HC Deb 12 December 1972 vol 848 cc206-8
1. Mr. Molloy

asked the Secretary of State for Social Services if he will seek powers to make a bonus payment to pensioners on the introduction of value added tax.

The Secretary of State for Social Services (Sir Keith Joseph)

No, Sir. As my right hon. Friend the Chancellor of the Exchequer made clear in the debate on 5th December, the introduction of value added tax is unlikely to lead to any significant overall increase in the prices of goods which pensioners buy.

Mr. Molloy

Is the right hon. Gentleman aware that for him that is a very unimaginative reply? Is he aware of the disturbing VAT exposé which appeared recently in The Sunday Times? Is he aware that both the Chancellor of the Exchequer and The Chief Secretary have made contradicting statements? The Chancellor has said that for income tax and surtax payers the unification of tax codes will ease VAT. The Chief Secretary has said that there will be hardly any increase whatsoever, yet warns traders about increasing prices. Are we heading for price chaos? Does the right hon. Gentleman understand that he will gain the approval of the House and the country if he safeguards the pensioners and makes the right provisions?

Sir K. Joseph

I am sure that the House would object if I used my imagination rather than facts in answering hon. Members' Questions. The fact is that food, fares, fuel and housing, which dominate the budget of pensioners, are all tax-exempt under VAT.

Mr. Trew

Can my right hon. Friend recall whether any bonus was paid to pensioners by the previous Labour Government on the introduction of SET, which, unlike VAT, entered into the cost of all foods?

Sir K. Joseph

That is an imaginative and also a factual comment.

Mrs. Castle

With regard to the Christmas bonus now in payment, has the right hon. Gentleman seen the report in The Times today to the effect that a number of pensioners who happened to be working—perhaps on casual work—the week before the bonus was payable have lost the bonus? Is not that a very brutal operation of the earnings rule? Will the right hon. Gentleman please have the matter rectified?

Sir K. Joseph

I have seen the case to which the right hon. Lady refers. It was explained to the House that in order to make the payment before Christmas we had to have a rough and ready arrangement—a mechanism by which the Post Office could recognise without error the people who were entitled. For that reason we had to choose those who were entitled to a pension on the week in question. Those who had earnings—and most of them are regular earnings, although not all—disentitled themselves to a pension. For that very small number, that is one of the consequences of making the payment so quickly.

22. Mr. Eadie

asked the Secretary of State for Social Services what are his specific plans to protect pensioners in order to maintain the value of their pension after entry into the Common Market; and if he will make a statement.

Sir K. Joseph

The Government have introduced an annual review of pensions and other benefits and have undertaken to ensure that at the least their purchasing power will be maintained.

Mr. Eadie

The right hon. Gentleman has not answered my Question, which asked him to make a statement to assure pensioners that the value of their pension will be preserved on our entry into the Common Market. Does he not agree that promises made by the Government do not always materialise? For example, we read in the Press this morning that some pensioners who expected to receive the Christmas bonus have discovered that because they have taken on some work the expectation of the £10 Christmas bonus will not materialise. Will not the right hon. Gentleman make a statement and give some reassurance to the pensioners?

Sir K. Joseph

No, I do not accept what the hon. Gentleman says. The White Paper on joining the European Community pointed out that the effect on food prices and all other prices will be small and gradual. The Government have undertaken to review pensions every year—a great improvement that has brought much comfort to all those on benefit. Our record since taking office shows that we have done better than that by improving even modestly, the real buying power of all benefits.

Mr. Ewing

Is the Secretary of State aware that contained in the White Paper of July 1971 there is a specific pledge to protect pensioners and low-wage earners from the effects of entry into the Common Market? Is he telling the pensioners that the protection has now been given, and that they will have to wait until October 1973–10 months after entry—before they can get a further increase?

Sir K. Joseph

In the light of the increase in the pension two months ago, which itself was a brand new innovation by this Government—as before the Government came into office the habit was a two-yearly review—the obligation to review the pension in November 1973 gives pensioners the confidence that they have the right to expect.