Uprating of Pensions and Other Benefits

HC Deb 11 April 1989 vol 150 cc751-96

Mr. Speaker

We now come to the first Opposition motion, on the uprating of pensions and other benefits. I have selected the amendment in the name of the Prime Minister. Given that we are starting rather later than I had hoped, I ask Front-Bench spokesmen and Back Benchers to make short contributions.

4.7 pm

Mr. Robin Cook (Livingston)

I beg to move, That this House notes that this week pensions and other benefits are increased by 5.9 per cent. at a time when prices are rising by 7.9 per cent. and earnings by 9 per cent.; further notes that if the pension had been uprated since 1979 in line with earnings, under the formula introduced by the Labour Government, a married couple would this week be receiving an additional £17.55 p; records its deep concern at the plight of over half a million pensioners and other claimants who this week do not receive a single penny in uprating; and calls upon Her Majesty's Government to extend the full uprating to all pensioners and claimants.

I read daily that preparations are under way to commemorate in May the 10th anniversary of the Prime Minister's election, when she will exceed the time limit that Mr. Gorbachev has thought it prudent to impose as a maximum period for which any elected official can hold senior office in the Soviet Union—a prudent measure to prevent the abuse of power.

Six weeks later, on 13 June, we shall celebrate another 10th anniversary. On that date in 1979, the then Secretary of State for Social Security, who has now been translated to another place, announced to the House that pensions would no longer rise in line with earnings but would be pegged only to prices. That is not quite how he put it. He said that that was the minimum that the Government would do to the pension. If the right hon. Gentleman had been mean with the money, he was generous with the promises. He said: I should like to make it clear, however, that it remains the Government's firm intention that pensioners and other long-term beneficiaries can confidently look forward to sharing in the increased standards of living of the country as a whole."—[Official Report, 13 June 1979; Vol. 968, c.439.]

Mr. Dennis Skinner (Bolsover)

A pack of lies.

Mr. Cook

My hon. Friend the Member for Bolsover (Mr. Skinner) characteristically commits the Government to rigorous scrutiny. I hope that he will forgive my saying that I am sure that the then Secretary of State meant every word he said. The sad thing is that the Government of which he was a member did not keep a single word of that pledge. Not once in the past decade have pensioners on the basic pension shared in the increased standards of living of the country as a whole. Every year under this Government they have been short-changed.

I wish to be scrupulously fair: it is not the case that pensioners have had no share in the increased living standards of the country. That would be unfair; they have been given a 2 per cent. share. That is the precise amount by which the basic pension has gone up in real terms under this Government, while over the same period average earnings have gone up by 24 per cent.

I heard the Minister for Social Security interviewed on the radio on Sunday, when he entertained me by saying that he was looking forward to this debate with relish in order to contrast the record of his Government with the record of the last Labour Government. There certainly is a contrast. In 10 years this Government have increased the basic pension by 2 per cent.; in five years the last Labour Government increased the basic pension by 20 per cent. in real terms. If that is the contrast the Minister relishes, I give him 10 out of 10 for bravado but one out of 10 for prudence.

Of course, the Secretary of State and the Minister have a well-worn alibi. I have not the slightest doubt that they have been rehearsing it all morning at the Department in front of the mirror to make it sound more convincing. The alibi runs thus: the basic pension does not matter all that much; what matters is the growth in pensioners' total income.

What makes that alibi so breathtaking, so bald that it would take away the breath of any honest jury, is that it rests on a system which this Government inherited from the last Labour Government. On 13 December the Under-Secretary of State, in a reply to a parliamentary question from me, confirmed that the largest single contribution to the growth in real incomes of pensioners was from the state earnings-related pension, designed by the last Labour Government, which has provided two fifths of the increase for which the Government claim credit. The irony is, of course, that the Government have spent the last four years doing the best they can to undermine SERPS and to make sure it does not make the same contribution in the next decade.

It is possible to measure how much the pensioner has been short-changed over the past decade by supposing that the statement made 10 years ago had not been made and that the pension had been uprated in line with earnings, as it would have been under the formula inherited from Labour. A married couple would this week have been receiving £17.55 more than they will get in their pension book this Friday. That is big money. It is very big money to those living on a pension. Yesterday I unveiled what a pensioner might get in a shopping basket for that money. It included a fresh chicken for a Sunday roast; half a dozen oranges, a source of fresh fruit; a packet of tea bags; a jar of instant coffee—even that is now a luxury to many pensioners; a pair of tights; a couple of bars of soap; a cheap brand of talcum powder; two stamps towards the TV licence. The really depressing feature about every item on that list is that nothing there is not likely to disappear within a week in a household of two. Without that extra income, all those items disappear from the weekly budget of that couple.

Mr. John Redwood (Wokingham)

rose——

Mr. Cook

If I can just finish this point I will certainly give way to the hon. Gentleman.

The result is that that couple is left with a constant conjuring trick to make ends meet. This was perfectly expressed with complete understatement by Age Concern, Scotland, which said: Age Concern Scotland staff know of one elderly man who budgets by buying one big item every week. One week the big item is the washing up liquid, the next week toilet rolls. A loss of a couple of pounds per week for someone with this kind of budget is drastic.

Mr. Redwood

I am grateful to the hon. Gentleman. Does he not agree that pensioners have also benefited under this Government from income from savings, which has gone up dramatically; from the real increases in occupational pensions; and, for the poorest one fifth, from the substantial increase in income support and related payments, particularly for the elderly pensioner, which Conservative Members welcome and which far outstrips anything done in the 1970s?.

Mr. Cook

Of course there have been increases. There have been increases in occupational pensions and, given that the Social Security Pensions Act 1975 was passed by the last Labour Government, we would expect that increase. If the hon. Gentleman looks up the figures, he will find that the bottom quarter of pensioners receive an average of £3.50 a week in occupational pensions. The second bottom quarter received an average of £10.50 a week in occupational pensions. Most of the income of the great majority of pensioners in Britain comes from their basic pension.

Mr. Robert Hughes (Aberdeen, North)

Does my hon. Friend agree that if pensioners had received this week the pension increases that they ought to have received they would even have been able to afford a pair of the special long johns from Harrods that the hon. Member for Derbyshire, South (Mrs. Currie) suggested, when she was a Minister, they ought to wear to keep warm in winter?.

Mr. Cook

My hon. Friend will have to wait until we receive the Department of Trade and Industry report to find out whether it will be possible for pensioners to obtain access to Harrods.

It is possible to measure the short change and the extent to which the Secretary of State had the money to provide extra for pensioners. If he had wanted to do so this year, he certainly had the money. Any doubt that he had the money is removed by a glance at the Government Actuary's report on the national insurance fund. In the financial year that ended last week, the Government expect to make a surplus of contributions over benefits of £2.5 billion. That, alone, is enough to treble this week's increase in the state pension. Nor is that an aberration under this Government. It is an inevitable consequence of benefits increasing in line with prices, although national insurance contributions increase in line with earnings. The Government have become so accustomed to running a surplus on the national insurance fund that the cumulative surplus has almost doubled during the last three years. By April 1990 it will stand at over £10 billion.

To put that staggering sum in terms to which Conservative Members can relate, it is big enough to pay for the Trident submarine programme. There is some reason to fear that that is probably what it is doing. Rather than pass on the benefit of the surpluses to pensioners by way of increased benefits, the Treasury is siphoning them out of the fund for its own use by reducing the Treasury supplement. This financial year—for the first time, I believe, since 1948—not a penny will be paid into the national insurance fund by the Treasury. Contributors are being conned, by accepting deductions from their wages in good faith, that they are paying for benefits to pensioners and other claimants, when in reality what they are paying for is to let the Treasury pocket money that used to be paid into the fund.

The reason why pensions have not increased faster than prices is not because the Government lack the money but because they lack the will. It would take some convincing to persuade most pensioners that this week's increase keeps pace with prices. The increase that pensioners will receive this week is 5.9 per cent., at a time when prices are rising at 7.8 per cent. Some of those prices, most of which are under Government control, are rising even faster. I refer to the increases in the price of gas, fares and water. All those increases have a direct impact on pensioners.

Mr. John Butterfill (Bournemouth, West)

Will the hon. Gentleman give way?

Mr. Cook

I shall give way on this occasion, but as I am mindful of Mr. Speaker's injunction, it will be the last occasion on which I shall give way.

Mr. Butterfill

Does the hon. Gentleman accept that the underlying rate of inflation, if we exclude mortgage interest payments which most pensioners do not pay, is only 5.5 per cent. and that therefore the increase in pensions is above the cost of living of most pensioners? On top of that, most pensioners have some investment income, which has improved as a result of high interest rates.

Mr. Cook

We look forward with interest to the Social Security Bill 1990 in which we shall no doubt see the new re-rating of pensions to take account of the increased income from interest on savings. Many pensioners do not pay mortgage interest—that is reflected in the retail prices index—but they spend a much higher proportion of their income on food, fuel and the basic necessities of life. If we look at the increase in the price of those items in the retail prices index, we find that they are rising faster for pensioners than for anybody else.

Another measure that the Government have introduced which will have a direct impact on pensioners took effect only this week.

The introduction of charges for eye tests will hit pensioners harder than anyone else. Boots, which has a quarter of the market, is now charging £10.50 a test. Boots is the market leader, but some opticians are charging up to £15. The optician nearest to the House of Commons is charging £17.50 for an eye test. Even if we confine ourselves to a charge of £10.50, a pensioner would need to club together this year's uprating for four weeks to afford an eye check. There is one clear, inescapable consequence. Many pensioners will now not go for a regular check-up on their eyes, and as a result some of them will put their sight seriously at risk.

It is entirely fair for me to remind the Secretary of State for Social Security that eye-test charges were introduced this month, as he thought them up before his transfer to his present post. He was also in charge of last April's social security changes. I note that the Secretary of State's amendment to the motion invites the House to congratulate the Government on the simpler, fairer, more flexible system". It is curious to describe the system as more flexible when it has resulted in all the extra allowances for special needs being abolished. The new, flexible scheme takes no account of claimants' needs, although it still makes rigorous searching scrutiny of individual claimants' means. It is curious to describe the system as fairer when the people who have been hit hardest are the most disabled, frail and invalid people who received the allowances. They received heating allowance because they are housebound, they received diet allowance because they are chronically sick, and they received laundry allowance because they are incontinent. By definition, those who got most had the most to lose. Tens of thousands of them have already lost it all because the slightest change in circumstances triggers a review whereby they lose all the transitional protection they had last April.

Some people lost transitional protection because they were unwise enough to fall sick. One of the most distressing letters I have received in the past couple of months was from a resident of Midlothian who fell sick in October and transferred to sickness benefit. In February she came off sickness benefit because she was well again and she discovered that because she had been on sickness benefit she had lost transitional protection. Why had she received transitional protection? She had been receiving an extra allowance to pay the bus fare from Midlothian to Edinburgh to visit her elderly mother twice a week. Her mother is in a geriatric hospital where she will be confined until she dies. There is simply no way in which my correspondent can afford to make that trip on her new reduced benefit of £34.90 a week. Because she made the mistake of being sick, she is unable to visit her mother in hospital. Is that fairer? Is that more flexible?.

Other people have lost transitional protection because, under the party of the family, they were unwise enough to take on increased family responsibility. In previous debates, I have drawn the attention of the House to the way in which a couple who have an extra child are entitled to an extra £10.75 addition in income support, but if they are on transitional protection that money is included in the transitional protection.

Since our last debate on the subject, an even worse case has been drawn to my attention. It relates to a single girl in Cheshire. Last April she was receiving £7 a week in allowances for her diet and health needs. At the end of April she gave birth to a child. She was given an additional £10.75 which wiped out the £7 in transitional protection but left her just a little better off as she was given an extra £3.75 a week net to feed the infant. In October the child died, her benefit was reassessed and the £10.75 was taken away, including the £7 she used to receive in transitional protection. She is now on a flat rate of £26.05. This girl has suffered an appalling personal tragedy. The grief and distress that she must experience should be understood by every Member of this House. The understanding that the Government have shown of her personal tragedy is to tell her that it has cost her her benefit. Is that a fairer system? Is that a more flexible system?.

There is another example that I should like to share with the House. This very month the Secretary of State hopes to complete the proceedings on the Social Security Bill, which will force the unemployed into even more desperate efforts to find work. Under the Tory party, of course, some claimants have lost their transitional protection because they were unfortunate enough to succeed in their search for work. One case was brought to me by a citizens' advice bureau in north London.

Mr. Tony Favell (Stockport)

What is unfortunate about finding a job?.

Mr. Cook

If the hon. Gentleman waits, he will discover what is unfortunate about finding a job.

One claimant in north London—a person confined to a wheelchair—through great personal effort, was successful in finding a temporary job, for four weeks. What support did the Government give that disabled person as a demonstration of the virtues of independence and self-reliance? The support they gave him was that when he ceased his four weeks' employment and came back on to benefit he discovered that he had lost his transitional protection because he had been temporarily employed. That is what is unfortunate about his experience. If I may say so, it is a question not of misfortune but of deliberate Government policy. That person is now £4 a week worse off than he would have been if he had never bothered to seek work.

But perhaps the most remarkable contradiction between this Government's rhetoric and the reality of their benefits policy is that, under the party of the owner-occupier, some claimants have lost all, or nearly all, their transitional protection as a result of the rise in the mortgage interest rates, which is the Government's chosen way of fighting inflation. Disability Alliance has drawn my attention to the case of one of its members who was receiving attendance allowance—indicating, as the House will know, that he was severely disabled. Last April he was receiving £17 a week in transitional protection. As a result of the increase in the mortgage interest rate, his interest payments have gone up by £13 a week. His entitlement, of course, has been adjusted to reflect that addition, but every single penny of the £13 comes out of his transitional protection. He is left with additional mortgage expenditure but not an additional penny in benefit.

An interesting feature of that case is that last April a then Under-Secretary of State at the Department of Health and Social Security wrote to the Member of Parliament for this claimant, and ended his letter reassuring the MP by saying: I do hope that you will now be in a position to reassure Mr. F…that he will not be any worse off in April as a result of the changes.

