Pensions and Benefits

HC Deb 30 November 1976 vol 921 cc664-6

2. Mr. Newton

asked the Secretary of State for Social Services what representations he has received from national insurance retirement pensioners and widows following the recent increases in pensions and benefits.

The Minister of Social Security (Mr. Stanley Orme)

I have received about 300 letters on the subject of retirement and widows' pensions since 15th November, when the increases were introduced. Of these about half were concerned with the level of pensions. This is a typical postbag for this time of year.

Mr. Newton

Is the Minister aware that £105 million of the increase in benefit is coming straight back in the form of extra tax on pensioners' and widows' pensions, and that this has added to the resentment felt over the comparison with untaxed short-term benefits? Will the right hon. Gentleman try at least to make sure that pensioners are not treated in the same shabby way in respect of their tax allowances next year and ensure that something will be done to meet the growing sense of injustice felt by working widows?

Mr. Orme

From what the hon. Gentleman said one would think that the practice has changed. It has not changed. The tax position is exactly the same as before. I remind the hon. Gentleman that pensions have been increased by 97 per cent. since 1973. Over the same period prices have arisen by 69 per cent. That is to October 1976. Therefore, the true value of the pension has increased by one-sixth since the last uprating brought in by the previous Conservative Government.

Mr. George Rodgers

While warmly welcoming the recent increase in social benefits, may I ask whether my right hon. Friend would agree that it has brought the elderly person who is exclusively dependent on the State pension up to the threshold of tax payments? Will my right hon. Friend draw this fact sharply to the attention of his right hon. Friend the Chancellor?

Mr. Orme

I thank my hon. Friend for his supplementary question. We are concerned about the tax threshold but it is a matter for the Chancellor who has to take into account the whole issue of the poverty trap and all the other factors about which my hon. Friend is concerned. I shall certainly draw my right hon. Friend's attention to the matter.

Mr. Boscawen

Is the Minister not more than merely concerned, now that the gap between the single person's tax allowance and the basic widow's pension is narrowing month by month? Will not the Government take steps to take the pensioners out of the tax system altogether?

Mr. Orme

We could take pensioners out of the tax system, or we could increase the pension. What we have done at present is to increase the pension. I am aware of the concern expressed on the matter. It is, of course, a matter for my right hon. Friend the Chancellor.

Mrs. Bain

Will the right hon. Gentleman accept that to say that the system has not changed is no excuse for continuing it? Will he particularly bear in mind that working widows have to meet all the responsibilities of being heads of households? Is it not time that this Government showed a humanitarian attitude towards widows?

Mr. Orme

The Government have shown concern. The important fact is the size of the increase, which, as the hon. Lady knows, was 15 per cent. this month. We are concerned, but the pension has been considerably increased. I take note of the other points that the hon. Lady mentioned.