qualifications as non-disabled people. They are over three times as likely to be economically inactive and when they are in work, they earn less on average than their peers. Indeed, around a third of young disabled people actually expect by age 30 to be earning less than non-disabled people of their own age.

And on the day that annual figures are released showing the extent of poverty across Britain, it is telling that disabled people are more likely to be trapped in poverty than non-disabled people; and a quarter of all children living in poverty have long-term sick or disabled parents.

We simply cannot accept these outcomes.

So this government is taking steps to tackle institutional discrimination and promote independent living – giving disabled people choice, empowerment and freedom through more joined-up and individualised service delivery.

We have set up the Office for Disability Issues to co-ordinate and drive forwards our work to deliver substantive equality for disabled people.

It will create a new national forum which will enable the views of disabled people to be heard by policymakers at the highest level; and ensure that disabled people really are at the heart of public policy – able to influence the development of policies and service delivery that will affect every aspect of their lives.

The Office for Disability Issues is also working to test practical new ways of delivering services such as through the piloting of “individual budgets”. And it will champion a genuinely “joined up” approach to delivering disability equality right across government. Because disabled people, just like everyone else, don’t divide their lives into separate silos – and we can’t properly tailor our services to meet their needs if we do.

Because it is, we believe, ultimately by tailoring support to, and empowering, individuals that we can achieve our ambition of true equality. And nowhere is this more true than in supporting people to get into work. That is why we are determined to build on the success of the New Deal, which has helped nearly a quarter of a million disabled people to find work.

We will now roll out the hugely successful Pathways to Work scheme across the entire country – so that all disabled people claiming Incapacity Benefit can benefit from extra help and support.

Over the last few years – thanks to the New Deal for Disabled People – the employment rate of disabled people has risen twice as much as for the population as a whole.

Our proposals in the Welfare Reform Green Paper are underpinned by clear principles. The development of a modern active welfare state that responds to individual need, balances rights with responsibilities and invests for the long term. That provides work for those who can but security for those who can’t.

We recognise the sensitivity and importance of getting the changes right, which is why we want to work with you to ensure that we take a fair and equitable approach.

I am grateful to those of you who have already engaged with the current consultation on our Green Paper and I strongly encourage those of you who have not yet done so to contribute your views.

But today I am going further than that – because as part of the ongoing consultation Margaret Hodge has written to Bert Massie and agreed that we will work with the DRC to develop a “prototype” disability equality impact assessment on our proposals for reform of Incapacity Benefit.

I hope very much that you will all feel able to work with Bert in contributing your expertise to this process – and helping us to ensure that when delivered, the package of support and the newly designed system meets the goals we have set for it – enabling all disabled people to fulfil their aspirations in the workplace. That is very much what we want to do.

It’s vital too that we collect evidence about the life chances of disabled people – about the extent of what we are achieving and how much more there is for us to do. That’s why the Government’s Office for Disability Issues is working with disabled people and their representative organisations on ways of measuring progress towards our goal of a fully inclusive Britain. And I expect the ODI to address this in their first Annual Report to the Prime Minister this Summer.

Because we are committed to developing, though consultation, a set of outcome-based indicators to measure progress towards our goal of achieving substantive equality for disabled people by 2025.

So let us measure our progress and let us do this systematically; let us celebrate what we have achieved and let us use that as the catalyst to go further.

Because if we work together we can achieve that step change in attitudes – so people come to view disablism as every bit as corrosive and intolerable as any other form of prejudice and discrimination.

A truly fair society of equal rights and opportunities for all is our goal. With your help, support and encouragement I believe it is a goal we can achieve.

Below is the text of the speech made by John Hutton, the then Secretary of State for Works and Pensions, to the IPPR Conference on 14th March 2006.

I’m grateful to Nick and the IPPR for giving me the opportunity to join you this morning.

The relationship between the State and the individual lies at the heart of the pensions debate. This relationship is so important because the state pension system reflects one aspect of a much wider social contract. A contract that binds our country and our communities together, based on the notion that risk should be pooled, that all should contribute according to their means, and that the there is a floor below which no person should be allowed to fall. Our ability to build a lasting pensions settlement hinges crucially on whether we can establish clear roles and clear expectations for that relationship within a rapidly changing world, and which reflects these fundamental values of solidarity and social cohesion.

If we are to meet the challenge of demographic change – where there will soon be more people over 80 than under 5; and if we are to help the 10 million people identified by the Pensions Commission as not saving enough for their retirement – then a new deal must be struck between the State and the individual.

One that gives individuals clarity over what the State will do for them and what they must do for themselves. A new deal that meets the five tests that I set out when I last spoke to the IPPR – that is fair, affordable, simple, sustainable and – above all – promotes individuals taking personal responsibility for building the income in retirement that they want and expect.

But to strike such a deal, we need to do two things.

Firstly, to achieve a step-change in public attitudes and expectations: Raising awareness of the difficult decisions and trade-offs that have to be managed; building an acceptance that choices have to be affordable, and that could mean working longer and saving more, and persuading individuals that financial prosperity in retirement simply can not be delivered exclusively by the State – that individuals themselves therefore have to step up to the challenge of taking much more personal responsibility for their own retirement planning.

Secondly, we need to get the balance right between a number of competing aims for the role the State does play. A balance that reflects the newly emerging public consensus – both in terms of what people now demand from the State and what this new deal requires of them – whether as individuals, employers or financial partners.

This is why we’re having a National Pensions Debate. It is precisely because we want to raise this awareness among members of the public; to allow them to see and understand the challenges we face; and to allow us to listen to their views on the most sensible way to proceed.

The Government welcomed the broad framework of the Pensions Commission proposals and options. The idea of a stronger State Pension funded by some increase in the state pension age and acting as a platform on which to build a radical expansion in personal saving through access to new and low cost savings options – is absolutely the right basis for the debate. It defines the 2 key roles of the State in this new deal with the individual. Firstly as a provider – funding a minimum income below which no-one is allowed to fall and providing a proper platform on which to build private savings. And secondly, as an enabler – offering the right incentives and regulatory framework for encouraging and supporting an expansion of personal savings.