Here we come to the greatest irony of all. The House will recall that when we debated the April changes we were assured repeatedly that 88 per cent. of claimants would be either better off or no worse off. I should like the Secretary of State to confirm that in calculating that 88 per cent., every one of the cases that I have drawn to the attention of the House in the last 10 minutes was counted. I should like to hear the Secretary of State try to explain to any one of those people that he or she was not a loser as a result of last April's changes. I invite the Secretary of State, or the Minister for Social Security—whichever one of them has the greater brass neck—to repeat to the House now that those people were not losers as a result of the "fairer, more flexible" system that was introduced last April. I cannot hear it from them; I am willing to hear it from any Conservative Back Bencher who voted for the measures that were introduced last April. I am bound to say that if no Conservative Member is prepared to argue that these people were not losers, we can conclude only that the 88 per cent. figure was a mischievous deceit practised upon this House and upon the public.

Not all the people who are on transitional protection have yet lost it. At the end of this week there will still be a minority drawing transitional protection. That is something of a mixed blessing particularly as this week those who have managed to retain the transitional protection do not get a penny extra in benefit—that is 570,000 claimants, one tenth of all those on income support. By definition none of them got a penny last year either. For two successive years they have experienced a freeze in their income—two years in which prices have gone up by 12 per cent.

Many of those affected have written to me and my right hon. Friend the Leader of the Opposition. There is a common theme to the letters that they send us: disbelief that even this Government could treat them so badly. They demonstrate a touching and misplaced faith in the belief that the Government cannot let them suffer so badly. I have in front of me one such letter and I shall share only this one with the House. It says: I have been waiting desperately for this £2.50 rise as my money runs out on a Friday and I have to wait till Tuesday comes round again before I get my pension …as I have angina, kidney complaint and rheumatoid arthritis I am so cold all the time and gas is so dear, on top of all this I am also a diabetic…I cannot afford a proper diet as I never have enough money left and for some time I have been losing weight".

During the radio interview when I heard the Minister perform I was astonished to hear him describe the situation in which that correspondent finds himself as a "soft landing". That suggests that he does not have the remotest grasp of the bleak despair of those half a million people on transitional protection. He is not alone in his incomprehension. The last time we had social security questions one Conservative Member asked of the Parliamentary Under-Secretary whether he was really satisfied that claimants had been warned sufficiently far in advance in order to make other arrangements once their benefit went down. The Under-Secretary replied that all those who were not having their benefit uprated and who were on transitional protection: will have been informed well in advance."—[Official Report, 6 March 1989 Vol. 148, c. 588.]

Perhaps the Secretary of State can tell us how on earth those claimants are supposed to make other arrangements. What are they supposed to do? How are they supposed to cease to be retired or cease to be disabled? How are they supposed to cease to suffer from arthritis or from angina?.

One reason why it is inexcusable for Conservative Members not to understand the plight of those claimants is the letter which I just read to the House, which was sent from a Conservative constituency. I have received many such letters from Conservative constituencies, such as Harlow, Torquay, Romford and Brentwood. Every Tory Member of Parliament represents at least 1,000 claimants who, this week, will receive not a penny in uprating.

Are those Conservative Members going to leave it to Opposition Members alone to speak for their constituents? Are none of them prepared to speak for those who find themselves in that trap? Are none of them—I appeal to what motivates them most when they vote—more afraid of what their constituents might do to them than what their Whips might do to them? If there are any such people on the Conservative Benches I appeal to them to join us in the Lobby tonight and to vote for a simple act of justice for those bewildered and desperate pensioners who, once again, this week are cheated by their own Government.

4.33 pm

The Secretary of State for Social Security (Mr. John Moore)

I beg to move, to leave out from "House" to the end of the Question and add instead thereof: `notes that it is now one year since the Government introduced a simpler, fairer, more flexible system of income-related benefits and that the uprating which took effect yesterday added a further £2.2 billion to spending on social security, now running at £51 billiion a year; and congratulates the Government on the success of its economic policies which have enabled it not only to fulfil the pledge to maintain the value of the basic retirement pension in line with price movements but also to use the new system of income-related benefits to direct additional help this year of over a quarter of a billion pounds beyond the normal uprating to those in greatest need.'.

The Opposition have produced a motion that I fully understand in the sense that it seeks to challenge fundamentally the adequacy and the methods of the benefit provisions that were introduced a year ago. They are to be debated in part today. I have vivid memories going back beyond the past 10 years to the period when the Labour party had the misfortune to seek to govern our country.

Mrs. Margaret Beckett (Derby, South)

What about the pensioners?

Mr. Moore

I shall come to the pensioners later in considerable detail.

That the Opposition should table this motion despite their record of incompetence means that I must start my speech by reminding the House of why I am able, as Secretary of State, to spend record sums of money in our country's history on social security—the increases this month attest to that—and how miserably Socialism's record compares with our success.

We were, and will continue to be, re-elected to office because of the absolute inability of Labour Members to understand the reasons for our success. [Interruption.] I will take my time and make the points I wish to make. Opposition Members have tabled the motion and if we have the usual vulgar and irrelevant sedentary interruptions that we get from them, that will only take time out of the time available to them in the debate.

Social security needs, above all—I should have thought that this view was shared by Members in all parts of the House—wealth to be able to care. Without economic success, none of our achievements, or the understandable ambitions and aspirations of the hon. Member for Livingston (Mr. Cook), would be possible.

The uprating this year increases our spending on social security to £51 billion. That is not simply an increase of £2 billion over the previous year, for it conceals additional increases because of the happy reduction in unemployment. That adds about £.1.6 billion to the overall increase in my spending.

That record is not just for this one year. It reflects a decade of achievement in which we have seen increases in social security spending go up by 33 per cent—[Interruption.] I think I know the point that the hon. Member for Newcastle-under-Lyme (Mrs. Golding) is making, albeit from a sedentary position. Would she care to rise and interrupt and make it in more detail? I should be happy to let her do so, and I would point out in reply that, even taking unemployment out of the data, the increase would still have been 27 per cent.

In that decade of achievement, the priorities of the Government have been clearly shown by their spending on social security. We have seen a pattern of increase as a proportion of our overall public expenditure from 25 per cent. in 1978–79 to 31 per cent. this year. That is a sign of the added significance that we place on social security spending compared with Labour Members when they were in office, and the contrast in that improved position within that increased expenditure is telling in terms of social security priorities.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

If there has been such tremendous economic success and the Chancellor has a surplus of £14 billion, why will pensioners on £47.90, many of whom live in my constituency, not receive a penny increase in the next financial year because the Government are clawing back the whole of the transitional allowance? The same will apply the following year in relation to the £1.80. Surely the Government could have afforded to ensure that such pensioners got a real increase.

Mr. Moore

I shall come to the question of pensioners and to the transitional point to which the hon. Gentleman refers. It is an important issue which I shall cover in detail. I wish first to contrast the relative impoverishment of the areas that Labour Members considered, rightly, to be important when they were last in office with the decade of achievement under the Conservatives. To do that I will take only two issues, the disabled and families with children.

The achievements of the last Labour Government on behalf of the disabled were considerable. They increased spending in real terms by 29 per cent.—they increased spending each year in real terms on the disabled by £220 million—and I recognise that achievement. But that was as nothing compared with the achievement of the last decade, during which expenditure on the disabled has increased in real terms by 90 per cent., or an annual average increase of £390 million.

That is the first contrast that I think the House will acknowledge. The second is about families with children, and I am talking about spending in real terms.

Mr. Robert Hughes

Will the right hon. Gentleman confirm that one change that the Government have made applies to people who apply for attendance or mobility allowance? Does he agree that when such an application is granted the money will now be paid not from the date of the claim, if it takes time to process through appeal, but from the time it is granted? Why are people being cheated out of this money, out of disablement help that they need desperately?

Mr. Moore

The position on claimants is unchanged from that under the previous Government. I shall shortly go into more detail about the disabled.

I should like to look at the second area of major social security expenditure because the motion refers to all benefits. That second area is expenditure on families with children. When Britain last had the misfortune to have a Labour Government expenditure was reduced in real terms over five years by 7 per cent. I am sure that the then Labour Government had no intention of doing that, but they were not able to govern with economic success.

In the last decade we have seen an increase in expenditure on families with children of 27 per cent. In addition to this year's uprating, our economic success has allowed us to spend an extra £200 million on a poorer pensioner package which is welcomed by all hon. Members. I shall deal with that later. Again because of our economic success, my right hon. Friend the Chancellor was able to announce in his Budget the abolition of the earnings rule for pensioners at a gross public expenditure cost of £375 million. Everybody welcomed that. He was also able to announce because of our economic success the completion of our national insurance contribution changes. That will especially help the lower paid and will cost £2.8 billion in a full year. I could continue to deal with our record, but I think that I should answer the first Opposition charge.

Mr. Dennis Turner (Wolverhampton, South-East)

People outside will treat the Secretary of State's contribution with absolute incredulity. Thousands of my constituents are finding it impossible to live through the week. How can the Secretary of State say that the Government have been kind and generous when people know that they cannot live from week to week? This week a lady in my constituency threatened suicide because of water bills pouring through her letter box. She has no possibility of paying them. The Secretary of State's speech is no answer to the real struggle that our people face day by day, in Conservative as well as in Labour constituencies.

Mr. Moore

I must try to proceed. I have taken more interventions than did the Opposition Front-Bench spokesman. I have heard statements and not questions.

Mr. Geoffrey Lofthouse (Pontefract and Castleford)

Will the Minister give way?

Mr. Moore

No, because, as I have said, I have given way more than the Opposition spokesman.

I have tackled the Opposition's first basic charge about the adequacy of provision. I shall now consider the challenge in the motion to the methods of the new system and our transition to it. Will the Opposition seek to argue for a return to the old, unloved supplementary benefit and single payments system? As they well know, it had flaws which they recognised. It was complex, difficult to understand, extremely intrusive, and absolutely inflexible. Hon. Members did not like the fact that, for example, a family earning £140 a week could be worse off than a family earning half that amount. None of my hon. Friends—I am not certain about Opposition Members—would welcome the return of the abused single payments system under which 80 per cent. of the money went to about 10 per cent. of the claimants.

This is the first anniversary of improvements that are already in. The first of those is income support. Nobody would deny that there is now a simpler system that is faster for claimants. That is important for those who claim and those who advise claimants because it means that they can understand the advice. Those who sought to try to help people through the old supplementary benefit system were not impressed by the complexities of the structure.

The new system is much faster. We are handling claims within five days, rather than nine days, as in March 1988. That is important for those who seek help. The system is also producing—again, I should have thought that this would be welcomed by Opposition Members if they were in a more serious mood—an 80 per cent. success rate for the claimants compared with 73 per cent. previously.

The error rate—another important feature of a system designed to help people—has improved from 12 per cent. to 8.3 per cent. Furthermore, as I illustrated last year and in this week's benefits improvements with regard to child premiums, it is easier to target help more accurately as a consequence of the new income support system.

Family credit, again, is infinitely better than family income support. A total of £422 million has been spent in the first year in comparison with £180 million on family income supplement. I should have thought that that would be welcomed by hon. Members on both sides of the House. I should also have thought that the House would be welcoming the fact that payments are averaging £25 a week. The expenditure percentage take-up so far is too low; it is 65 per cent. and I am launching a major new campaign to increase it. But the expenditure is more than double the FIS of a year ago.

I should have thought also that the House would wish to support the changes in the disablement arrangements. Last year, under the old scheme, 70 per cent. of long-term sick and disabled claimants were getting additional payments averaging £5.34 per week. I will not lay too much stress on the fact that under Labour the figure was not 70 per cent. but 38 per cent. Now all 270,000 are getting the disability premium, which is running at £13.70. I should have thought that that would be welcomed by hon. Members on both sides of the House.

I should have expected the House to welcome also the fact that, while under the old system 4,500 severely disabled people were getting domestic assistance additions averaging £6.35 per week, now 7,000 are getting severe disability premiums at £26.20. Again, I should have thought that that was something to be welcomed by all hon. Members.

Beyond that, the new system is much more flexible. My hon. Friend the Minister for Social Security and I said that we would monitor the system and seek to change it if necessary, and we have been able to do so, as all hon. Members know, not just last year but three times this year.

Mr. Martin Redmond (Don Valley)

I am grateful to the Secretary of State for giving way. Will he accept the simple truth that there are many elderly disabled people worse off under his regulations? What steps will he take to ensure that those people are brought back up to standard?

Mr. Moore

I always listen to the hon. Gentleman. I was trying to illustrate that in terms of the new versus the old system there have been enormous improvements for the disabled. I said, as did my hon. Friend the Minister for Social Security, that we would watch, monitor and seek to improve the system. We have already made major changes in a relatively short period and I will continue to watch the area to which the hon. Gentleman particularly draws my attention.

I will come in a moment to pensioners, but I think it right first to address the point made by the hon. Member for Livingston about transitional protection. As he well knows, one cannot change any system in such a way that most will gain or be unaffected without some doing relatively less well. The Government promised in 1986—we have the economic success to fulfil our promises—that we would protect income support recipients from cash losses during the changes. Clearly, that protection reduces as entitlement rises with each uprating. If it did not, that would mean keeping the old system for ever with all its inequities. The hon. Member for Livingston has mentioned quite a lot in the media, and in the House briefly today, the nature of the old system of additions. Hon. Members should remember—sometimes people forget—that something like 40 per cent. of income support recipients were not in receipt, under that incredibly complex system, of additions of any kind. Furthermore, the average addition was running at £3.57 and, although this is not mentioned very often, the whole of expenditure on the heating addition of more than £400 million was put into the income support rate.

However, I recognise the point which the hon. Gentleman has made and I can confirm to the House, because I think it right to do so, that 3.25 million income support recipients will receive their uprating in full, over half a million will receive partial increases and, as he rightly said, nearly 600,000 will receive no increase at all. But the vast majority of claimants on income support——

Mr. Favell

A great deal has been said about the transitional provisions. However, but for the transitional provisions, would there not have been a two-tier system for people living in identical circumstances, old claimants and new claimants? That would be unfair and wholly unacceptable to many hon. Members and certainly to new claimants.

Mr. Moore

My hon. Friend is right. I was trying desperately to be non-political and helpful to the Opposition.

I remind the Opposition of what happened when they last attempted to make changes in the social security system; I think it was in 1976 when they were going through another process with the International Monetary Fund. Memories of those days are clear. [Interruption.] I will take plenty of time to make the point. Obviously the Opposition have memories of that time when they were trying to change the system from family allowances and child tax allowances to child benefit. I am not now talking about the £1.4 billion of which they cheated families with children in one year. In the face of economic failure they also had to reduce provision in cash terms by £300 million.

