HC Deb 27 January 1969 vol 776 cc912-5
5. Mr. Tapsell

asked the Secretary of State for Social Services what is the loss in value in real terms of the National Insurance retirement pension since it was last increased.

34. Mr. Edward M. Taylor

asked the Secretary of State for Social Services what has been the reduction in the purchasing power of the £4 10s. pension since it was fixed at that weekly rate.

Mr. Swingler

Measured by the Index of Retail Prices, the purchasing power of the retirement pension which has been considerably improved since this Government look office has, since its last increase in 1967, diminished by rather less than 7 per cent.

Mr. Tapsell

How is that Answer to be reconciled with the Prime Minister's promise that the most vulnerable sections of the community would be safeguarded against the effects of devaluation?

Mr. Swingler

It depends upon the periods at which the reviews take place. The Prime Minister made that promise, and I would stress that the present level of the pension is still considerably above the level, in terms of its real value, in October, 1964. This change in the cost of living will be taken into account when the next review takes place.

Mr. Edward M. Taylor

Has not the hon. Gentleman read the report of the Cost of Living Advisory Committee, which shows that the basic prices paid by pensioners were increasing faster than the average rise in the cost of living index? Bearing in mind that on the right hon. Gentleman's own figures there has been a fall of 6s., was it on a different basis from the pensioners' budget, on the figures given in this report?

Mr. Swingler

The hon. Gentleman will know that a further report is coming out on this subject. My hon. Friend the Under-Secretary for Employment and Productivity has promised to bring this out, and we: shall take this into account in assessing what shall be done about pensions in the next review.

Mr. Rankin

Does not my right hon. Friend agree that nearly all the claims for increased wages today are based on the fact that the cost of living—and particularly the cost of food—is continually rising? As these claims are accepted in many cases, why are pensions not increased in order to meet what is accepted as the continuing rise in the price of food?

Mr. Swingler

This factor will be taken into account. It depends at what periods the pensions are reviewed. They will be reviewed again shortly. In spite of the fact that their real value today is higher than it was four years ago, they will be reviewed and this rise in the cost of living will be taken into account.

Lord Balniel

The right hon. Gentleman seems complacent. In considering the burden of rising costs on pensioners will he also take into account the fact that in the first four years of this Government the real value of pensions has been increased by 14 per cent. whereas in the last four years of the former Conservative Government the real purchasing power of the pension was increased by 19 per cent.? Could elderly people have expected this deterioration in their interests from the speeches delivered by the Government spokesman at the last election?

Mr. Swingler

I should make it plain that the increase of 14 per cent. is an increase in real value of the pension as left by the Tory Administration. That is the position about which we are talking. Nothing that I have said is complacent. The real value of the pension is higher. Though we recognise that the cost of living has been rising, we cannot deal with this matter from month to month. We shall deal with it in the next review.

6. Mr. Tapsell

asked the Secretary of State for Social Services what is the current actuarial value of the National Insurance pension for someone who had paid contributions for 20 years, excluding the Exchequer subsidy.

Mr. Swingler

This depends on various assumptions, including the interest rate assumed, and, in the case of pension for a married couple, on the age of the wife. Assuming, for example, a rate of interest of 5 per cent. the contributions paid for retirement pension over the last 20 years by a man and his employer might provide a weekly pension of £2 3s. 0d. for a single man aged 65 and £1 14s. 0d. for a married couple where the man is 65 and his wife is 60.

Mr. Tapsell

On what basis of equity does the Government continue to refuse to pay to people over 80 the difference between the actuarial value of the pension and the current level of benefits? Will the Minister undertake to support my hon. Friend the Member for Farnham (Mr. Maurice Macmillan) when he introduces a Bill to remedy this situation?

Mr. Swingler

I am not sure whether I understand the hon. Gentleman aright. The basic point is that this is a contributory scheme, and the Fund is based on contributions from employers and employees, with a supplement from the Exchequer. Those who have not been in the contributory scheme cannot draw a contributory pension. That is precisely why we have established the supplementary benefits system—in order that those people shall be entitled to something from the Supplementary Benefits Commission.

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