The choices we make on pensions reform will ultimately depend on our objectives.

Lord Turner himself judged that an evolutionary two-tier state pension system was preferable to adopting a single-tier approach such as the citizen’s pension. The citizen’s pension would involve spending large amounts of extra money on helping better off pensioners rather than poorer pensioners, so while it offers greater simplicity more quickly – it does so at the cost of helping better off pensioners instead of others. And it also destroys completely the contributory principle – the concept of something for something – while carrying significant implications for the crucial test of affordability.

And even with an increase in the State Pension Age from 2020, which I believe is inevitable, affordability still remains the critical test both for the period from 2010 to 2020 and in the longer term.

Many of this Government’s reforms to date have focussed on fairness for current pensioners and in particular, on tackling the serious issue of pensioner poverty which we inherited in 1997. The Pension Credit has played a crucial role in helping to lift over 2 million pensioners of out abject poverty – and as last week’s statistics show, we’ve achieved a 15% fall in relative poverty in the last year alone.

Two-thirds of those helped by Pension Credit have been women – many of whom have suffered from incomplete contribution records or been prevented entirely from being able to build up a state pension in their own right. Indeed, among tomorrow’s pensioners, women account for around 60% of those who are not accruing any State Pension in their own right.

And there’s another critical group of women – currently aged around 45 and over – who are less likely than their younger peers to have benefited fully from Home Responsibilities Protection or to have benefited from increased participation in the labour market.

The need to achieve better outcomes for women was one of the objectives that led the Pensions Commission to suggest a residency basis for future accruals of the Basic State Pension from 2010.

The current system is projected to result in around half of women retiring with a full Basic State Pension in 2010. But implementing a residency based approach for accruals from 2010 will offer virtually no immediate help to that core group aged 45 and over, who tend to have poor contribution records and do not now have time to put this right.

After 15 years, in 2025, when even today’s current system is projected to offer a full Basic State Pension to around 80% of newly retiring women, the residency based approach only improves this to around 85%. And with a full 45-years before it matures into a virtually universal Basic State Pension, that critical group of women aged 45 and over are almost completely missed.

I believe we should therefore be looking at how we can develop a new contributory principle that gives women a fairer entitlement to the Basic State Pension more quickly – ensuring that we value social contributions equally with cash contributions and move progressively away from a system predicated on a 19th century view of both working lives and social relationships.

In fact, as modern lives become increasingly more diverse – and men and women alike spend time bringing up children and caring for family and friends – we are not just talking about redressing the balance for women affected by the unfairness of the system in the past – we are talking about reforms that could actually reverse what is now a projected decline in men’s entitlement. This could be a classic win win for both men and women alike.

Finding a way to extend coverage of the state pension of course goes hand-in-hand with wider coverage of private pension saving – and the role of the State in enabling more people to both take more responsibility and make more provision for their own retirement.

This means Government providing the right framework to support an increase in private saving. It means getting the right incentives to save, appropriate regulation and protection of those savings; and ensuring access to low cost savings vehicles such as the National Pension Savings Scheme suggested by Lord Turner.

Finding the right approach to achieve a personalised, flexible tool that can enable people to save at low cost, is I believe a key part of any long-term pension solution – and crucial for individuals and families to take personal responsibility for their retirement planning.

Lord Turner’s scheme still remains the one to beat – but the question of whether to compel employers to contribute is a finely balanced one – especially when considering the potential impact on small businesses.

What is clear is that the role of the State as an enabler and its role as a provider are inextricably linked. Reforms to the state pension scheme, must provide a clear foundation on which people can save with confidence. And they must therefore by definition, seek to halt the otherwise inevitable spread of means testing.

As research from the National Institute for Social and Economic Research commissioned by my Department makes clear, means-testing has played an important role in improving outcomes for today’s pensioners – and I believe the Pension Credit will rightly be an important part of any future pensions settlement.

That same research also showed that for middle-income households means-testing could be a disincentive to save and that allowing Pension Credit to extend further up the income distribution was not expected to generate any further benefits from work or saving.

We want future generations to aspire to saving for retirement incomes above the level of means-testing and that means giving people confidence that they are not going to have savings unfairly clawed back through means-tested benefits.

As well as a clear platform on which to build, the State must act in a way that gives people the confidence to save.

Our responsibility must be to set the right regulatory framework. That is what the Pension Protection Fund and the new Pensions Regulator can offer. And with the Financial Assistance Scheme we have been able to offer help to some of those who have lost out the most in the past – while the Pension Credit has, of course, also ensured a minimum income floor.

But I know from the recent meetings I have had with people who have lost much of their pension when their defined benefit pension scheme wound up under funded, that they believe they have been robbed of their pensions. And I completely understand that feeling of injustice.

So while we should always be prepared to look at how we can help people trapped in this situation, we must be clear that taxpayers cannot guarantee the value of occupational pensions on behalf of employers. That would take away the responsibility from employers – where it properly lies.

And pension forecasts are an important tool to help with this. Since their launch in October 2001, nearly 6 million combined pension forecasts have now been issued showing a State Pension forecast alongside information on private pension savings. Quantitative research is showing that these forecasts can and do influence people’s savings behaviour – and I’m very keen that a much more widespread and regular provision of forecasts should be an integral part of any long-term pensions settlement.

Ultimately, delivering this new deal between the State and the individual – requires us to achieve consensus on a lasting settlement. It requires us to deliver an integrated long-term State package that explicitly links state pension reforms and incentives to encourage more private savings. And it requires us to achieve that shift in public attitudes so that the changes we make are seen not as personal intrusion into individual lifestyles – but that instead, genuinely reflect the new expectations of individuals and communities in a changing society.