I have been led astray and I shall go back to the point that I was seeking to make, which was that the vast majority of claimants on income support;87 per cent. —will have an increase. As my right hon. Friend the Prime Minister said today in the Chamber, 98 per cent. of pensioners will get an increase, as will practically all couples with children.

Mr. Robin Cook

Before the Secretary of State leaves that passage, will he answer the question that I put to him in my speech and confirm that every single one of the cases that I described, who have lost transitional protection in the past year, would have been counted in the 88 per cent. that he claimed last April would be no worse off as a result of the changes?

Mr. Moore

I said then, and I say again, that it is impossible without detailed notice of all the cases concerned to answer precisely. I am assuming, of course, that they were included. I will look at the individual cases; I always do. Of course, I will come back to the hon. Gentleman, as I always do, but I will not go into a detailed commitment on those cases now. I cannot possibly do so without examining the details.

I shall go on to deal with pensioners, on whom the hon. Member for Livingston based most of his speech. I thought that the hon. Gentleman classically fell into the Socialist trap. It was a perfect illustration of the way in which the Opposition seek to argue the issue. They are obsessed with only one part of the pension equation—the level of the state retirement pension. I shall give sufficient illustrations for the House to understand the comparisons. For pensioners the true measure of economic well-being —no doubt the hon. Gentleman thought I might say this —is their total income. That is why the Government's approach throughout this decade contains two vital elements, not one.

The first is our pledge to increase pensions in line with prices to provide a secure foundation for income in retirement. The second is to pursue policies to keep inflation under control to safeguard the pensioner's income from other sources. [Interruption.] I shall illustrate the success in a moment. The comparisons should shock Opposition Members. The success of our policy versus the failure of Labour's promise is a fact of history that I shall illustrate. [Interruption.] If Opposition Members think that Labour Governments are utterly irrelevant, I cannot say that I disagree with that concept. But they have to learn to live with the reality of what they sought to do when in office.

I want to consider first the relative record of the way in which pensioners lived under two Governments, Labour and Conservative, remembering that we have been happy to look after 1 million more pensioners, but still our record is outstanding. Throughout our period of office the growth in net income has averaged 3 per cent. per year to produce a total increase in net income of 23 per cent. versus a miserable 3 per cent. in total throughout the whole Labour period of office. Secondly, my hon. Friends the Members for Bournemouth, West (Mr. Butterfill) and Wokingham (Mr. Redwood) were very conscious of the role of savings.

What an appalling record there was under Labour. Throughout their period of office savings lost their value. [Interruption.] Those who are denying the role of savings for the pensioner will get a bigger shock at the next election. Under Labour, savings went down by 3.4 per cent. per year. In all they lost 16 per cent. of their value throughout the Labour period in office. For the eight years to 1986—we only have figures until then—savings increased by 7 per cent. per year, or 64 per cent. in all.

I saw the hon. Member for Livingston on television yesterday with wonderful charts, talking very properly about how pensioners should share in our prosperity. Let me remind him of the reality of sharing under Labour and what happened to the pensioner then. The hon. Gentleman talked on television yesterday about the pensioner needing to share in a successful growth of earnings and the economy. Let me tell him what happened. I shall give him exact comparisons.

In comparison to the average earnings of all manual workers in 1974 the pensioner was receiving 63 per cent. —[Interruption.] I will come to the Conservative figures in a second. Hon. Members will not like them. Between 1974 and 1979 the pensioner saw his percentage of the average manual worker's income go down, not up, from 63 per cent. to 60 per cent. Was that sharing in the national earnings and prosperity? That was the price of Labour's failure.

Since then, the pensioner's share has gone up, not from 60 per cent. to 63 per cent., but to 66 per cent. I can see Opposition Members on the Front Bench nodding and chatting. No doubt they are saying, "Of course, he is now arguing about the average pensioner." Let me give them other figures that they have not heard—the figures for those who have no income other than state benefits and their state pension income. What happened to them under the five years of Labour government? Their income went from 32 per cent. of the average earnings of all manual workers, not down happily, but up by 1 per cent. That was the achievement of Labour. Under the Conservative Government their income has gone up, not by 1 per cent., but from 33 per cent. to 37 per cent. That is what is called sharing in the prosperity of the rest of the community.

Mr. Robin Cook

rose——

Mr. Moore

No; I have already given way. This is an abuse. If the hon. Gentleman will sit down, I shall give him the figures.

Mr. Cook

Those figures are wrong. They are fabricated.

Mr. Moore

I object. I shall now repeat carefully and precisely the figures that I have obtained from my officials. There are two groups of figures. First, would the hon. Gentleman like me to repeat the figures for the average pensioner, which he seemed to accept, or does he just want me to give him the figures for the pensioner who has no income other than state benefits? I shall repeat the figures, which are the figures obtained from my Department—[AN HON. MEMBER: "For what years?"] I will give the precise years. They are the latest family expenditure survey data because, of course, that is what I bring to the House. I repeat that a pensioner with no private income, whose only income is from the state, through his state pension and benefits, in 1974 would have received in comparison to the average of all manual workers 32 per cent. I acknowledge that by 1979 that had gone up to 33 per cent. By 1986, the latest figures I have from the FES data, it was up to 37 per cent.

Mr. Cook

No.

Mr. Moore

It is no good the hon. Gentleman saying no.

Mr. Cook

I am grateful to the Secretary of State for giving way. I have before me a table prepared by the Library's statistical section which I believe is accepted by hon. Members on both sides of the House to be a source of impeccable objectivity and reliability. I have a copy of the table of figures from which the Secretary of State is quoting. The figures show that the Secretary of State was correct with regard to a married pensioner between 1974 and 1979. However, the figures do not rise between 1979 and 1989. They actually drop from 32.6 to 26.1 per cent. between 1979 and 1989. Those are figures produced by the House of Commons Library. I invite hon. Members to question whether the statisticians who advise hon. Members on both sides of the House can be relied upon better than the Secretary of State.

Mr. Moore

These figures come from my Department. They were obtained from the economic advisers office. The hon. Member for Livingston knows full well that I do not use data other than that which has been placed in the House of Commons Library. I will consider the figures to which the hon. Gentleman referred. However, I repeat that the figures in my possession to 1986, the latest figures available from the latest thorough FES data, take the figure up to 37 per cent.

Mr. Max Madden (Bradford, West)

On a point of order, Mr. Deputy Speaker. The figures given by the Secretary of State have been challenged by my hon. Friend the Member for Livingston (Mr. Cook). The Secretary of State says that he will reconsider the figures. Will the Secretary of State give a clear commitment that the Minister for Social Security, when he replies, will try to clarify the position so that the House and pensioners outside this place, who know very well what——

Mr. Deputy Speaker (Mr. Harold Walker)

Order. Mr. Moore.

Mr. Moore

Of course that was not a point of order. I did not retract one iota of what I had said. The hon. Member for Livingston was talking about Library data. I have not seen those figures—[Interruption.] I hope that the hon. Member for Livingston will contain himself. The figures to which he referred relate to 1989. The hon. Member for Livingston may not be aware that the latest full FES data relate to 1986 and it was on the basis of those figures that I was giving the full, accurate data. I stand by that data because it reflects the latest full data which show an accurate comparison.

I want to illustrate the improving position in society. The hon. Member for Livingston quite rightly drew attention, as did my hon. Friend the Member for Wokingham, to the position of pensioners in relation to the poorest in society. The hon. Member for Livingston neglected to draw the attention of the House to the fact that in 1979 a total of 38 per cent. of pensioners comprised the bottom one fifth of the population. Happily today, only 24 per cent. of pensioners occupy that position. There has been a significant improvement in their relative position.

I agree with my hon. Friends and with Opposition Members that that is not enough. I am not satisfied and that is why I have brought forward a poorer pensioner package which will increase considerably the position of many pensioners in the autumn. [Interruption.] I wonder whether the hon. Member for Livingston could possibly pay attention to me for a moment because I want to correct what I know he would want me to correct, which are one or two unfortunate inaccuracies which he made in a radio interview on 10 April in the "Today" programme.

I fully understand that it is not always easy to keep all kinds of figures in mind at any one moment, but the hon. Member for Livingston referred to the increase as a token increase, going only to those on income support, only to those who are over 75. I must remind the House that it is not a token increase. It goes to 2.6 million people including approximately 1.4 million who are above income support level who will receive help in the form of housing benefit. It also includes 340,000 disabled people and, within the income support group, it includes 1.22 million pensioners on income support. That is not an insignificant number, as I am sure hon. Members on both sides of the House will appreciate. Therefore, many couples over 75 can see increases this year of more than 11 per cent.

Mr. Lofthouse

Will the Secretary of State give way?

Mr. Moore

Mr. Speaker invited us to be brief and I have answered many interventions. I want to finish my remarks now.

The date 11 April is an anniversary of which the Government can be proud. Our system for delivering benefits to the most needy had fallen into sad disarray. It was outdated, inflexible, unfair and bewildering in its complexity. We tackled that problem and overcame the nonsenses of the past. But Britain's prosperity, which the Government's policies have fostered, has given us the resources to do far more.

Mr. Lofthouse

Will the Secretary of State give way now?

Mr. Moore

I am trying to finish, as the hon. Gentleman is aware.

We have been able to protect the poorest against the impact of change without cash loss and we are using the improved system to direct still further help, flexibly and surely, to where it is most needed. We are doing all that on top of a massive commitment of resources to social security which is higher now, as all hon. Members have acknowledged, than ever before in our history. That is the surest testament to our economic success, based on capitalist principles of market enterprise. Economic success is at the heart of our more generous provision. It is a heart with the strength to care. I urge the House to support the Government's amendment.

5.5 pm

Mr. Jack Ashley (Stoke-on-Trent, South)

The difference between the Secretary of State's speech and reality shows that he lives on a different planet. It was unbelievable to hear the right hon. Gentleman make such claims. First, he said that he was trying to be non-political and then he peppered his speech with a series of party political points, not many of which were valid. He also failed to respond to the challenges of my hon. Friend the Member for Livingston (Mr. Cook), in particular the challenge about the 88 per cent. of people who will be better off or no worse off. The Secretary of State fell at that fence. That was his Becher's Brook.

The Secretary of State also made the mistake of claiming that the Tory party will be re-elected because of its policies on social security. That is the last thing that the Tories would be re-elected for. Social security is one of the Government's many Achilles heels. They have failed abysmally.

The truth underlying this debate is that Ministers have deliberately tried to change people's perceptions of social security. To those in desperate need, social security used to be a reassurance that our civilised society would not desert them. That was very important for them. They thought that it would ease their poverty, edge them away frorn disaster and lend a friendly and dependable hand in times of need. That does not apply any more.

The Government have turned social security into dirty words. They have sullied compassion and scoffed at what they call the "dependency culture". If anything makes me sick, it is the sight of well-heeled politicians complaining about the poor. The miserly uprating of a miserable system of benefits is one of the disgraceful aspects of that despicable attitude.

One would expect the Government's aggressive and parsimonious approach to be softened when they dealt with disabled people. However, that does not apply with this Government. Disabled people cannot stand on their own feet and their problems cannot be attributed to lack of will or enterprise. However, they have also become the targets of Government marksmen, the Ministers who are picking off the poor. Those same Ministers are boasting to the country that the Government have a £14 billion Budget surplus.

Disabled people were not included in the social security review. The Secretary of State promised them a review of their own when the Office of Population Censuses and Surveys studies are completed later this year. However, although they were not included in the review, they were greatly affected by the social security changes as no fewer than 75 per cent. of disabled people rely on social security.

The Government have boasted of their generous increase in money for disabled people, but individual disabled people are little better off. The main change has been that more disabled people are claiming their benefits. When the Minister makes his grandiose claims, he is misleading the House because individual disabled people are not better off. More disabled people are applying for benefits which they badly need because of the squalor into which they have been plunged by the Government.

The Prime Minister and the Secretary of State claim that there have been significant increases in the mobility allowance. However, increases in petrol and other costs for cars have been even greater. Therefore, that is a bogus claim. The basic fact is that many disabled people have lost out as a direct consequence of Government policies.

When the Secretary of State talks about flexibility, he is talking nonsense. Disabled people have lost flexibility as a result of changes imposed by the Government. They have lost individual help. The most severely disabled people now have to turn to the independent Disabled Living Foundation, which provides handouts, not payments as of right. It is outside the state system. There is no right of appeal. People must accept the decisions that are made. Where else does one have such a system in a civilised society? Moreover, the system receives inadequate publicity.

My hon. Friend the Member for Livingston mentioned transitional payments in his eloquent and splendid speech, and he was right to do so. The Secretary of State was wrong to dismiss worries about transitional payments. Ministers made a clever move when they introduced transitional payments because they promised that there would be no immediate loss of benefit. Some innocent disabled people believed that assurance, which gagged the protests and held back an avalanche of complaints when the changes were first made.

It is only now that transitional payments are being understood. Prices are soaring and those on transitional payments have no overall increase in income. There will not be any such increase until income falls to the level that the Government deem appropriate, when it will be much less than it was in the first place. That is the check of the transitional payments. My hon. Friend was right to attack that. The scheme is a fundamental error. The real hurt will come later this year. Incomes will be frozen while inflation soars. What kind of Government can hit the disabled in that way while at the same time boasting of their great economic success? The Secretary of State referred to "economic success" at least four times. How can he boast about that and at the same time hit the severely disabled in this way? It is disgraceful.

What hope do disabled people have for the future? They did have hope for the future, but they were told to wait for the completion of the OPCS survey when the Government would respond to their plight—and some plight it is. When people become disabled before retirement, they have a fearful time under the present Government, as Labour Members recognise. They have only a one-in-three chance of getting a job. On average, their income is only half that of an able-bodied person, and that was before the social security changes which the Disability Alliance, accurately quoted by my hon. Friend, estimates has made 1 million disabled people worse off. They are the people we are speaking about today.

When the Minister for Social Security replies, he should tell us what has happened to the long-awaited promised review for disabled people. It is a punctured balloon. In a letter to Ian Bruce, the director general of the Royal National Institute for the Blind, on 27 February 1989, the Minister said: However, it would be wrong to assume at this stage that we will proceed to a review on the same lines as the social security reviews in 1984–85; that might well delay things unnecessarily. For that reason, I don't see much purpose in our discussing the terms of reference and composition of a review team. Some letter that.

