HC Deb 26 March 1987 vol 113 cc558-60
4. Mr. Patrick Thompson

asked the Chancellor of the Exchequer what information he has on the rise in living standards of (a) a married man on average earnings and (b) pensioners since 1979.

15. Mr. Forth

asked the Chancellor of the Exchequer what is the latest information he has on the change in living standards of a married man on average earnings and of pensioners since 1979.

Mr. Norman Lamont

The real take-home pay of a married man on average earnings will have risen by 2.2 per cent. a year between 1978–79 and 1987–88. The latest available information is that the average net income of pensioners rose by 2.7 per cent. a year in real terms between 1979 and 1985. The Budget will help to maintain that improvement.

Mr. Thompson

I thank my right hon. Friend for that reply. Does he agree that it is good news that under this Government pensioners' incomes have risen at an even faster rate than those of the working population? Will he contrast that with what happened during the Liberal-Labour hung Parliament of the old days, when pensioners' living standards and incomes were destroyed by hyper inflation?

Mr. Lamont

My hon. Friend is right. Pensioners' incomes under the Labour Government grew by 0.6 per cent. per annum. That is a sorry contrast with what has happened under this Government. I am sure that pensioners will welcome the reduction in basic rate, which will be worth £1.85 to the average pensioner couple. In addition, 2.8 million pensioners over the age of 65 will have the benefit of tax cuts in the Budget. I am sure that they will also welcome the increase in the age allowance which will bring it to its highest ever level in real terms.

Mr. Forth

Is my hon. Friend aware that the average married pensioner now has a weekly income of more than twice the value of the state pension? Is he worried that that message has not come across as widely as it should have done? Does he agree that if any additional benefits are to be given they should be concentrated on those who are most in need?

Mr. Lamont

My hon. Friend makes an extremely important point. Some 51 per cent. of pensioners have an occupational pension and 71 per cent. have some investment income, which is why the taxation policies and the policies that would encourage a rise in the rate of inflation — the policies espoused by the Opposition — would be damaging to the interests of pensioners.

Mr. Hardy

Before the Minister and his hon. Friends boast about these rather niggardly improvements in the pension arrangements, may I ask whether he accepts that Britain's pensioners are far worse off and receive much lower pensions than pensioners in all the other EEC states?

Mr. Lamont

I do not accept that. As has been pointed out in the House before, the proportion of gross national product that is spent on pensions in Britain compares well with most countries in the EEC. The point made by my hon. Friend the Member for Mid-Worcestershire (Mr. Forth) about the income of pensioners coming from several different sources — increasingly from occupational pensions and the state pension—representing 40 per cent. of the average pension income is an important fact that the Opposition still have to take on board.

Mr. Lawrence

Given that such a high proportion of pensioners now have an increase in income which is liable to tax, is not the introduction in the Budget of an increased age allowance for the over-80s a particularly welcome measure?

Mr. Lamont

My hon. and learned Friend is right. Pensioners have also benefited from the considerable increases in the basic thresholds, which have taken more and more people out of tax. That has benefited a lot of pensioners as well.

Mr. Straw

Is the Minister proud of the fact that those on the highest incomes in the country have had the highest increase in wealth and income in the last eight years, while the poorest, whom he failed to mention — pensioners and the unemployed — have enjoyed a tiny increase in income? Will he also confirm that the overall burden of family taxation is up significantly on the levels of 1979?

Mr. Lamont

The hon. Gentleman says that the poorest —the pensioners and the unemployed—have enjoyed a tiny inrease in living standards. As I have already demonstrated, living standards are considerably in excess of those that they enjoyed under the Labour Government. What has happened to people on higher incomes is irrelevant to that point. What matters is the absolute increase in the living standards of the pensioners and the poor, and they have been much better under this Government than under the Labour Government.

Mr. Speaker

Order. The hon. Member for Bolsover (Mr. Skinner) must not have private conversations. It is difficult to hear at this end of the Chamber.

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