One of the reasons why, for many decades, the UK has not fulfilled its social, cultural and economic potential, is because too often Governments of all colours have been tempted by the short-termist quick fix. It is all too easy for politicians to avoid the challenges of long term reform. But one of the hallmarks of this New Labour Government has been our explicit determination to take decisions that are in the long-term interests of the country. Whether giving the Bank of England independence to set interest rates or setting child poverty reduction targets that stretch over decades not just years, and sticking to them however difficult and challenging they are to meet. This Government has shown itself able to put the collective long-term vision above short-term political gain.

Pensions is perhaps now the most important test of our resolve to continue in this vein. To create that national consensus; achieve that step-change in public attitudes; and deliver a new deal between the individual and the state.

I believe it is right for our economy and for our society that we meet this challenge of long-term reform,. We have always made the argument that a economic efficiency and social justice go hand in hand. That you cannot have one without the other. Establishing a new national consensus on pensions reform will be one of the greatest challenges we face in our third term in office. If we are clear about our values and what we want to achieve, then we can lay these new foundations on which successive generations can plan for their future.

Below is the text of the speech made by John Hutton, the then Secretary of State for Work and Pensions, to the DWP City Strategies Conference on 9th May 2006.

Thanks for coming here today – and to Dave (Simmonds) from Inclusion and the Local Government Association for hosting this conference with us.

When we launched our Welfare Reform Green Paper in January most of the attention focussed on our proposed reforms to incapacity benefit. The replacement of Incapacity Benefit with a new Employment and Support Allowance will, of course, be a crucial step towards modernising the benefit system.

But the Welfare Reform Green Paper was about more than changes to individual benefits. At its heart was the vision of a modern active devolved welfare state, based on a new contract between the State and the individual. A contract that extends support and opportunity in exchange for engagement and responsibility. A contract that lifts the summit of our ambition beyond simply getting people back into work to one that seeks to sustain their careers and progress up the job ladder. And a new contract between State and communities to share the challenge of tackling worklessness and poverty in Britain. This is why the new City Strategy is so important.

We have set an aspiration of an 80% employment rate. It is at the heart of our response to the growing global challenges of social, economic and demographic change.

The measures we proposed in the Green Paper will make a significant contribution to this aspiration – reducing the numbers on incapacity benefit by one million; and getting one million older workers and 300,000 extra lone parents into work.

But as we said in the Green Paper, a modern welfare state also means modern forms of welfare delivery. Delivery that’s effective, accessible and flexible.

In the few months that I have been in this job, I have been struck by scale of the challenge that we now face to renew our welfare delivery system to meet the conditions of the modern economy. Despite the success of the economy and the progress that we have made in improving employment rates across the country, there are still significant pockets of worklessness that blight the prospect of individuals and communities.

When I think about the challenge of getting a million individuals off incapacity benefit, I think about the need to construct a welfare delivery system that is able to adjust to the needs of a million individuals. Each with their own stories and challenges. Each with their own needs. I very much hope that the Welfare Reform Green Paper can be a catalyst for a wide ranging debate about how we can modernise delivery so that it is able to respond to the needs of millions of individuals. I hope that our City Strategies will be a practical expression of that ambition.

Tailored support to tackle worklessness is unlikely to be compatible with a bureaucratic, top down, statist model. Instead, it needs an enabling state – one that empowers local institutions to develop local solutions; one that gives local stakeholders the freedom to innovate and the flexibility to work together combining and aligning their efforts behind shared priorities; and one that mobilises the resources not just of the public sector, but of the private and voluntary sectors as well – in a new drive to extend opportunity and prosperity.

This I hope is the shared vision and ambition that brings us here today.

Today there are more people in work than ever before – with some 2.4 million more than in 1997 and the biggest increases in the neighbourhoods and cities that started in the poorest position. And we’ve lifted 2.4 million out of relative poverty – including 800,000 children.

But we must now go further in breaking the cycle of deprivation and tackling the remaining barriers that trap people in pockets of worklessness – areas of poverty that are especially prevalent in some of our major towns and cities.

The UK has a relatively small number of areas with an employment rate below the EU average – but nearly all of these are in major cities.

15 of the 20 local authorities with the lowest employment rates are in cities. Nearly one-fifth of the working age population in Glasgow, Manchester and Liverpool are on benefits as either lone parents or incapacity benefit recipients. And, in total, our cities account for almost two-thirds of all those on benefits.

Take London, for example. It is the wealthiest city in Europe; productivity 25% higher than the rest of the UK; and a quarter of the workforce educated to degree level. And yet London now has the highest level of worklessness – and the highest level of child poverty in mainland UK. Nearly half of children in inner London are poor. We can and must improve on this.

We know that worklessness causes poverty. And the clear link between benefit dependency and poverty is shown by the simple fact that half of the most severe pockets of deprivation in the country are contained within the hundred parliamentary constituencies with the highest number of incapacity benefit claimants.

If we were to increase the employment rate for London merely to the current national average – over a quarter of a million more Londoners would be in work. And if we were to do the same for the 20 biggest cities in the UK – again just increasing their employment rates to the current national average – we’d see over half a million more people in work – helping themselves, their families and their local economies.

We know what a difference local initiatives and local solutions can make. The Welfare to Work forum in Glasgow, for example – a private sector led initiative working in partnership with Jobcentre Plus, the Scottish Executive, the City Council and other public sector bodies – has set ambitious targets to reduce the numbers claiming out-of-work benefits by 15,000 by 2007 and 30,000 by 2010. By the end last year they had already reduced benefit dependency by 11,000 – with around 3000 of those having been on incapacity benefit. It has been a huge success story.

Manchester City Council are already aligning £1.75m per annum of Neighbourhood Renewal Fund money to fund a Stepping Stones Project that has helped more than 1000 people on Incapacity Benefit get back to work – by bringing together the support of Jobcentre Plus, Manchester City Council and The Employment and Regeneration Partnership.