We do not know what will happen. Disabled people have been waiting for the review, but it may not be a full one. I do not usually make forecasts in the House because they are difficult things to make, but I shall make a forecast now of what will happen. There will be a snappy Civil Service investigation, done by people who are not disabled and have no experience of disabled living. The Minister will make minimal and inexpensive changes. The long-awaited additional costs allowance will not be forthcoming even though the Social Security Advisory Committee, agreeing with all disability organisations, recommended that the first step should be help with additional costs. I am putting down these markers for the Minister to answer tonight. If the review does not confirm my forecast I shall stand up and withdraw it.

I forecast that Government energy will be devoted not to helping all disabled people but to encouraging occupational and private schemes for the better off and the privileged. Will the Minister intervene now and deny that? If he does not, he should do so when he replies.

Contrary to what was said a few moments ago, we shall have a two-tier Britain. That will be the Government's epitaph. They have already achieved that in many areas. The Health Service will be the next immediate target, and a quick Bill on disability will finish off the process before the next election. The message to the people of Britain is: "Do not be disabled if you are also poor, at least while the present Government are in office."

5.18 pm

Mrs. Marion Roe (Broxbourne)

From experience gained in my constituency through contact with many elderly people, there is no doubt that the 1980s have witnessed a sustained and substantial improvement in the living standards of most pensioners. Sound economic policies and a realistic social policy have been the key to that important change. The essential safeguard for pensioners' living standards will always be a growing economy, able to pay for the services and benefits that the elderly need, coupled with the firm control of inflation to protect pensioners' savings. The policies of the past 10 years have helped pensioners on both counts, spreading greater prosperity to more pensioners than ever before.

Opposition Members are eloquent in their commitment to pensioners but as the history of the Labour Government shows—and as was confirmed last night in the speech on economic policy by the right hon. Member for Islwyn (Mr. Kinnock)—their policies could never deliver the sustained and vigorous growth needed to fulfil all their grandiose pledges. In short, there was plenty of commitment, but no cash.

The present Government, by contrast, are determined to help pensioners and have the policies to do so. Today, Britain spends £23 billion on caring for our elderly people, which is more than is spent on either defence or education. The revival of the British economy has enabled the Government to raise spending on all forms of benefits for the elderly by almost one quarter in real terms since 1979. Despite all the nonsense that we hear from members of the Labour party about Britain lagging behind our European partners, it is instructive to note that the United Kingdom spends 9.6 per cent. of its gross domestic product on care for the elderly—a proportion exceeded in the European community only by France and Denmark.

It is not sufficient to measure any Government's record on care for pensioners solely in terms of overall expenditure levels. The system of support for the elderly should also be fair, simple, and easy for claimants to understand. Above all, it should get the help to those who need it most. The social security system which we inherited from the Labour Government—and which had developed piecemeal over almost half a century—failed on all those counts. The reforms that came into effect last year dramatically simplified and modernised the social security system. The service to the public has improved and both the time taken to process claims and the error rate in assessment of entitlement are down.

It was inevitable and necessary that the reforms would create some net losers. The alternative was to perpetuate many of the manifest weaknesses and inconsistencies of the old system, at huge cost to the taxpayer and to the most needy. No meaningful reform that is affordable, fair and brings extra help to those who need it can make all claimants better off. However, transitional payments ensure that no one loses out in cash terms.

If one accepts the logic of the 1986 reforms, one must also acknowledge that as benefit levels rise transitional relief should disappear. Only a tiny proportion of pensioners—about one in 50—will see no increase in income support levels after yesterday's upratings, due to withdrawal of transitional support. Similarly, more than one in nine claimants in the other groups targeted for extra help by the 1986 reforms—the sick and disabled, lone parents, and couples with children—will receive increases. The vast majority will receive the full uprating. Following last year's reforms, the social security system is providing more help to those who need it most more quickly than ever before. Crucially, it is doing that far more efficiently and with far fewer damaging consequences for the rest of the economy now that we have done away with benefit withdrawal rates of more than 100 per cent.

Current preoccupations with the first anniversary of implementation of the reforms should not obscure a remarkable development in the last few years—the way in which a growing number of pensioners rely only to a limited extent on the state for their pensions and benefits. Thanks to the spread of personal and occupational pensions, savings and home ownership, eight out of 10 pensioners receive income from savings or from their own pensions. Thanks to the revitalisation of the economy and to policies which have reduced inflation to less than one third of the peak that it reached under the Labour Government, pensioners' private incomes have risen well ahead of the growth in earnings. In the seven years to 1986, for example, pensioners' real incomes from savings and occupational pensions rose by a massive 60 per cent. Opposition Members find it difficult to grasp that what matters to pensioners is the growth of their total incomes, as was mentioned by my right hon. Friend the Secretary of State, not merely benefits and the state pension but earnings and income from savings and private pensions. Typically, Labour Members think that all pensioners are totally dependent on the state. In reality, the majority have savings and private pensions, and most pensioners' standard of living is higher than ever.

Mrs. Beckett

Perhaps the hon. Lady did not entirely follow the point made by my hon. Friend the Member for Livingston (Mr. Cook), when he pointed out that Labour, far from being unaware of the increased prosperity of many pensioners as a consequence of occupational schemes and of the state earnings-related pension scheme, actually brought those advantages into being. Under the present Government, they are being cut back so that in a few years pensioners' income growth will be substantially reduced.

Mrs. Roe

My experience is that pensioners feel that they are much better off than they have ever been, and that relates entirely to my point concerning savings and private pensions.

Since 1979 pensioners' total incomes have grown twice as fast as those of everyone else and five times faster than under the Labour Government. The modernised and reformed social security system brings more help to pensioners in greatest need. Last November's announcement of an extra £200 million income support will be particularly welcome to those elderly pensioners who never had a chance to participate in personal or occupational schemes or in SERPS.

The Labour party's extravagant and voluble compassion is nothing without policies to deliver sustained economic growth. The Government's record shows that a strong economy benefits everyone. The Labour party would be well advised to take that lesson to heart.

5.27 pm

Mrs. Llin Golding (Newcastle-under-Lyme)

I bring to the attention of the House, and to the Secretary of State especially, the case of a 79-year-old woman who came to my advice bureau the other week. She entered the room very breathless and obviously upset, but with a determined expression on her face. She is one of the many working women of north Staffordshire whose lungs have been damaged from breathing the industrial pollution which previously existed in the Potteries.

That lady, who had known her fair share of low pay and hardship, said to me in a quiet, firm voice, "I have come to tell you of the plight of many of the pensioners where I live. They will not come to see you because they no longer believe that the Government will listen to what they have to say, so I have come for them. Many of us received little or no increase in our pension this time. I myself received nothing. Because of my health, I cannot do much housework or my laundry—I have to pay someone to do that, and all the heavy work. Every week I carefully portion out my money into separate piles so that I do not get behind with any of my payments, and so that I do not owe anyone anything, which would be a dreadful thing to do, but I have been finding it very hard to manage and I cannot go on any longer. I used to have four pints of milk a week—now I have two. I used to have two loaves of bread a week—now I have one. For many months I have been unable to afford fresh fruit. Occasionally I buy a tin of fruit, such as apricots, which lasts me a number of days. I was looking forward to an increase in my pension, but I have had no additional money. Please could you go down there and tell them what it is like for many of the pensioners?"

I wrote to the manager of the local Department of Social Security office—a caring man who would help if he could—and received the following reply: This lady was in receipt of Supplementary Pension prior to April 1988 and was receiving extra payment for her additional requirements in respect of heating and laundering costs. The Income Support scheme introduced in April 1988 made no provision for payments in respect of additional requirements and to prevent her becoming financially worse off under the new scheme a transitional addition payment was awarded to maintain the weekly allowance at the pre-April 1988 level. The effect of this is that … benefit will remain at this level…until the transitional payment has been eroded by subsequent increases in benefit rates. The letter continued that the lady was receiving her full legal entitlement by way of benefit and will qualify for the higher rate of pensioner premium when she attains age 80 in August 1989 which will further erode the transitional addition.

That lady will not receive any additional pension or any extra money until her pension reaches £51, but she will continue to have to pay for laundry, cleaning and for people to help her with all the heavy work that she is incapable of doing for herself. She asked me to put her case to Ministers in the belief that they would do what they could to help elderly people like her who suffer from ill health and those who are poor and unable to help themselves. I ask them—please do not fail this lady.

5.32 pm

Mr. Robert McCrindle (Brentwood and Ongar)

The first half of the Opposition motion is a red herring. I shall turn my attention to that in an attempt to persuade the House that it is better to judge by actions rather than rhetoric.

However, although I cannot agree with the extravagant language of the second half of the Opposition motion, I shall show more sympathy with the underlying point that the Opposition seek to make. In the process I hope to take up the challenge of the hon. Member for Livingston (Mr. Cook) and prove that at least one Conservative Member is influenced considerably more by the plight of pensioner constituents than the threat of Government Whips. I say that with great respect for my hon. Friend the Member for Staffordshire, South-East (Mr. Lightbown).

I always look to what a Government have actually done rather than paying undue attention to either the promises that they make for the future or criticising them for their present actions. Although it is correct that, during the last Labour Government, pensions were linked to earnings rather than prices, the hon. Member for Livingston conspicuously overlooked, when addressing this point—which he has addressed many times in this House and outside—the fact that the Labour Government were unable to deliver that promise for three out of the five years during which they were in office. On some occasions that was for reasons outside their control.

Before the Labour party lectures the Government for failing to continue the link with earnings, it should recognise that those of us who listen to what it plans to do —should it ever again be given responsibility for the government of the country—are inclined to reflect that the Labour Government were unable to keep their promise because of their own poor economic stewardship of the country. Rather than concentrate, as some Labour Members seem to do, on the past and what they would do in the future, they should recognise that, since 1979, the Government—who have made no secret of their wish to link pension increases to the level of prices—have carried out that undertaking to the letter.

I freely concede that some Conservative Members would have infinitely preferred it if, during this year when we have a substantial Budget surplus—and recognising that pensioner expenditure tends to be far less inflationary than the expenditure of younger earners, and less is spent on imported goods—we had safely increased the standards of living of pensioners and other beneficiaries. I am disappointed that the Government did not consider that to be an appropriate move.

Let us examine the system which is at the heart of today's debate. It would be extremely difficult for any hon. Member to say that we did not need the reforms represented in the 1988 legislation. It cannot have escaped the attention of hon. Members that, at that time, there were 30 different benefits, myriad conflicting rules and a complex administration which was vastly overdue for reform. I have been at the forefront of those who have welcomed this endeavour to improve the simplicity of the social security scheme and, in the process, to improve targeting so that those in greatest need receive most help.

I warmly welcomed the Government's aim to remove the poverty trap and encourage savings—to which Opposition Members have not paid enough attention—to foster positive attitudes towards employment and—I make no apology for this—to seek to move away from what has come to be known as the dependency culture. We should recognise that we should not continue to expect the state alone to prop us those who are able to earn additional incomes. At one time it may have been accepted as the norm, but that is clearly not so now.

The Government's aims are laudable. I regret that the results do not seem to have equalled the aspirations. I have already endorsed the welcome attempt to streamline the benefit structure, and remove the pages of regulations, so that it is more easily understood. I have no hesitation in once again endorsing that attempt.

The Opposition spoil their case by exaggeration. However, it is true that a minority of pensioners who—being no longer entitled to the various additions on matters such as fuel, diet and incontinence, which they had and which no doubt contributed to the complication of the scheme—will find one year later, as the transitional period moves on, that they are in a worse position. That seems to be buying the simplification of the system which I support at too high a cost.

Targeting has undoubtedly benefited millions of people. Again, the Opposition spoilt their case by failing to concede that many gained as a result of last year's changes. It is a pity that a much-improved system for many people is reduced in the eyes of the population because there is a minority for whom it is not so.

Targeting is a splendid aim, which I continue to endorse, but it does not appear to be working. The people for whom it is not working are not those who, by most definitions, do not need it to work because they are among the less well off, no matter how that definition is stretched. The fact that there will be no increases or will be net reductions for some and modified increases for others because they are not entitled to the additions that they were able to expect before, or because of the end of the transition period, or because of both, shows that there is a corner of a broadly extremely successful review of social security to which the Government must turn their attention.

I concede that in most cases improvements have been made. I concede the point made by the Secretary of State that in the autumn there will be further advances for those whom I and other hon. Members have represented in previous debates, but there is no question but that a tiny element have not benefited from targeting, which was one of the principal objectives of the reforms. If people who are by no means well off are losing further benefit, targeting is not working across the board in the way that it is to a considerable extent for millions of beneficiaries, on whose behalf we understandably receive few representations.

There is no virtue in being consistent, but I hope that hon. Members will concede that, whatever else, I am at least consistent about the introduction of the requirement to pay 20 per cent. of the community charge. It may be desirable according to the views expressed by some of my hon. Friends, who say that it will involve the community and lead to understanding of what local government costs, but the other side of the ledger is that many who would have benefited as a result of the social security reforms will be tipped back on to the other side of the register. It may be too late to redress that merely by saying that we shall discontinue the 20 per cent. contribution, but this aspect must be taken into account by Ministers as they try to plug gaps.

I am reassured when Ministers remind me that they continue to monitor the position. To their eternal credit, they have monitored the system since 1 April 1988, and as a result of pressures brought by a number of hon. Members they have moved. The capital limit of £6,000 was increased to £8,000, and an announcement was made recently regarding 16 and 17-year-olds. I hope that the Minister will take this as a sincere representation on behalf of the people whom I represent, but the same could be said of people who live in Labour constituencies. When they ask me, "Could you live on this net amount?" the only answer that I can give in all conscience is no. When they ask, "Am I one of the better off, because that would seem to be the reason for my not receiving as much as I did before?", again, I must answer no.

The position of beneficiaries has undoubtedly improved as a result of last year's changes, but thousands of people have been adversely affected. As I and other hon. Members were able to persuade the Minister to move on previous anomalies, I hope that we will persuade him that fresh thinking is required. It reflects no credit on an otherwise excellent range of social security reforms if, with inflation rising, people tell me "I am about to receive less in 1989 than I did in 1988." That cannot be right.

