HC Deb 09 November 1982 vol 31 cc421-3
Q1. Mr. Peter Bottomley

asked the Prime Minister what has been the decrease and increase in the real values of child benefit and the State retirement pension since May 1979.

The Prime Minister (Mrs. Margaret Thatcher)

The real value of these benefits at the uprating later this month will not be known until later in December when the retail price index figures up to November will be published. But if we assume, for illustrative purposes, that inflation to November is further reduced to 6.5 per cent. then the real value of child benefit at the uprating will have decreased by about 4 per cent. since April 1979, and the State retirement pensions will have increased by about 4.5 per cent. since November 1978 in real terms.

Mr. Bottomley

I should like to pass on the thanks of pensioners for the increased reduction in the rate of inflation, which is of great advantage to them. Does my right hon. Friend agree that between now and the Budget it will be well worth the Government considering possible adjustment to the real value of the pension? Is she aware that the reduction in the retail price index includes the drop in mortgage interest, which does not affect pensioners, who also find their income from building societies reduced? Does my right hon. Friend agree that an increase in child benefit plays an important part in achieving lower pay settlements, which will determine the rate of inflation in the future?

The Prime Minister

A reduction in inflation is good news for us all, as my hon. Friend recognises. There are perhaps some misunderstandings about the pensioners' price index. If the pensioners' price index had been used as the basis for uprating pensions since the Government took office, the current pension would now be between 3 and 4 per cent. less than the actual rate. Food price increases have been very much less under this Government than under the previous Government.

There is no evidence that wage demands would be reduced if there were a substantial increase in child benefit. A substantial number of wage earners are not eligible for child benefit. I shall, however, bear in mind what my hon. Friend says.

Mr. Foot

Is the right hon. Lady aware that her reply shows that great injury has been done to child benefit by this Government? There cannot be any dispute about that. Can the right hon. Lady explain why she thinks the pension is too high? [Interruption.] How can she justify cutting it next year? Will she say how much money the Treasury intends to recoup by cutting the pension next year? How much extra will the pensioners have to contribute?

The Prime Minister

No one is cutting the pension. If, in the last Budget, we had not over-estimated inflation, the pension for a married couple would have gone up this month to £51.60. In fact, it is going up to £52.55, nearly £1 a week more. That means that this year pensioners will have a bonus of over £50. Next November the pensioners will keep this extra £1 a week, plus whatever further increase is necessary to maintain the value of their pension over the lifetime of the Parliament, as we promised. How the right hon. Gentleman can refer to a bonus of £50 extra this year as a cut is a mystery.

Mr. Foot

The right hon. Lady has not even attempted to answer my question, because if she did she would expose the falsity of her argument. How much money does the Treasury hope to recoup from the clawback? It will be money taken from the pensioners. Will the right hon. Lady recognise that the Government's proposals are an outrage? Will she undertake to put this matter at the top of the Cabinet's agenda on Thursday and to allow the pensioners to gain some advantage from the fall in inflation?

The Prime Minister

I shall repeat my remarks, because the right hon. Gentleman clearly did not hear. This year—[Interruption.] I shall answer the question my own way, with figures that will doubtless be unwelcome to Opposition Members. This year pensioners will receive a bonus of £1 a week—which is nearly £52 for the whole year—over and above the amount that would have been necessary to protect the pension from price increases. They will keep that amount next year. It will not be clawed back. They will keep that amount next year and there will be an extra sum added to it for further increases in prices, which, over the period of a Parliament, will protect the pension from prices. That is an advance and a bonus of £50 for this year which would not have taken place if we had stuck to strict price increases.

Mr. Foot

The simple question is: how much will the Treasury get from the pensioners as a result of the clawback?

The Prime Minister

For the whole year, a married couple this year—

Hon. Members

Answer the question.

Mr. Speaker

Order. The Prime Minister must be allowed to answer the question.

The Prime Minister

For the whole year, this year, a pensioner married couple will be £1 a week better off as a result of the uprating than they would have been if the uprating had gone hand in hand with price increases. That is a bonus. A bonus does not give the Government money, but puts more money into the pensioner's pocket. That money is paid for not by Government, but by the working population of our country, who have had their national insurance contributions put up to pay for it.

Mr. McCrindle

To put it more simply—[Interruption]—does my hon. Friend agree that if the clawback next year—[Horn. MEMBERS: "Ah!"]—is less than the overshoot this year, that is another way of saying that there has been an increase in the standard of living for pensioners and other beneficiaries?

The Prime Minister

I note that my hon. Friend prefaced his remarks with "To put it more simply". I must say that I did not find that promise maintained in his question. There is nothing that I can usefully add. It is remarkable that when many people have not received wage increases of anything more than 4 per cent. or 5 per cent.—and some have received less—the great working population of Britain is providing an 11 per cent. increase in pensions and other benefits. We should thank them and congratulate them on that.

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