And in Edinburgh, the Capital City Partnership and the Joined up for Jobs Strategy launched in 2002 has seen a hugely successful move towards the development of demand led programmes, better aligned funding, and a delivery model which can help the most disadvantaged get into work. One of many achievements from this project has been to bring all of the city’s blackspots to within 5% of the city employment rate of 75.5%.

Across the country we see the difference that local solutions can make. But we also see the barriers to those solutions – whether it is a lack of flexibility in the system or complexity around funding and accessing different pots of money.

In London, for example, there are well over 70 different funding streams all designed to tackle worklessness and promote regeneration.

The City Strategy is about pooling these resources and creating new flexibilities for local partners to work together within a community to improve economic regeneration through skills, employment and health. A consortium of local partners using new seed-corn funding and new flexibilities to show how they would deliver real improvements in the proportion of local people in work in their local areas.

We have high ambitions for this initiative; we want to push the boundaries of flexibility and devolution and to do so in a way that best meets the needs of individual towns and cities.

We’re asking towns and cities to submit expressions of interest which identify the key players in the consortium; the key groups that will be targeted for help; the ways the consortium will make better use of existing resources and improve outcomes for the target group; the barriers faced and flexibilities needed to overcome these barriers; and how they will measure progress towards stretching outcome targets.

We’ll be asking for expressions of interest in particular from towns and cities with the highest numbers out of work. Those who have already built a business case as part of the New Deal for Towns and Cities will just be able to use or adapt this business case. I want the process to be as simple and clear as possible.

The Welfare Reform Green Paper Consultation highlighted the importance of minimising the burden on resources needed at the initial selection stage – we have listened to these views and that is why we have avoided a more complex bidding approach. And we’ll be issuing clear light touch guidance very shortly.

In assessing the expressions of interest, we will focus on the degree of disadvantage, the anticipated evidence-based performance improvement, the breadth and effectiveness of the proposed partnerships and the scope of innovation in using resources and overcoming barriers.

We want to focus the initial pathfinders on areas that are furthest from the national 80% employment rate aspiration – but, depending upon the success of this first round, we intend these pathfinders to be the forerunners to a wider roll-out. So areas that are not successful in the initial bidding process will be encouraged to prepare themselves for a later roll-out and, where possible, supported to take forward specific elements of their proposed initiative. This may include, for example, looking to grant additional flexibilities to overcome barriers highlighted in the expression of interest.

We intend to announce the Pathfinder areas that have been successful before the end of July. We will then work with these areas to draw-up detailed delivery plans many of which could be being implemented before the end of this year.

For these successful pathfinder areas, we will make available seed-corn funding as a flexible pot for consortia to spend as they see fit. Outcome-based funding will be then available at the end of the agreement period based on measurable achievement against agreed targets.

We’re creating a new £90 million Deprived Areas Fund which pools together money from the Action Teams, Ethnic Minority Outreach and Working Neighbourhoods Pilots that are coming to a close. This new fund will be more strongly focussed on – and give more money to – the most disadvantaged parts of the country.

It will give each District the flexibility to decide the type of support which would be most effective in meeting the needs of the local area, whilst ensuring value for money. And in City Strategy Pathfinder areas, this money will be seed-corn money over which the Consortia will have complete control and total flexibility to use.

Yesterday’s 2nd report on local Government by Sir Michael Lyons emphasised the importance of greater freedoms and the balance of power between Whitehall and local areas. Real success in tackling worklessness will demand a renewal of that balance – with more local choice to improve national prosperity.

We believe that by empowering you – local organisations and local stakeholders – we can begin the journey towards devolving aspects of the welfare state so that it is responsive to the needs of individuals and local communities. A welfare state that incentivises local partnerships to meet objectives through a new deal with Government that’s based on shared outcome targets and maximum discretion to do what it takes to make a real and sustained difference.

This I believe is the essence of modern welfare delivery. An approach that has the potential to make a radical and lasting difference in helping people off benefits and into work; in making sure that if people get jobs they are able to stay in work and not return to benefits; and in beginning to see people progress through the labour market by acquiring work-placed skills, confidence and ambition to do more.

I am under no illusion that the task of modernising our welfare system to meet these challenges, of changing the culture within Whitehall to respond to local flexibility and delivery, will be difficult. But I believe there is a growing consensus that a one-size fits all, top down solution to policy making and delivery is increasingly unsuited to the challenges we face. I will make sure that at the Department for Work and Pensions we will work with others and play our part in overcoming those challenges. Beginning a process of policy renewal that will help us to better address the endemic problem of worklessness facing many of our major towns and cities. Looking to the future. Being prepared to adapt and change. Always being prepared to develop new and better tools through which we can support local re-generation and economic development.

Many of you here today will be willing to work with us to prove this new approach can succeed. Together we can set a new direction of travel – harnessing the contributions of all those who can make a difference – whether in the public, private and voluntary sectors. And in the process, we can help improve the wealth and prosperity of Britain’s major towns and cities. Thank you.

Below is the text of the speech made by John Hutton, the then Secretary of State for Work and Pensions, to the Fabian Society on 10th May 2006.

When Tony Blair announced in the first term of this Labour government that we would seek to end child poverty in a generation he set a target that encapsulated much of our ambition and aspiration for our country and its people.

Anger about poverty and the hope that it could be eradicated has driven progressive politics from the French Revolution to the foundation of the Welfare State. Our historic mission to eradicate child poverty by 2020 reflects the roots of our social democratic movement – and articulates a path to our ultimate aim of equal life chances for all.

So I want to begin, first of all, by thanking the Fabian Life Chances Commission for their excellent work in stepping up the debate on this crucial issue, culminating in their comprehensive final report to which I am very pleased to have the opportunity to respond today.

The Commission has made a number of recommendations, about which I want to say more shortly.