5.44 pm

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

It is always a pleasure to follow the hon. Member for Brentwood and Ongar (Mr. McCrindle), who has a reputation for independence and thinking out his own thoughts. His speech would repay careful study by Ministers, and I hope that he will receive answers to the questions that he posed.

It will come as no surprise to hon. Members who served on the Committee considering the Social Security Act 1986 that we are in this position today. I welcome the motion, which was ably presented by the hon. Member for Livingston (Mr. Cook), and will recommend that my colleagues vote for it.

The Fowler reviews set themselves an impossible task. It was impossible to simplify matters, which was laudable, and increase targeting, which was also an honourable objective, without incurring any additional cost. It is the main reason for the difficulties being experienced now by hon. Members' constituents.

The Secretary of State for Social Security and the Minister for Social Security are picking up the consequences of the fact that no detailed research was done prior to the Fowler reviews. We regularly have these debates, in which Conservative Members trade statistics and Opposition Members confront them with individual cases. It is a hopeless and frustrating process which gets us nowhere.

Some of the points made by the hon. Member for Brentwood and Ongar were right. Perhaps Opposition Members do exaggerate the number of people experiencing financial difficulty, but that does not detract from the fact that some are indeed suffering very real difficulties. The debate should not proceed further without our placing on record the fact that the basic level of premiums and allowances under the new income support, family credit and housing benefit rules are far too low to allow a normal person a normal standard of living and to play his or her part in the community. It is substantiated by figures produced by the Policy Studies Institute, which show that 2 million pensioners are on income support, 2 million additional pensioners are on housing benefit and I million are estimated to be claiming benefits to which they are entitled. That clearly shows that the basic state pension cannot provide for basic needs, and that state of affairs must be addressed. Almost half of the 10 million pensioners are caught in the poverty trap, and the Government have an obligation to do something urgently about that.

Mr. Faye11

The hon. Gentleman has put his finger on the dilemma that faces any Government responsible for looking after pensioners who cannot otherwise look after themselves. He said that the basic pension is not adequate for 2 million pensioners on income support. That being so, what is the point in increasing the basic pension for rich people such as Lord Forte or the Prime Minister? Why not concentrate benefit on income support for the poorest pensioners? What is the point of spreading the jam thinly?

Mr. Kirkwood

I do not think the hon. Member understands the difference between the needs of those on contributory state pensions and those who enjoy occupational pensions. I will try to deal with that point later in my speech.

It is incumbent on Opposition Members to resist the temptation to be extravagant about numbers. I want to limit my remarks to the generation of pensioners with us now. They will come to the end of their natural lives between now and the end of the century. There has been a significant change in the rules for providing most income from occupational personal pensions and after the year 2000 when these pensions are the norm we will not have this problem of inadequate pension provision, but the problem will get worse before it gets better. There is no point in going on in abstract terms about total incomes or even average incomes of pensioners; we have to deal with the 2 million real people suffering real hardship now. That is the question the Government must address today.

As was said earlier, benefits have increased in real terms over the period of this Government by only something like 2 per cent., while earnings have increased by more than 20 per cent. I think that the figures used by the hon. Member for Livingston are right; they are the ones the Library supplied to me. I am seeking to make a contrast between the increase in pensions and benefits and the increase in earnings, however measured, and the Government cannot deny, whichever figures are used, that there has been a substantial difference between them.

I do not think it is possible to rely only on price protection between now and the end of the century. I understand why the Government should make that pledge, and it is a pledge worth having, but if one applied price protection to the July 1948 pension figure of £1.30, which was the original level at which the pension was set, it would only be something like £18.70 at today's prices for a single person, and the figure of £2.10 in July 1948 would now only be £30.59 for a married couple. Nobody would seek to justify that miserly level of increase over that period of time. Also, the Social Security Advisory Committee says time and again in its reports that the Government cannot simply, between now and the end of the century, hide behind the screen of price protection, because the standard of living of pensioners will inexorably fall further and further behind. That is an absolutely certain consequence of the Government restricting their policy for uprating benefits like pensions merely to price protection.

Transitional protection is presented as an example of generosity by the Government. To me, it is a device to conceal the full extent of the original 1986 cuts. This debate will occur year after year, and it does this House no credit to keep running away from the fundamental problems causing the difficulties. I have warned in previous debates that this day would dawn, and constituents I meet are frequently distraught, furious and feel cheated. What distresses me more than anything else, however, is that, after going through these three respective angry phases, they invariably adopt a resigned, subdued attitude, as they realise they must submit themselves to the Gradgrind of continuing poverty for yet another year or even longer.

The poll tax rebate scheme, from a Scottish point of view, is in a state of total chaos. Nobody seems to be able to get answers to questions and all sorts of anomalies are appearing. This is a totally iniquitous, unjustified, damaging and complex new tax, loved by nobody north of the border. If English Tory Members think they have problems with transitional protection, just wait until the poll tax comes into force in England. In future in these debates words of criticism such as those of the hon. Member for Brentwood and Ongar will seem like milk in balm compared with what they will then have to tell Ministers.

Problems are not only restricted to deprived urban areas, but occur in rural areas, too. A series of very disturbing representations was made to me this weekend in Hutton in Berwickshire, an otherwise idyllic part of the world. The hon. Member for East Lothian (Mr. Home Robertson) lives within a stone's throw of there. He will confirm what type of place it is. There were real problems there which caused me substantial concern. Another separate problem is the fact that there is a capital upper limit of £8,000 on the poll tax rebate, and not, as should be since it is a personal charge, a married couple's upper limit of £16,000. This is in my view an absolute disgrace.

I anticipate I will have the sympathy and support of the hon. Member for Brentwood and Ongar for my final point. I am worried about the injustice experienced by those with small occupational pensions and other income. For reasons I have explained earlier, nearly half the 10 million pensioners in our country are potentially caught in a poverty trap. Any income over basic benefits is firstly taken into account in reducing their income support and then housing benefit. I have not done a calculation at the current rates, but under the benefit rates in place in November 1988 the first £30 of increased additional income could be reduced to £4 extra in certain circumstances, and I know of cases like that. It seems to me that, where the Inland Revenue has a special scheme enabling people to have the first £20 of income free from tax, it is quite wrong for the DSS to require it to be declared against income support and housing benefit. I put it to the Minister of State that the Department should do something urgently about that. Some earnings should be disregarded over and above those that already are. That would help remove some of the worst problems of the poverty trap faced by some of our worst-off pensioners.

The Government do have a problem. Provision for pensioners between now and the end of the century is inadequate and a matter of real concern, and I hope the Government will take carefully into account what is said in debates like this and try to do something to alleviate problems caused by the whole transitional mechanism before it hits us again in the same disastrous way next year.

5.56 pm

Mr. Simon Burns (Chelmsford)

I do not know how familiar you are with contemporary rock music, Mr. Deputy Speaker, but it may not have escaped your notice that a new rock song has been going around recently, reviving a flagging theme, the red rose. Sadly, it will not get to No. 10. However, I have been struck by some of the lyrics in that song, saying To help each other every day, Remove injustice on the way". Perhaps those lyrics are somewhat trite but, taken in isolation, no reasonable person can dispute the basic sentiments expressed. However, if these lyrics are a declaration of intent of any Labour party which might seek office at some distant time, and if they are taken in the context of today's motion by the official Opposition and the past record of the Labour Government of 1974 to 1979, they are meaningless. Good intentions, glib promises and pious rhetoric are just not good enough. It is a cruel deception to raise expectations which cannot be realised.

Labour's October 1974 election manifesto proudly proclaimed

Britain will win with Labour". It proclaimed that Labour's policies would protect the weak, the poor and the disabled, … and to maintain and improve their living standards. The subsequent performance of that Labour Government failed dismally to live up to those high-falutin' declarations. Labour might have been the winners, but the losers were the pensioners, the less well off and the disabled in our society.

The oft-repeated claim that pensions increased each year by the movement of prices or earnings, whichever was the greater, is not sustainable. It was not honoured in 1976 or in 1978. If Labour had won the 1979 general election, its proposed policies would have meant that it would not have been honoured in 1979, either. Mrs. Barbara Castle dispensed with the historic calculation of earnings and replaced it with a system of forecasting in 1976. That deprived pensioners at a stroke—if I dare use that expression—of £500 million. At today's prices that is over £ 1 billion.

To add insult to injury, the method of forecasting was wrong in five of the seven years in which it was used to calculate the increase in the state pension. Even the Christmas bonus did not escape unscathed. It was not paid in 1975 and 1976. If Lord Barnett's memoirs are to be believed, it was only a kicking and screaming Lord Ennals and the right hon. Member for Salford, East (Mr. Orme) who agreed to pay the Christmas bonus in 1977. Opposition Members should think twice before lecturing the Government on their uprating of benefits record. Their criticisms do not square with the facts.

The Government have not simply paid lip service to the need to help pensioners, the less well off and the disabled. They have encouraged the creation of wealth, with the result that this year the Government have been able to spend a record £51 billion on benefits. Approximately half of it is paid to the elderly. Pensioners have shared in the nation's prosperity. Their total incomes have grown twice as fast as those of everyone else and five times as fast as they grew under the last Labour Government.

Much play has been made of the claim that Britain's pensioners lag behind those of our European competitors. Again that myth cannot be sustained, because 9.6 per cent. of Britain's gross domestic product is spent on all programmes for the elderly, excluding medical care. Britain is third on the EEC chart. We are marginally behind Denmark, at 10.4 per cent., and France at 9.8 per cent.

The most powerful argument for what the Government have done for pensioners comes not from me but from Mrs. Dorothy Rhodes, the president of the National Federation of Retirement Pensions Associations. Recently she said: I have spoken loudly in support of parity with Europe but during the past year … having spoken at length to those who receive Europensions and discovered that in many cases the actual cash received in relation to the cost of living is often lower than in the United Kingdom, I am revising my opinion, for in no way can our Federation ask for an equality that would disadvantage our own people.

There is a gulf between Conservative Members and the Opposition over pensions. The gulf is not about whether we care, or about trying to find the best solution and the best policies for providing help to the less well off. That does not divide us; everyone believes that the most effective help possible should be provided. What divides us is philosophy and the implementation of policy. Our policy during the last 10 years has benefited pensioners. We must create wealth so that the state can then spend the money that is generated on providing genuine help to the less well off and to pensioners whose only income is the state pension. It is crucial to target resources.

I return to child benefit which, deliberately, has not been increased but frozen. My right hon. Friend's decision was absolutely correct. My wife and I have a young daughter. It is nonsense for my wife to receive a tax-free sum of money each week towards the upkeep of our child. I much prefer that money, or the money that my wife would have received as an increase in child benefit, to be targeted on genuinely less well-off families through the income support system and the family credit system.

The less well off rightly deserve help and they a re getting it from the Government. The vast majority of people do not whine and complain. They accept the Government's philosophy. They accept also that the money is going to those who are in genuine need and who need to be helped.

6.5 pm

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

The hon. Member for Chelmsford (Mr. Burns) asked you, M r. Deputy Speaker, whether you enjoyed pop music. My eldest son writes pop music, although I brought him up on Bach and Beethoven. I much prefer Bach and Beethoven. The majority of my pensioners preferred the Labour Government to the present Conservative Government when it came to pensions.

The hon. Gentleman used the word "whine." That was obnoxious. The pensioners that I shall be speaking about are not whining. They are demanding a right that they worked for all their lives. In the community that I represent, many husbands have died and their widows have been left on their own. Their husbands earned poor money and died young as a result of the work that they did. Their widows have been left totally dependent on the state.

We have been challenged and asked to look at total incomes and targeting. I accept both challenges. I expect the hon. Member for Chelmsford to accept the challenge that I intend to put to him, based on the cases to which I shall refer and also on the cases mentioned by my hon. Friends the Members for Livingston (Mr. Cook) and for Newcastle-under-Lyme (Mrs. Golding). I refer to a widow whose husband died younger than he ought to have done, because of the work in which he was engaged. I wrote to the local Department of Social Security office. I do that as a matter of course until I find that DSS employees are victims of Government policy. I complained that that widow would not receive a penny increase in the financial year 1989–90. I received a letter from the DSS, together with the calculation. I ask the Secretary of State to listen to the simple terms of the calculation, which are that the total income on 11 April 1988 was £47.90 and that the total income on 10 April 1989 was £47.90.

Does the Secretary of State believe that a pensioner whose total income is £47.90 should be targeted? That pensioner, on £47.90, will have to soldier through the whole of the next financial year without a single penny increase in her pension. The whole of her pension increase has been clawed back because of the loss of the transitional addition. It is a pity that the hon. Member for Brentwood and Onger (Mr. McCrindle) did not say that he supported the cases that we are bringing to the Secretary of State's attention. This pensioner has lost the whole of the increase for 1989–90. Moreover, because she was in receipt of transitional addition amounting to £3.80 instead of just £2, she will lose the whole of her increase for 1990–91 as well.

With the odd exception, Conservative Members are endorsing a system under which a pensioner with a total income of £47–90 will spend this year and next year without a single increase in her pension to cover increases in the cost of living. If we do not include the mortgage interest rate and take inflation as 5.5 per cent., we still know that water charges are to increase by 10 per cent., and that, despite low inflation, the cost of living and the prices of essential goods still change. We know that rents will go up, and only a percentage of those rent increases will be covered by increases in housing benefit.

The pensioner I mentioned—I hope that the hon. Member for Chelmsford agrees that she should be targeted —is one of the 20 or 25 per cent. of pensioners who will have to depend on a static income to cover essential costs for the next two years. She is one of dozens of such pensioners in my constituency. Does the hon. Gentleman think that that is fair? Does he believe that the policy of targeting benefits should include that pensioner? In an intervention I asked the Secretary of State whether he thought that a pensioner on £47.90 a week should be targeted for support or whether that pensioner should go through the next two years without any increase in income to handle the additional costs of living. The Secretary of State did not reply.

I understand that by their very nature transitional additions must be phased out, but we should remember that the transitional additional allowances were dragged out of the Government as a result of pressure from both sides of the House more than 12 months ago when the impact of the new scheme was fully understood. I understand that among others the Prime Minister at her Finchley surgery suddenly realised the consequences of introducing the new system. Why is there not the same reaction this year? The same thing is happening. The same dozens of people who knocked on our surgery doors last year—I hope that they are knocking on the surgery door of the hon. Member for Chelmsford—are now saying that they did not realise that when they received the transitional addition the entire increase in their pensions would be clawed back in a single year and within a year.