But while they are rightly pushing us to do more, I also welcome the fact that the Fabians have recognised the important steps we have already taken in both setting our goal of eliminating child poverty and making real progress towards it.

We are now close to the European average for child poverty – instead of bottom as we were in 1997 – and we’ve made the biggest improvement of any EU country. There are more people in jobs than ever before: 2.4 million more than in 1997. The numbers on benefit have fallen by around 1 million. And with around two-thirds of the working age population in work, our employment rate is the highest of the G8 countries.

Today we are achieving growth with fairness. Since 1997, incomes have grown strongly for all groups but the poorer two-fifths have seen larger proportional increases in incomes than the better off.

As a result of this progress there were 800,000 fewer children in low income in 2004/05 than 1997. The proportion of children living in workless households has fallen from 18.5% to 15.9% – a reduction of nearly 370,000. And the lone parent employment rate has increased from 46% in 1997 to over 56% in Spring 2005. These are encouraging statistics. And behind each and every one of them are families and children who now have a better chance of getting on in life than they had before.

As well as increasing employment rates, we’ve targeted financial support at low-income families. Tax credits are benefiting around 6 million families and 10 million children. And by October 2006, as a result of our reforms to the tax and benefit system, families with children will be on average £1500 a year better off in real terms than in 1997, while those in the poorest fifth will be, on average £3400 per year better off.

Compare that to the legacy left by our predecessors. A passive benefit dependency culture obstructed any hope of delivering equal life chances, with millions of people on benefit and with no expectation of a return to work.

Between 1979 and 1997 the poor did not share fairly in rising national prosperity.

The largest increases in incomes were concentrated on the most well-off. Inequality in the UK rose faster and further than in any other country. And while Britain got steadily healthier as a nation, the number claiming unemployment benefits rose by 50% and the number claiming lone parent and incapacity benefits more than trebled.

And, inevitably, with benefit dependency came poverty. By the mid-to-late 1990s, the UK suffered higher child poverty than nearly all the other European nations. Over a period of 20 years, the proportion of children in relative poverty had more than doubled and by 1997, one in every three babies born in Britain was born poor.

The Conservatives now say they have signed up to our child poverty target. I welcome this. But it will take more than words to deliver on it. All of the measures we have taken to tackle child poverty have been opposed by the Tories. Tax Credits; Sure Start; The Minimum Wage; The New Deal; the list goes on and on. It’s no good willing the ends if you remain opposed to all of the means. These kind of promises are simply empty and hollow.

It is true that we ourselves have not yet gone far enough, and equally true that as we deal with each successive challenge that confronts us, fresh challenges appear on the horizon. But the hallmark of New Labour is that we are a party that is prepared to dig deep to find new responses to new situations, and we will continue to do so. Policy renewal is not an event scheduled to take place at some time in the future. It is a process underway now.

When earlier this year, despite significant progress, we fell short of our interim target to reduce the number of children in low-income households by a quarter by 2004/05, we did not go quiet or try and re-define the target to make it easier to hit. The target is the right one. It’s our delivery mechanisms that have to improve.

Our challenge is now to accelerate our progress on tackling poverty, not sit back. And we know we must be bold in embracing whatever it takes to help us achieve our goal.

Ultimately child poverty is the principal determinant of life chances. Children born into poverty are more likely to be premature, have low birth weight, die in their first year of life or from an accident in childhood.

We know that an infant who grows up in a poor family is less likely to stay on at school, or even to attend school regularly; less likely to get qualifications and go to college; more likely to be forced into the worst jobs, or no job at all; and more likely to be trapped in a lifelong cycle of deprivation that prevents them from fulfilling their potential.

Worse still – there are strong associations between youth crime, parental crime and child poverty, with children born into poverty being far more likely both to be victims of crime and to offend themselves.

So Labour’s child poverty targets are not simply about responding to the moral imperative to act, though that is clear. Allowing children to grow up in poverty means storing up long-term problems which will ultimately undermine social cohesion and social progress. We cannot have a strong society and a strong economy unless we address the problem of child poverty. That is why it is a shared objective of both DWP and the Treasury.

And it is why I am making tackling child poverty the Department’s number one priority.

In every area of policy development and delivery – across the full range of functions and responsibilities in the DWP – Ministers will be asking the question – what will be the impact on child poverty?

When we’re delivering our welfare reforms – we must be clear about how we can best help those more likely to be in poverty – such as disabled people, where over a quarter of poor children are in households with at least one disabled adult.

When we’re considering reform options for the Child Support Agency – how many children can we lift out of poverty? We know that receipt of child maintenance currently helps to lift 100,000 children out of poverty. The successful implementation the changes I announced in February could lift a further 40,000 children above the poverty line. The redesign being led by Sir David Henshaw must take us even further.

Even our reforms to pensions and savings will be important. The way in which society recognises and rewards social contributions – such as the work of carers or the contribution made by many women who have given up work to look after children – doesn’t just impact on life chances today but affects the nature of the society we create for tomorrow.

And of course, promoting financial inclusion is crucial to overcoming poverty. Increasingly inequality in asset-ownership threatens to become the social divide of the future. That’s why the Child Trust Fund is important in ensuring all children have a financial asset at age 18. And it’s why we’re looking at how we can improve our use of the Social Fund – which together with the Growth Fund – is increasing the availability of affordable credit to low-income families and helping them to build their way out of poverty.

All these policies will play an integral part in the government’s wider drive to tackle every facet of social exclusion – a drive that will be led by Hilary Armstrong in her new role in the Cabinet Office.

This Autumn, alongside our annual “Opportunity for All” progress report, the Department will be setting out its new strategy for how we can make faster progress in reaching our goal of halving child poverty by 2010. We would welcome the thoughts of all those who share our goals as part of this work. The Fabians have of course given us much food for thought already, and the Life Chances Report will help fuel the debate that we will continue over the summer in the run up to outlining our strategy for the years ahead.