The transitional additional allowance was not some act of great generosity but was a limitation of the loss of benefit as a result of the change in the system. We should watch out for the Orwellian double talk that the Government use when they talk about the transitional additional allowance as if it were a marvellous act of generosity when it was limiting the loss of benefit as a result of the so-called reform to a simpler system.

No one should have believed that a transitional addition equivalent to the entire increase in the pension should have been clawed back, as has happened. I hate to be in this position. I do not agree with the whole show and I do not agree with the system, but if we have to work the system and make a desperate plea on our hands and knees, I ask the Secretary of State now why he does not have an urgent rethink. He claims that he is monitoring, so here is the information he requires. Why does he not adjust the system at least by a much more gradual process by which the transitional additional allowance is clawed back? I hate the notion of presenting such a plea, but as the situation is desperate and the Government have a majority and can override our motion and continue to enforce the provisions, just as the Secretary of State had a rethink when he introduced the transitional allowances, will he not consider introducing in the next month or so some measure to provide a much slower and more gradual claw-back of the transitional addition? For example, he could say that no pensioner should lose more than one quarter of the increase in the next financial year.

If the Secretary of State is to introduce such a horrid system, let him at least do it with some amelioration, and introduce a scheme so that pensioners, such as the widow to whom I referred, do not have to soldier through the coming year and the year after without any increase in income. I hate the idea of having to ask the Secretary of State to do it, but will he reconsider urgently the concept of phasing out the transitional additional allowances over a much longer period? Instead of clawing back the entire £2.06 increase this year and virtually writing off next year's increase in the income of the average pensioner such as the one I described—and there are dozens of them in my constituency—if the Secretary of State were to ameliorate that situation it would be a modest crumb for us and we could tell our constituents that someone has listened, as my hon. Friend the Member for Newcastle-under-Lyme argued.

When the Minister replies, will he give his assessment of what it would cost not to claw back the full £2.06 from those in receipt of transitional addition in the next year if a pensioner were allowed to retain three quarters of the £2.06 increase? What will be the additional cost in a financial year to introduce a more gradual transition? Conservative Members repeatedly have defended the system by arguing that the Conservative party and not the Labour party has established a major economic success story which allows the Government to be generous to pensioners. But why can they not be generous to pensioners living on £47.90 a week? Why do they have to claw back the entire pension increase? We are not talking about millions of pounds. Perhaps we are talking about hundreds of thousands of pounds or whatever figure the Secretary of State or the Minister wishes to provide. If the Government's economic success story is so great, surely they can assist and support that group of pensioners.

I read with fascination the Secretary of State for Wales' speech last night to that tower of Tory power, the Tory Reform Group. He condemned the "simplistic economic dogma" which does not solve the nation's problems. Nor does the simplistic social policy dogma that has emanated from some quarters of the Government and the Conservative party. But the Secretary of State is a member of the Cabinet which endorsed all the changes. I look forward with great interest to his speech on social policy in the near future, on behalf of the pensioners whom I represent. But we have to depend upon urgent pleas to the Secretary of State.

In the past few weeks, I have done what I did last year. I have sent a whole batch of cases, such as the case I have described, to the Prime Minister in the hope that some message of assistance and support to the pensioners may come from on high. I noticed that the Chancellor of the Exchequer, in presenting the Budget, spoke about the £14 billion he had to pay off the national debt. But there is another debt to be paid to a whole generation of elderly people who sacrificed their efforts, their health and their lives, and who are entitled not to request, to beg or to whine but to demand the right to a fair and just pension system.

Several Hon. Members

rose——

Mr. Deputy Speaker

Order. There is very little time and I hope that hon. Members will make brief speeches.

6.17 pm

Mr. John Butterfill (Bournemouth, West)

I wish to raise the subject of the uprating of retirement pensions, and especially the uprating that took place last November. I want to call upon my hon. Friend the Minister to consider paying a bonus of an extra week's pension for Britain's 8 million pensioners. I believe that this is urgently required to make up for what I consider to be a sleight of hand or conjuring trick which occurred last November. At that time pensioners received 1.8 per cent. less than the law required that they should receive.…I do not think that Parliament should allow the pensioners to be double-crossed in the way that they have been over the latest pensions uprating…the pensioners' own money was hi-jacked by the Government to pay their Christmas bonuses at Christmas…many of us are seriously disturbed by the fact that a firm pledge, about which we have frequently publicly and proudly boasted, is apparently not to be honoured." [Official Report, 12 March 1979; Vol. 964, c. 231–35.] Those are harsh words, but they are not my words and they are not about this Government. Those are the words of the hon. Member for Birmingham, Perry Barr (Mr. Rooker) and the words of Mr. George Rodgers, the former Labour Member for Chorley, almost exactly 10 years ago, speaking about the last Labour Government. Whatever we may have heard from the Opposition about the good intentions of the Labour party, we can hear from their own lips what the performance was when they were last in power. For the hon. Member for Livingston (Mr. Cook) to say that had their formula remained in place there would have been an increase of £17-plus a week for pensioners is sheer deception, as is manifest in the words of his Back-Bench colleagues that I have just quoted. The difficulty about the speech of the hon. Member for Livingston was that it was almost entirely anecdotal.

Of course there are people who are suffering under the arrangements that have come into force recently. My hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) was right to point out that there are anomalies that need to be redressed. My right hon. Friend has said that he will look at these problems and keep the matter under continuous review. Where the hon. Member for Livingston was wrong was in not giving any account of the enormous improvements that have been made by this Government, or of the enormous improvement in the welfare of pensioners that has taken place over the past few years. We are not talking just about the basic pension; the improvements in income support and in housing benefit have to be taken into account.

My hon. Friends have already spoken about the total proportion of GDP that we in this country, compared with other European countries, spend on benefits. We are third in the European league. It is right that that 'should be pointed out, but it is right also to point out that the changes that we have made have not been made without extra money. An extra £200 million is being spent on income support as from October. In particular, the older and disabled pensioners will benefit by an extra £2.50 a week.

Equally, the Opposition have taken no account of the exceptionally cold weather payments. Recently they criticised the basis on which those payments were made. But at least the payments were introduced by this Government; they did not exist when the last Labour Government were in power. The Labour Government certainly did not think of such payments. Nor have the Opposition paid any tribute to the very generous improvements in the tax allowances for pensioners that were introduced in the last Budget. The age allowance was increased very substantially, the age threshold was reduced, and the earnings rule was abolished. All of those things are very good news for pensioners.

Instead, Opposition Members harp on about poverty. They produce statistics to show that an ever-increasing number of people in this country are living in poverty. It is worth looking at the basis of those claims. They tend to operate on one of two bases: either earnings related to average earnings, or earnings related to the thresholds for income support. Of course, the difficulty with that is that every time we improve the level of social security the number of people allegedly in poverty goes up. It is a no-win situation for the Government. But those are precisely the sort of statistics that the Opposition like to deal in.

We have to look at the fact that we are now spending £51 billion on the social security budget, which is a real increase of 33 per cent. since the last Labour Government were in power. We have to look also at the increases that we have made in income support and family credit. The amount being paid in income support is £421 million more than was paid in supplementary benefit; and £400 million is being paid in family credit against £200 million under the old family income supplement. Those are real increases that are benefiting the majority of people.

The great problem in this country is that, despite all the money that is being spent, we still have people who are genuinely poor. We must ask ourselves why it should be so. When we are spending £51 billion—nearly £1,000 a year for every man, woman and child in the country—why are there still poor people? If the bottom 10 per cent. of the population were regarded as the really needy, that would give them £10,000 a year each. Why do we have poor people? It is because benefit is very poorly targeted. So long as we have universal benefits, such as child benefit —this was mentioned by my hon. Friend the Member for Chelmsford (Mr. Burns)—there will be a problem. Of course, child benefit did not benefit the genuinely poor because it was clawed back from their other benefits; it benefited only the middle classes. So long as we continue with nonsenses like that we will never redress poverty in this country.

Mr. Robin Cook

Perhaps the hon. Gentleman could clarify a point. He has just said that so long as we continue with nonsenses like universal benefits we will never resolve the problem of poverty. Is he including in "universal benefits" the state pension?

Mr. Butterfill

I include all benefits in my assessment of the way in which we should treat people. I am not suggesting, for example, that we should get rid of the state pension, but I am saying that we need very much more accurate targeting of benefits if we are to eliminate poverty.

6.26 pm

Mrs. Rosie Barnes (Greenwich)

The Government have a very shabby record in their treatement of the poor, the disabled and the under-privileged, particularly those who are dependent on benefits, and even more particularly the elderly. It is clear that the Government believe that by reducing the value of benefits, by failing to uprate benefits in line with inflation, they will produce a net result of a reduction in the dependency culture and will compel people back into productive economic employment. This is just not the case. People are not dependent on benefit of their own wish; the vast majority wish to be employed, and wish to have a dignified standard of living that they have earned and provided for themselves. If they are in need of a pension, if they are in need of benefit, it is not something that they have willed upon themselves.

It is a disgrace that, at a time when inflation is running at nearly 8 per cent, we see increases in benefit of only 5.9 per cent. There is nothing complicated about the net effect of that: the poor will become poorer—straight, unavoidable fact. There is no whining about it, no harping on about it; I am simply reporting what many of my constituents have told me, and what the constituents of all hon. Members will be telling them over the coming weeks. Whatever extravagant claims the Government may make, nothing can explain the policy of lowering the income of those people who are dependent on benefits.

That is particularly exacerbated by the combined system of taxation and benefit—or rather the fact that those are not combined. The two have to be looked at together because, together, they exacerbate the poverty trap. They frequently and continually inhibit people from taking low-paid or part-time work because, by doing so, those people would be worse off than they are when on benefit. Most people do not have a fair choice—the combined effect of the tax and social security system ensures that they stay at the bottom of the pile.

My greatest criticism of the Government is of their meanness of spirit. Yes, the system is simpler than it was before—and that is to be welcomed—but it is also totally inadequate. The Government had an invaluable opportunity to revise the system, to simplify it, and to make sure that no one was worse off. Such opportunities come very rarely. There was an opportunity last year, and the Government passed it over. Yes, many people are worse off. We are talking about a minority, but it is a minority of people who are suffering through no fault of their own.

We are looking not at a decision that was made against the backcloth of a shortage of revenue, but at one that was made against the backcloth of a surplus of £15 billion. Despite the growing shadow of inflation, which endangers our economic recovery, we have seen consistently strong economic growth. One of the advantages of a strong, successful economy is that it enables a caring, socially responsible Government to share the fruits of success with those members of society who have not been able to benefit directly—those who are not earning high wages, those who are not getting increased revenue from shareholdings. If the Government seriously want to encourage everyone to participate in our economic success, they should understand that they must give everyone, including the needy and the poor, a share of that success. They should never have considered cutting the real value of social security benefits.

The uprating of pensions and other benefits, including child benefit, should be automatic. The Government have shunted child benefit to one side and it has been gradually eroded, presumably in order to dismantle the universality of that benefit.

The Government should go further and examine ways to make benefits more buoyant. They should ensure that the poor benefit from our economic success by giving an additional increase in benefits which is related to the success of the economy. It is a measure of the Government that, today, we are debating real cuts in benefit. We are witnessing the poor becoming poorer when the Chancellor does not know how to spend the reserves that he has.

Pensioners have a particular right to be angry. The Government happily preside over a system of supposedly contributory benefits. The system educates people to believe that they are paying into a fund on which they will be able to draw, by right and with dignity, in later life. In reality, however, the Government treat pensions as though they were a handout rather than money which is given back to those who have paid in over the years. Pensioners are only asking for what is theirs by right and for what they have paid. They are right to argue that the Government are wrong to cut the value of their pensions. This is an argument of principle that goes far beyond the fact that many pensioners are living in great poverty today. If the Government have decided that they do not accept the contributory principle, they should have the courage to say so rather than to act as the arbiters and controllers of what is given back to those who have paid over the years.

The growing number of dependent elderly poses a challenge to and a great problem for the future reduced working-age population. To try to wriggle out of social obligations, to try to reduce the cost of supporting the elderly by cutting pensions and by trying to push the elderly into the private health sector by subsidising private health insurance amounts to a cowardly approach to a problem that must be faced honestly and openly.

It is right to continue the tax relief on personal private pensions to enable many people to enjoy a better standard of living in later life. Ultimately, if the majority of our elderly are covered by such schemes, it may be right to reduce the extra tax relief given to pensioners through the age allowance. For the majority of today's pensioners, however, the state pension is their basic income. It is clear to anyone who meets and talks to pensioners regularly that their basic pension is not high enough. Those with small occupational pensions often suffer even more deprivation because they are denied access to the benefits that may be claimed by those with no additional pension.

We must consider seriously the provision for poor pensioners. To achieve a better allocation of resources is not just a question of giving more money. We must change the structure to make claiming a more straightforward and simplified matter, with less stigma attached to it. The answer must lie in the integration of the tax and benefit systems. Only by aggregating everyone's earnings and benefit entitlement can a sensitive assessment of net tax burden or net benefit entitlement be made. An integrated system is perfectly feasible within a computerised Inland Revenue. That would eliminate the "churning" of revenue that results in the Government giving with one hand and taking back with the other. For the population as a whole it would ensure that people did not become worse off by taking on work and subsequently losing benefit. Within such a system provision for poor pensioners should be a priority.

Mr. Butterfill

The system that the hon. Lady has adumbrated has some merit. Would it involve withdrawing universal benefit such as child benefit?

Mrs. Barnes

No. My party strongly defends child benefit. It was, in part, a tax concession that was taken away from the main earner in the family and given to the caring parent, usually the mother. Time does not permit me to take that argument further this evening.

Other measures that we advocate, particularly for the elderly, include the miserly £10 bonus at Christmas. We believe that a double pension should be given the week before Christmas. We should also seriously consider abolishing the standing charges on gas, electricity and telephones, which hit the elderly particularly hard.

The issue today is not how much the system costs but how effective it is. Does it fairly do the job it was set up to do? No one believes that any increase below the level of inflation will do anything other than make people poorer. There has been some indictment today of the use of anecdotes, but those who have made such criticisms should remember that anecdotes represent people who are suffering and that they are symptomatic of some of the failings of the system. They highlight the gaps which we must plug.