In the remainder of my remarks, I want to set out the direction on which we must now focus, and comment in more detail on some of the specific recommendations of the Life Chances Commission.

The Commission recommends a number of measures related to increasing benefit levels in order to lift people out of poverty – increasing child benefit, introducing a ‘pregnancy premium’ to income support, and raising out-of-work benefits across the board.

We will always consider raising benefit levels where it is appropriate and affordable to do so. Child Benefit for the first child has increased by more than 25% in real terms since 1997. And in this year’s Budget, the Chancellor announced a commitment to increase the child element of Child Tax Credit at least in line with earnings until the end of this Parliament. This will mean an additional £200 million for families in 2008-09 – and at least as much again each year until the end of the Parliament.

But at the heart of our work going forward must be an integrated approach that makes a sustained difference to child poverty. Even increasing benefits in line with average earnings will do little to help families escape poverty, if median income is increasing at roughly the same rate.

Ultimately, to lift people clear of the poverty line and to give them the tools they need to prosper in the longer term, we need to ensure that everyone who can work has the help and support they need to do so.

This is the principle that has always underpinned the British Welfare State – from the its early days under Asquith and Lloyd George – to its full development under Clement Atlee’s Labour Government. It was conceived as an active, empowering force. The State would ensure there was a floor below which no person could fall. But the principle responsibility to do everything possible to support yourself and your family would rightly remain on the individual. Because it is, in the end, the opportunity to work that can provide the only long-term, sustainable pathway out of poverty.

That’s why New Labour’s approach to tackling child poverty hasn’t been simply about redistribution, but actually about promoting work as the best route out of poverty. It’s why we created a National Minimum Wage and tax credits to make work pay; why we’ve invested in Jobcentre Plus and the New Deal to help people find work; and maintained a strong economy that sees everyone sharing in the benefits of record economic growth.

The Commission suggested we should consider raising the top rate of tax as part of our anti-poverty drive. Matters of taxation are of course the responsibility of the Treasury. We have a progressive system of income tax. Since 1997 we have made reforms to the tax system that have increased help for those on low incomes – rightly so. But we have no plans to raise income tax in the way you have recommended. And I don’t believe it would send out the right signal to do so.

Our focus should, instead, be on doing more to get more people into work, breaking down the remaining barriers that people face in getting jobs so we can extend employment opportunity for all.

Around 40% of poor children live in lone parent households – and the majority of these are non-working. And yet we know the difference that helping lone parents into work can make. A significant proportion of our progress so far in tackling child poverty is due to helping lone parents move into work. And raising the lone parent employment rate further to our target of 70% would mean a further 200,000 children lifted out of poverty.

In the Welfare Reform Green Paper we proposed a measured increase in obligations on lone parents to come in and talk to a personal adviser about the options open to them. These proposals could lift many more children out of poverty and increase the lone parent employment even further. But we should be prepared to keep these arrangements under review, and potentially consider further support and incentives to help get more lone parents back into work – especially when by 2010 we will have the guarantee of universal wrap-around childcare in place.

But it’s not just policy change that can make a difference to employment rates – modern localised welfare delivery can transform our most disadvantaged communities.

The UK has a relatively small number of areas with an employment rate below the EU average – but nearly all of these are in major cities. 15 of the 20 local authorities with the lowest employment rates are in cities. Nearly one-fifth of the working age population in Glasgow, Manchester and Liverpool are on benefits as lone parents or incapacity benefit recipients. And, in total, our cities account for almost two-thirds of all those on benefits.

Take London, for example. The wealthiest city in Europe; productivity 25% higher than the rest of the UK; and a quarter of the workforce educated to degree level. And yet London now has the highest level of worklessness – and the highest level of child poverty in mainland UK. Nearly half of children in inner London are poor.

Yesterday I launched a new City Strategies initiative designed to tackle worklessness and poverty in our most disadvantaged towns and cities.

With the City Strategies, local partners form consortia and bid for seed-corn funding and new flexibilities by showing how they could deliver a stretching and measurable improvement in the proportion of local people in work. We’re inviting expressions of interest from the most disadvantaged towns and cities – and incentivising them to find local solutions to local problems with a deal based on shared outcome targets and maximum discretion to do whatever it takes to make a real and sustained difference.

I believe this has the potential to transform welfare delivery – pushing the boundaries of flexibility and devolution and helping us take a major stride both towards our aspiration of an 80% employment rate and the elimination of child poverty.

But getting people off benefit and into work can only be part of the answer. It is a striking fact that around half of the children living in poverty in Britain today live in a household where an adult is in work. These are largely couple families who do not work enough hours or earn enough to escape poverty. Analysis shows that at the minimum wage, typical couple families need a full-time and a part-time worker to move out of poverty.

We must never under-estimate the strain of trying to make ends meet and bring up kids alone. Yet it is clear that it can often take more for low-income couples to lift themselves out of poverty than it does for single parents.

It’s also the case that children with the very lowest incomes are more likely to be in couple families. Of children in households below 50% of median income, nearly two-thirds are in couple families.

So helping the in-work poor means that we must always be ready to look at new ways of encouraging second earners into work; continue to ensure that people will be better off in work than on benefit, and do more to improve skills and progression in the labour market.

This last point is particularly crucial when you consider that today our economy has 9 million highly skilled jobs – but by 2020 will need 14 million highly skilled workers. And whereas today we have 3.4 million unskilled jobs, it is estimated that by 2020 we will only need 600,000.

Conclusion

Ultimately, our ability to respond to the challenges of demographic and economic change hinges on the opportunities, skills and experiences of tomorrow’s workforce. And at a time when the integration of communities has perhaps never been more important – our social cohesion will depend on our social mobility.

So to eliminate child poverty by 2020 we need an effective cross Government approach – pushing forward with our reforms of public services to offer ever greater choice and flexibility to meet the specific needs of individuals; breaking the cycle of dependency and tackling discrimination and prejudice in our society.