On Friday night, a constituent, a single parent with three children, came to me. She is a diabetic and, because her eldest child has just turned 16, her income has fallen from £72.96 a week to £46.31. Her 16-year-old son has not yet got a job. Her doctor sent a letter to tell me that she may be hospitalised because her diabetes is getting out of control as she is eating badly. How can I explain to my constituent just how fair and compassionate the Government are? Such anecdotes represent people. They may represent the minority, but they are suffering, and they deserve the attention and a share of the resources of this country.

6.36 pm

Mr. Tony Favell (Stockport)

I shall confine my remarks to a few basic truths about the basic pension. A country is judged on the way in which it treats its pensioners and that is right, because a decent society should be judged on how it treats its elderly citizens.

There are widely held misconceptions about the basic pension. There is a belief held by the young, including the hon. Member for Greenwich (Mrs. Barnes), that most pensioners have to live on the basic pension. But they do not. Opposition parties complain about the rate of increase in the basic pension and ask whether it is reasonable to expect couples to live on £65.80 a week. The answer is that none do because the basic income support level is above the basic pension. Therefore, any couple on basic pension are entitled to income support and if they are householders they are also entitled to housing benefit.

Opposition Members have complained that one fifth of our elderly population are on income support or receive housing benefit, but that means that four fifths of our pensioners also have occupational pensions or savings, or both. What on earth is the point of raising the basic pension to the level advocated by the Opposition parties? As I said earlier in an intervention, what is the point of spreading the jam so thinly that no one benefits? There are many pensioners who are very rich and what is the point of giving extra help to them? As I said earlier, what is the point of benefiting Lord Forte or the Prime Minister? It is much more sensible to target extra help to those in real need.

Mr. Allen McKay (Barnsley, West and Penistone)

rose——

Mr. Favell

No, I shall not give way. With a falling working population and the elderly thankfully living longer, to increase the basic pension would have no purpose and would simply be a waste of money.

6.40 pm

Mrs. Margaret Beckett (Derby, South)

Our motion refers to the fall in income that has been experienced under the Conservatives by vulnerable groups, including many pensioners, and I remind the hon. Member for Stockport (Mr. Favell) that many pensioners do not claim the means-tested benefits to which they might be entitled because they are proud and resent the fact that those benefits are means tested. They are among the most vulnerable and needy and they most lose out and resent being deprived of that basic pension increase which is still the most important part of the income of the vast majority of pensioners.

My hon. Friend the Member for Livingston (Mr. Cook) admirably exposed the Government's lamentable record on pensions, and it was plain again, as in the past, that neither the Secretary of State nor his Back Benchers had much in the way of any accurate response to make to refute the points that my hon. Friend made. They had even less to say about the case made on behalf of those whose standard of living not only dropped last year but will drop again this year—those for whom the Prime Minister's recent sweeping assertion that everyone is better off under Conservative rule rang hollow.

My hon. Friend the Member for Livingston pointed out that every one of those individuals benefiting from or receiving transitional protection, whose difficulties we are highlighting in this debate, and many of whose case histories have been given by my hon. Friends and others, are the people who were untruthfully described by the Prime Minister and other Ministers last year as being no worse off after last year's benefit cuts—some of the 88 per cent. about whom that outrageous claim was made.

Indeed, Ministers defended the claim that they were no worse off by saying that they were no worse off because they faced no cash losses. By definition, the Secretary of State either chose not to, or could not, answer the question posed by my hon. Friend the Member for Livingston. By definition, every one of those vulnerable individuals whose cases have been highlighted in this debate were among those whom the Prime Minister said were no worse off, though their income rose at most by £1.30 and their bills alone, including in most cases their rate and water rate bills, rose by far more. They have since faced the rise in gas and electricity prices without a penny more. That was last year. This year, 600,000 of them again get not a penny more, while another 500,000 or so will get some increase, but not the full increase needed to meet price rises in November and which are already out of date.

The Government's response to the plight of those people is to talk about something else. The Government are hoping that if they shut their eyes tightly enough and for long enough they will all go away, and that if the Government shout loudly enough and long enough, mouthing one set of meaningless or manipulated figures after another, either those people will not be heard or they will not be believed. But Opposition Members are determined that they will be heard because they have a right to be heard.

It is bad enough that we have a Government who are so uncaring and deceitful that they are prepared to cut the standard of living of the most vulnerable people in the country and call it targeting on those in the greatest need. They do not even have the guts to admit that that is what they have done. To the injury of increased struggle they add the insult of pretending that it is not happening.

The Conservative case is that they are doing more than any previous Government. It is certainly true that the Conservatives have had the opportunity. No Government in history have had a windfall gain such as that of North sea oil—revenues secured for them by the Labour Government whom they succeeded, who did not believe in throwing away the nation's assets—[Interruption.] It is all very well for Conservative Members to laugh. If the policies of the right hon. Member for Old Bexley and Sidcup (Mr. Heath) had been pursued by the last Labour Government there would have been no North sea oil revenues for them to throw away. But that opportunity, like those assets, has been squandered.

Indeed, almost every penny of the increased expenditure of which the Secretary of State spoke—spending in real terms of which the Government boast —is due not to more generous benefits but to increased numbers forced to draw them. As my right hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) pointed out, there are more people unemployed, more people reaching retirement, more living longer in retirement and showing increased frailty and more with some disability who can no longer find work under Conservative rule. Only three times in 10 years have the Conservatives given a real increase in benefits over and above that required by inflation-proofing, and even those amounts were usually tiny.

If the Conservatives have been so generous, how did it happen that 600,000 people did not get a penny more this year for the second year running, with no cost of living increase? Whose fault was it that there was no increase in child benefit for 12 million children and no increase of any kind for the upkeep of nearly 8 million of them? What wicked fairy brought about the reduction in case load that meant that I million people lost all help with their rent and rates?

We have had a further indication today of the generosity of the Government. I refer to a report in today's Glasgow Times about the handling of deductions from the income support of people who are refusing to pay the poll tax deductions to which the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) referred. A memo sent to all DSS offices in Scotland has been leaked to the Glasgow Times. It states: In deciding whether a deduction can be made"— for the poll tax— the adjudication officer will ensure that there is sufficient Income Support to allow for the deduction to be made in full whilst leaving 10p in payment to the claimant. That is 10p a week, and of course it must be left in payment to the claimant because that is the law. That is the generosity of the Government.

I understand that over the weekend the Minister of State was reported as saying that when a new system of benefits such as this was introduced it was inevitable that there would be losers. That was obviously in the Whips' Office briefing because several Conservative Members have referred to it.

The Minister was talking nonsense. We know how the Prime Minister fancies that she is the Queen. Is it now the Prime Minister or the Secretary of State who considers herself or himself to be Moses? Was it divine revelation written on tablets of stone that there were bound to be losers, or were those just the instructions handed down by No. 10 and the Treasury?

There are bound to be losers because that has been decided by the Government. They chose it. It is not the product of some natural or divine law. It is certainly not divine law that the losers should be found among the elderly, the poor, the halt and the lame. That sounds much more like the woman who thought that the only thing that mattered about the Good Samaritan was that he had money in his pocket, not that he was prepared to spend it on the unfortunate. The victim was lucky that the Prime Minister did not pass by, or he would have got a brisk lecture on the value of standing on his own two feet.

As my hon. Friend the Member for Livingston pointed out, the Department has been throwing away sources of income that could have been used to make sure that there did not have to be losers. He referred to the supplement that every Government have made for 40 years, the supplement from tax revenues to make sure that decent pensions could be paid to the elderly and the disabled.

In 1980–81, £4.5 billion came from tax revenues for that purpose, but this coming year there will not be a penny, not because it is divine or natural or any kind of law other than that made by the Government, but because this Administration decided that it was money that the pensioners and the disabled did not need. In their view, they were already too well off.

The Government's attitude to the erosion of transitional protection is, in some ways, the most puzzling of all. Why are the Government prepared to defend a cut in the standard of living of the elderly, the sick and the least well-off families, a standard of living that even the hon. Member for Brentwood and Ongar (Mr. McCrindle) described as buying simplification at too great a cost?

A parliamentary answer that I received suggested that the full uprating of income support for which the motion calls could have been provided for about £70 million. In October, as the Government amendment to the motion records, they are spending three times as much to save the Chancellor's face and divert attention away from his long-term plans to means-test benefits such as child benefit, the Christmas bonus and—as the hon. Member for Bournemouth, West (Mr. Butterfill) was good enough to confirm—even the basic state pension. If the Government can find £200 million to help out the Chancellor, the money could have been found to uprate those benefits where transitional protection was being paid when the overall uprating was calculated.

The Government amendment proudly asserts the huge success of their economic policies. In other words, the Government are not saying that they could not have found the extra money. Why is it so important for them to push through these cuts, comparatively minor by the Government's standards and doubly difficult to defend? What principle is at stake?

Since the changes of April last year the Government have tried to insist that they have made no real or significant cuts. Every example to the contrary has been decried and denied. In particular, they have insisted that if any problems were inadvertently created, it was all in the cause of targeting the help still given on those in the greatest need.

What could more surely reveal the phoneyness and dishonesty of that case than the existence alongside a growing band of new claimants of a group, however small or fast diminishing, of people whose problems, sickness or distress were identical in all major respects but who got much more money because their benefit level under the old system was permanently protected?

When the woeful inadequacy of many new benefit levels becomes apparent by comparing people's needs with their resources, what will more dramatically blow the gaff on the Government's case than a simple straightforward comparison between what is paid now and what used to be paid? We can all write the script. Mrs A gets the old level of benefit but under the new scheme Mrs. B, if she becomes ill or is injured, will receive less money every week. What could more starkly prove what we know to be the truth, which is that the Government believe that 1 million of our most vulnerable people were too well off last April? Although the Government were prepared to see the standard of living of those people fall, they are a bit squeamish about admitting it. People might even have remembered that two weeks earlier the same Government had lavished tax cuts on the wealthy.

Mr. Butterfill

Will the hon. Lady give way?

Mrs. Beckett

No, I do not have time. I would have given way if the hon. Gentleman had asked me earlier.

The debate is taking place not because justice and fair treatment for the 1 million people who have not received a full uprating or any at all cannot be afforded, but because that would expose the sham and the meanness of Government policy. The hardship of those people is the price of concealment.

6.50 pm

The Minister for Social Security (Mr. Nicholas Scott)

I am delighted to know that the hon. Member for Livingston (Mr. Cook) listens to my weekend broadcasts. I do not resile for a moment from saying that I approached the debate with some relish, although the relish is slightly diminished because in my winding-up speech I have to deal with the statistical argument between the hon. Gentleman and my right hon. Friend the Secretary of State. l utterly refute the Opposition accusation that my right hon. Friend intended to mislead the House. The statistics quoted by the hon. Member for Livingston and those quoted by my right hon. Friend are simply different statistics. Both sets of statistics are accurate and acceptable in their own way, and the House can judge which set is more relevant to the debate. Having looked at both sets of statistics, I have no doubt where the right answer lies.

The hon. Member for Livingston obtained his figures from the Library and they relate to the basic state pension calculated as a proportion of male earnings. My right hon. Friend's figures were from the 1986 family expenditure survey and compare total state benefits with average manual earnings. The difference in the two sets of figures is easily explained. It is not the basic state pension that matters to pensioners, but their total income—in this case from state benefits. Those may include a whole range of benefits apart from the basic state pension. The important point about the statistics is that they contain figures about actual people with actual incomes. The figures supplied by the Library and quoted by the hon. Gentleman describe the pensioner equivalent of that well-known figure the person with 2.3 children. Such figures are an abstraction rather than a representation of the reality of what is happening.

Now that the hon. Member for Livingston has listened to my explanation and has reconsidered the matter, I hope that he will share my preference for the figures quoted by my right hon. Friend the Secretary of State. [Interruption.] I hope that the hon. Gentleman will read what I have said. If he cares to write to me about the matter, I shall be perfectly happy to conduct the argument by correspondence. I am certain that we have the right answer.

The right hon. Member for Stoke-on-Trent, South (Mr. Ashley) accused the Government of abysmal failure in running the social security system. Let us consider what has happened to total benefits under the Government. In 1988–89 the total benefit figure was calculated at £45.2 billion—a real increase of £10.9 billion since 1978–79. That increase was due to many factors, such as a real terms increase in the average amount paid accounting for about £3.9 billion, and increased numbers of beneficiaries accounting for about £7 billion, of which £2.2 billion was accounted for by extra unemployment. Over the same period, social security spending rose from 25.6 per cent. to 31 per cent. of public expenditure. That is what the right hon. Gentleman describes as abysmal failure. In fact, it shows a successful economy generating money for extra expenditure on people who need help.

The right hon. Member for Stoke-on-Trent, South takes a special interest in the disabled and their entitlement to benefit. He knows as well as I do that in the past 10 years there has been a 90 per cent. increase in benefits for disabled people, a real terms increase of no less than £3.5 billion. The right hon. Gentleman was right to say that £3 billion of that was due to increased take-up and that about £500 million was due to the increased level of benefits. The numbers of disabled people did not suddenly multiply when we came to office. Those people were there when the Labour Government were in office but they were not getting benefits then. They are getting benefits now, and that must surely be right.

Mr. Ashley

The Minister now admits that the Government are wrong to claim that all the money has gone to increase the individual incomes of disabled people because the larger numbers of disabled people mean that it is a small increase for individual disabled people.

Mr. Scott

The Government have never made any such assertion—certainly not while I have been in my present post, and none of my predecessors has done so. We have never said that the figures were anything other than those that I have just given—and those figures can not only be defended but applauded.

With his tongue firmly in his cheek the right hon. Member for Stoke-on-Trent, South asked me to prophesy our reaction to the Office of Population Censuses and Surveys reports and the nature of the review that we intend to conduct when we finally receive those reports. I urge the right hon. Gentleman to be patient and to await the arrival of the remaining four reports. I do not think that he could expect any other answer.

Without unduly delaying any action that might flow from our consideration of those reports, we shall want to find some way in which disabled organisations and perhaps hon. Members can make their views known as to the most appropriate way forward. We shall then take those views into account before making up our mind.