Later this month we are publishing a research report which explores the characteristics of children from poor backgrounds who go on to escape poverty and achieve economic success as adults. It provides strong evidence for early interventions in making the biggest difference to life chances.

That means delivering accessible and high quality education, health and social care. It means improving the quality of housing and reducing the number of families living in all forms of temporary accommodation. And it means continuing to develop the provision of childcare, enabling people to balance their work and parenting responsibilities.

Our vision is of an opportunity society – enabled by a powerful new drive against the barriers that hold people back, with work at its core; targeted support for those who need it most and high quality public services that offer individuals and communities the kind of life chances that in the past have only been available to the wealthy.

Only by realising this vision can we offer every individual and every generation the opportunity and support to raise and fulfil their aspirations. But if we can do this – if we can break the cap on aspiration that traps people in poverty and unlock the door to social mobility – so we can realise the ultimate goal of our modern social democracy – an end to child poverty and equality of life chances for all.

Below is the text of the speech made by John Hutton, the then Secretary of State for Work and Pensions, to the Fabian Women’s Network on 18th May 2006.

Next week the Government will set out its proposals for reforms to our pensions system to help more people achieve greater financial security in retirement. Our White Paper will lock in the huge progress we have made since 1997 in tackling pensioner poverty, and set a new direction to meet the fresh challenges we face in the decades ahead.

A compelling case for change was set out by the Pensions Commission last November. Three challenges stand out in particular.

Firstly, we are living longer. Of course this is good news. But it also means that in future there will be fewer and fewer people in work to support people in retirement, and in our system, it is the contributions of those in work that pay for the pensions of those who have retired. By 2050 there will be 50 per cent more pensioners than today. And there will only be 2 people of working age for every pensioner – compared with 4 for every pensioner today and 10 people 100 years ago.

Secondly, we are not saving enough. The Pensions Commission themselves calculated that between 9 and 12 million people are not saving enough for their retirement.

And finally, the current system is overly complex – possibly the most complex in the world. People often find it hard to work out whether they will be better off if they save or if they don’t. And it delivers unfair outcomes, particularly for women and carers, about which I will, of course, say more shortly.

I agree with the Pensions Commission that there isn’t a pensions crisis today. But there will be one in future if we don’t take action now to address these problems. Passing on the problem to the next generation to deal with would be simply to wash our hands of the problem. We can’t do this.

Central to this Labour Government’s programme of reforms – whether for public services or the welfare state – is the idea of an enabling state: Government giving people the tools and the support they need to provide for themselves. In truth, this has always been at the heart of our concept of a welfare state. It must remain so in the future too.

Just as the introduction of National Insurance contributions sought to do at the beginning of the last century, the next stage of pension reform must also imbed the same basic principle of personal responsibility in helping future generations plan for retirement.

And in doing so these reforms must, first and foremost, help establish a new pensions savings culture where future generations can aspire to saving for retirement incomes above the level of means-testing, having confidence that they will be better off saving than relying on means tested benefits. In simple terms, the state pension package should ensure that it pays to save – that there’s something in it for both the saver and the taxpayer.

The right way ahead has already been mapped out by the Pensions Commissioners – Lord Turner, Jeannie Drake and John Hills. They recommended:

A new low-cost savings scheme to give people an effective vehicle to save for their own retirement.

A higher state pension in return for a higher pension age as a means to allow all pensioners to share in the growing prosperity of the nation, promoting personal saving by giving people confidence that this will always be worthwhile.

And a fairer system that properly rewards the contributions made by women and carers.

We said at the outset that we accepted the basic framework of the Commission’s proposals, subject to the five key tests of promoting personal responsibility, affordability, simplicity, sustainability and, crucially, fairness.

The proposals we will publish next week will address the challenges the Pensions Commission described and meet those five tests. Following the blueprint Lord Turner recommended, this Labour government will set in motion the biggest renewal of our pension system since Clement Attlee’s post war Labour Government implemented the Beveridge reforms.

Our proposals will be underpinned by a new deal for women that tackles the inequalities of a system that reflects an outdated view of family relationships, properly recognising the different ways in which people contribute to our modern society today.

It is, of course, this issue of fairness to women on which the Fabian Society, the Parliamentary Labour Party and so many of the people in this room have campaigned so effectively for years. I want to pay tribute to the work you have done and the impact you have made. You have highlighted an injustice. Now we must put it right.

Tackling inequality in our society and promoting fairness and opportunity for all lie at the heart of our Labour movement and the social democratic tradition we represent. As a Government, these values define our policy agenda and drive our vision of the future.

Since 1997 we have made important progress in tackling poverty and discrimination and in breaking down the barriers that prevent people from fulfilling their potential. From last week’s Age Positive campaign to Civil Partnerships – we’ve sought to tackle prejudice and exclusion in every segment of our society

We’ve already implemented the most far-reaching programme of disability rights legislation that any European country has put in place. And we’re breaking down barriers to work – with increased employment rates for disabled people, minority ethnic groups, lone parents and for women as a whole.

Many of our pension reforms to date have focussed on fairness for current pensioners and in particular, on tackling the damaging legacy of pensioner poverty which we inherited in 1997. The Pension Credit has played a crucial role in correcting for the policy mistakes of the Tory years – helping to lift over 2 million pensioners of out abject poverty and 1 million pensioners out of relative poverty. Today, pensioners are no more likely to be poor than anyone else – a huge turn around since we came into office.

Two-thirds of those helped by Pension Credit have been women – many of whom have suffered from incomplete contribution records or been prevented entirely from being able to build up a state pension in their own right.

When Barbara Castle first sought to get to grips with this problem in 1978, she introduced Home Responsibilities Protection. Groundbreaking in its day, it meant that for the first time the vital contribution to society made by those caring for children was recognised by being counted towards entitlement to the Basic State Pension.

And the State Second Pension, introduced in 2002, meant that for the first time some caring responsibilities were reflected not only in Basic State Pension entitlement but also in access to a Second Pension. Each year, 5.5 million women and carers are now credited in to State Second pension as if they were earning £12,500 a year.

Both Home Responsibilities Protection and the State Second Pension have helped to improve pension entitlements for both women and carers. And women aged 25 to 45 are now as likely as men to be building a State Pension record.

But among tomorrow’s pensioners, women still account for around 60% of those who are not accruing any State Pension in their own right. And many carers are still excluded by a system which does not fully accommodate the greater flexibility of modern lives.

Amongst those reaching retirement recently, around 85% of men have entitlement to a full Basic State Pension, compared with around only 30% of women – and only 24% on the basis of their own contributions.

In particular, there’s critical group of women – currently aged around 45 and over – who are less likely than their younger peers to have benefited fully from Home Responsibilities Protection and who may not have returned to – or kept in touch with – the labour market in the way younger women have.

The need to achieve better outcomes for women was one of the objectives that led the Pensions Commission to suggest a residency basis for future accruals of the Basic State Pension from 2010.

The current system is projected to result in around half of women retiring with a full Basic State Pension in 2010. But implementing a residency based approach for accruals from 2010 would offer no immediate help to that core group aged 45 and over, who tend to have poor contribution records and do not now have time to put this right. Indeed, with a full 45-years before it matures into a virtually universal Basic State Pension, the residency based approach completely misses this critical group of women now aged 45 and over.

We simply can not afford to miss this key group or indeed to wait that long. That’s why at the heart of next week’s reforms will be a new contributory principle that gives women a fairer entitlement to the Basic State Pension more quickly – while ensuring that we value social contributions equally with cash contributions and move progressively away from a system predicated on a 19th century view of both working lives and social relationships.

As with a residency approach, our approach will mean that by 2050 around 95% of women will receive a full Basic State Pension. But unlike the residency approach, we believe we can achieve better outcomes for women much sooner – such that in 2010 when the residency approach has made no impact and leaves only 50% of women retiring with a full Basic State Pension, our proposals will mean 70% entitlement to a full Basic State Pension.

And after 15 years, in 2025, when even today’s current system is projected to offer a full Basic State Pension to around 80% of newly retiring women, the residency based approach may only improve this to around 85% – while our proposals will achieve over 90%.

This means that, under our proposals, up to 270,000 more women will get a full Basic State Pension in 2020 – possibly in the region of 180,000 more than under a residence-accrual based scheme.

What’s more, by changing the system of credits to better reflect the different ways in which people contribute to society; and simplifying the system such that each and every year of contributions count towards the Basic State Pension, we will be better able to accommodate the greater flexibility of modern lives – in particular extending new recognition and state pension entitlement to many carers not currently supported by the existing system of Carer’s Allowance and Home Responsibilities Protection. And there are a range of other technical requirements that impose further obstacles in the way of women acquiring a full pension. It is right that we look again at these rules so that every year counts towards calculating entitlement.

Certain patterns of working and caring exist where – in an extreme example – a woman may be doing a combination of work and caring for 30-hours a week but not be able to accrue any State Pension. This is simply wrong – and our new contributory principle will end this injustice – finally placing cash and social contributions on an equal footing.

I think the public are behind these changes too. In a recent survey, almost four out of five people thought that carers should get the same amount of State Pension as someone who had worked all their life.

And at the National Pensions Day, the majority of people believed that paid work, voluntary work, caring for children, caring for the sick and disabled, and time spent long-term sick or disabled and unable to work should all count towards the additional State Pension.

But it’s also a contributory principle, which unlike a residence test, retains the crucial link between rights and responsibilities – that principle of something for something that defines the role of the modern welfare state. And as with our Welfare Reforms earlier this year, it makes clear the expectation that all those who can do so – should contribute to our society.

So it’s a principle which doesn’t just pass the fairness test but passes all of the five keys tests. It’s fairer and simpler, sustainable and affordable – but most crucially of all – it promotes personal responsibility.

Next week’s White Paper will strike a new balance of responsibility between the employer, the State and the individual. It will continue to protect the poorest pensioners from poverty and ensure that all pensioners share in the growing wealth of society. But it will also equip each and every individual – male or female – with the tools they need to save adequately for their retirement; recognising and rewarding the contributions they make to society and helping them to build the retirement income that they want and expect.

I hope our proposals will form the basis of a new consensus on a long-term solution to how we provide an effective pensions system in our country. A consensus that has been shaped by all that we have learnt from both the Turner Report and the National Pensions Debate – the final report of which we will publish early next week. And a consensus which puts fair outcomes for women at its core.

Fair outcomes for women is the measure of our intention – and we are happy to measure our progress towards this goal. Our Women and Pensions Report last November assessed the challenge we face – now we will go one step further and assess the impact of our policies in meeting this challenge.

But it is true that we will only truly eliminate inequality in retirement – when we also eliminate inequality in working life. That’s why we must also continue to build on the progress we’ve made in supporting women in the workplace through the National Minimum Wage and our investment in delivering universal wrap-around childcare by 2010.

We’ve already reached the highest female employment rate of the major EU countries but women in full-time work still earn on average 13% less than men. Until we have eliminated that gap in pay, income and assets and broken the glass-ceiling for progression through working life, we won’t fully eliminate the inequalities that lead to only 38% of today’s working-age women contributing to a private pension compared with 46% of working-age men. And which see women who do save for a private pension contributing significantly less on average than their male counterparts.

The Equal Opportunities Commission once said – “if we get it right for women, we’ll get it right for everyone”

We’ll only get it right for women when we’ve got it right in working life and retirement. But I truly hope and believe that with next week’s pensions reforms we’ll not only achieve the basis for a new lasting pensions settlement – but in doing so move a great deal closer to our goal of true equality and opportunity for all women.

Thank you.