The hon. Member for Newcastle-under-Lyme (Mrs. Golding) raised a specific case, and was not the only hon. Member to do so. I make it a general rule not to reply to questions about individual cases across the Floor of the House because it is difficult to establish the basic facts, but I will look at the case that the hon. Lady put forward. I can tell her that the package for poorer pensioners introduced by my right hon. Friend the Chancellor will provide a second uprating this year for poorer pensioners and that the October uprating will not erode transitional protection. We have made special arrangements to make sure of that. I hope that the hon. Lady will draw that to the attention of her constituent.

My hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) endorsed the simplicity of the new system but seemed to argue that we should return to the complexities of the additional requirements which existed under the supplementary benefits system. I remind him and the House that the additional requirements were complex and needed a great deal of intrusive questioning to ascertain the amount to which people were entitled. We got rid of those complexities and replaced them with a severe disablement premium. With Government money we established the independent living fund so that the needs of people with exceptional requirements could be met, thus preventing such people from being institutionalised rather than supported in the community. Those people were helped in a compassionate and flexible manner and the independent living fund has turned out to be a considerable success.

Rev. Martin Smyth (Belfast, South)

Will the Minister give way?

Mr. Scott

I have much regard for the hon. Gentleman but I have two minutes in which to complete the winding-up speech. I hope that he will forgive me if I do not give way.

When I saw the Opposition motion, I could hardly believe my eyes. It is now 12 months since the introduction of the reforms——

Mr. Rowlands

Will the Minister give way?

Mr. Scott

No. I shall read carefully what the hon. Gentleman has said and I shall write to him because the argument is complex.

When I first saw the Opposition motion, I could hardly believe my eyes. Twelve months after the introduction of the reforms and all the predictions of dire consequences flowing from them, the Opposition have laboured mightily and brought forth a mouse. At the weekend I heard a commentator say that in preparing to mount their attack on the Government the Labour Opposition had decided to concentrate their forces on a broad front—not a military tactic with which I am familiar—but it may be that they have had second thoughts on that and decided to concentrate on a much narrower target today. Perhaps this is because, as successive commentators have recognised and as most hon. Members recognise, they know that when we get away from the minority of individual hard cases—I accept that hard cases exist—the overwhelming success of our reforms is manifest.

The motion concentrates on two points—the way in which pensions are calculated, and the transitional protection. With regard to the first, the Opposition make two points—first, about the date of the calculation and, secondly, about whether it should be linked to earnings and prices. We have given a commitment to link it to prices and we have fulfilled that obligation. The Labour party had a variety of devices linking it to earnings or moving to the forecasting method.

My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) very effectively explained in his opening remarks the criticisms that were levelled against the Labour Government at the time. Further on in that debate the hon. Member then for Coventry, South-West—now the hon. Member for Preston (Mrs. Wise)—made it clear why that change had been made when she said: In April 1976, when the changed basis of calculation was announced, it was clear that the change was brought into being because it was advantageous to the Government at that stage and saved £500 million compared with what would have been required for that pension uprating to keep in line with the historic costs of inflation."—[Official Report, 12 March 1979; vol. 964, c. 236.] That was the record of the Labour Government.

We have given pledges and we have honoured them, and we shall continue to do so. We have honoured our commitment to monitor these reforms and to make changes where necessary in housing benefit and with regard to poorer pensioners, widows, 16 and 17-year-olds and hostels, and we shall continue to do so. The fundamental structure, however, is right and I commend the Government amendment to the House.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 220, Noes 308.

Divlslon No. 153]	[7.02 pm
AYES
Abbott, Ms Diane	Fyfe, Maria
Adams, Allen (Paisley N)	Galbraith, Sam
Allen, Graham	Galloway, George
Alton, David	Garrett, John (Norwich South)
Anderson, Donald	Garrett, Ted (Wallsend)
Armstrong, Hilary	George, Bruce
Ashley, Rt Hon Jack	Gilbert, Rt Hon Dr John
Ashton, Joe	Godman, Dr Norman A.
Banks, Tony (Newham NW)	Golding, Mrs Llin
Barnes, Harry (Derbyshire NE)	Gordon, Mildred
Barnes, Mrs Rosie (Greenwich)	Gould, Bryan
Barron, Kevin	Graham, Thomas
Battle, John	Grant, Bernie (Tottenham)
Beckett, Margaret	Griffiths, Win (Bridgend)
Beggs, Roy	Grocott, Bruce
Benn, Rt Hon Tony	Harman, Ms Harriet
Bennett, A. F. (D'nt'n & R'dish)	Hattersley, Rt Hon Roy
Bermingham, Gerald	Haynes, Frank
Bidwell, Sydney	Healey, Rt Hon Denis
Blair, Tony	Heffer, Eric S.
Blunkett, David	Henderson, Doug
Boateng, Paul	Hinchliffe, David
Bradley, Keith	Holland, Stuart
Bray, Dr Jeremy	Home Robertson, John
Brown, Nicholas (Newcastle E)	Howarth, George (Knowsley N)
Brown, Ron (Edinburgh Leith)	Howells, Geraint
Bruce, Malcolm (Gordon)	Howells, Dr. Kim (Pontypridd)
Buchan, Norman	Hoyle, Doug
Buckley, George J.	Hughes, John (Coventry NE)
Caborn, Richard	Hughes, Robert (Aberdeen N)
Callaghan, Jim	Hughes, Roy (Newport E)
Campbell, Menzies (Fife NE)	Hughes, Sean (Knowsley S)
Campbell, Ron (Blyth Valley)	Hughes, Simon (Southwark)
Campbell-Savours, D. N.	Illsley, Eric
Carlile, Alex (Mont'g)	Ingram, Adam
Cartwright, John	Janner, Greville
Clarke, Tom (Monklands W)	Jones, Barry (Alyn & Deeside)
Clay, Bob	Jones, Ieuan (Ynys Môn)
Clelland, David	Jones, Martyn (Clwyd S W)
Clwyd, Mrs Ann	Kennedy, Cnarles
Cohen, Harry	Kilfedder, James
Cook, Robin (Livingston)	Kinnock, Rt Hon Neil
Corbett, Robin	Kirkwood, Archy
Corbyn, Jeremy	Lambie, David
Cousins, Jim	Lamond, James
Cox, Tom	Leadbitter, Ted
Crowther, Stan	Leighton, Ron
Cryer, Bob	Lestor, Joan (Eccles)
Cunliffe, Lawrence	Lewis, Terry
Cunningham, Dr John	Litherland, Robert
Dalyell, Tam	Livsey, Richard
Davies, Rt Hon Denzil (Llanelli)	Lloyd, Tony (Stretford)
Davies, Ron (Caerphilly)	Lofthouse, Geoffrey
Davis, Terry (B'ham Hodge H'I)	Loyden, Eddie
Dewar, Donald	McAllion, John
Dixon, Don	McAvoy, Thomas
Dobson, Frank	Macdonald, Calum A.
Doran, Frank	McFall, John
Douglas, Dick	McKay, Allen (Barnsley West)
Duffy, A. E. P.	McKelvey, William
Dunnachie, Jimmy	McLeish, Henry
Dunwoody, Hon Mrs Gwyneth	Maclennan, Robert
Eadie, Alexander	McWilliam, John
Evans, John (St Helens N)	Madden, Max
Ewing, Harry (Falkirk E)	Mahon, Mrs Alice
Ewing, Mrs Margaret (Moray)	Marek, Dr John
Fatchett, Derek	Marshall, David (Shettleston)
Faulds, Andrew	Marshall, Jim (Lelcester S)
Fearn, Ronald	Martin, Michael J. (Springburn)
Field, Frank (Birkenhead)	Martlew, Eric
Fields, Terry (L'pool B G'n)	Maxton, John
Flannery, Martin	Meacher, Michael
Flynn, Paul	Meale, Alan
Foot, Rt Hon Michael	Michie, Bill (Sheffield Heeley)
Foster, Derek	Michie, Mrs Ray (Arg'l & Bute)
Foulkes, George	Mitchell, Austin (G't Grimsby)
Fraser, John	Moonie, Dr Lewis

Morris, Rt Hon A. (W'shawe)	Sillars, Jim
Morris, Rt Hon J. (Aberavon)	Skinner, Dennis
Mullin, Chris	Smith, Andrew (Oxford E)
Murphy, Paul	Smith, C. (Islton & F'bury)
Nellist, Dave	Smith, Rt Hon J. (Monk'ds E)
Oakes, Rt Hon Gordon	Smyth, Rev Martin (Belfast S)
O'Brien, William	Snape, Peter
O'Neill, Martin	Soley, Clive
Orme, Rt Hon Stanley	Steinberg, Gerry
Owen, Rt Hon Dr David	Stott, Roger
Parry, Robert	Strang, Gavin
Patchett, Terry	Straw, Jack
Pendry, Tom	Taylor, Mrs Ann (Dewsbury)
Pike, Peter L.	Taylor, Matthew (Truro)
Powell, Ray (Ogmore)	Turner, Dennis
Prescott, John	Vaz, Keith
Primarolo, Dawn	Walker, A. Cecil (Belfast N)
Quin, Ms Joyce	Wall, Pat
Radice, Giles	Wallace, James
Randall, Stuart	Walley, Joan
Redmond, Martin	Wardell, Gareth (Gower)
Rees, Rt Hon Merlyn	Wareing, Robert N.
Robertson, George	Welsh, Andrew (Angus E)
Robinson, Geoffrey	Welsh, Michael (Doncaster N)
Rogers, Allan	Williams, Rt Hon Alan
Rooker, Jeff	Williams, Alan W. (Carm'then)
Ross, Ernie (Dundee W)	Wilson, Brian
Rowlands, Ted	Winnick, David
Ruddock, Joan	Wise, Mrs Audrey
Salmond, Alex	Worthington, Tony
Sedgemore, Brian	Young, David (Bolton SE)
Sheerman, Barry
Sheldon, Rt Hon Robert	Tellers for the Ayes:
Shore, Rt Hon Peter	Mr. Nigel Griffiths and Mr. Ken Eastham.
Short, Clare

NOES
Adley, Robert	Buchanan-Smith, Rt Hon Alick
Aitken, Jonathan	Buck, Sir Antony
Alexander, Richard	Burns, Simon
Alison, Rt Hon Michael	Burt, Alistair
Allason, Rupert	Butcher, John
Amery, Rt Hon Julian	Butterfill, John
Amess, David	Carlisle, John, (Luton N)
Amos, Alan	Carlisle, Kenneth (Lincoln)
Arbuthnot, James	Carrington, Matthew
Arnold, Jacques (Gravesham)	Chalker, Rt Hon Mrs Lynda
Arnold, Tom (Hazel Grove)	Channon, Rt Hon Paul
Ashby, David	Chapman, Sydney
Aspinwall, Jack	Chope, Christopher
Atkins, Robert	Churchill, Mr
Atkinson, David	Clark, Hon Aian (Plym'th S'n)
Baker, Nicholas (Dorset N)	Clark, Dr Michael (Rochford)
Baldry, Tony	Clark, Sir W. (Croydon S)
Banks, Robert (Harrogate)	Colvin, Michael
Batiste, Spencer	Conway, Derek
Beaumont-Dark, Anthony	Coombs, Anthony (Wyre F'rest)
Bellingham, Henry	Coombs, Simon (Swindon)
Bendall, Vivian	Cope, Rt Hon John
Bennett, Nicholas (Pembroke)	Couchman, James
Bevan, David Gilroy	Cran, James
Biffen, Rt Hon John	Critchley, Julian
Blackburn, Dr John G.	Currie, Mrs Edwina
Blaker, Rt Hon Sir Peter	Davies, Q. (Stamf'd & Spald'g)
Body, Sir Richard	Davis, David (Boothferry)
Bonsor, Sir Nicholas	Day, Stephen
Boscawen, Hon Robert	Dicks, Terry
Boswell, Tim	Dorrell, Stephen
Bottomley, Peter	Douglas-Hamilton, Lord Jamess
Bottomley, Mrs Virginia	Dover, Den
Bowden, Gerald (Dulwich)	Dunn, Bob
Bowis, John	Durant, Tony
Braine, Rt Hon Sir Bernard	Eggar, Tim
Brandon-Bravo, Martin	Emery, Sir Peter
Brazier, Julian	Evans, David (Welwyn Hatf'd)
Bright, Graham	Evennett, David
Brooke, Rt Hon Peter	Fairbairn, Sir Nicholas
Brown, Michael (Brigg & Cl't's)	Fallon, Michael
Browne, John (Winchester)	Favell, Tony
Bruce, Ian (Dorset South)	Fenner, Dame Peggy

Field, Barry (Isle of Wight)	Jones, Gwilym (Cardiff N)
Finsberg, Sir Geoffrey	Jopling, Rt Hon Michael
Fishburn, John Dudley	Kellett-Bowman, Dame Elaine
Fookes, Dame Janet	Key, Robert
Forman, Nigel	King, Roger (B'ham N'thfield)
Forsyth, Michael (Stirling)	Kirkhope, Timothy
Fowler, Rt Hon Norman	Knapman, Roger
Fox, Sir Marcus	Knight, Greg (Derby North)
Franks, Cecil	Knight, Dame Jill (Edgbaston)
Freeman, Roger	Knox, David
French, Douglas	Lamont, Rt Hon Norman
Fry, Peter	Lang, Ian
Gale, Roger	Latham, Michael
Gardiner, George	Lawrence, Ivan
Garel-Jones, Tristan	Lawson, Rt Hon Nigel
Gill, Christopher	Leigh, Edward (Gainsbor'gh)
Gilmour, Rt Hon Sir Ian	Lennox-Boyd, Hon Mark
Glyn, Dr Alan	Lester, Jim (Broxtowe)
Goodhart, Sir Philip	Lilley, Peter
Goodlad, Alastair	Lloyd, Sir Ian (Havant)
Goodson-Wickes, Dr Charles	Lloyd, Peter (Fareham)
Gorman, Mrs Teresa	Lord, Michael
Gorst, John	Luce, Rt Hon Richard
Gow, Ian	Lyell, Sir Nicholas
Grant, Sir Anthony (CambsSW)	McCrindle, Robert
Greenway, Harry (Ealing N)	Macfarlane, Sir Neil
Greenway, John (Ryedale)	MacGregor, Rt Hon John
Gregory, Conal	MacKay, Andrew (E Berkshire)
Griffiths, Sir Eldon (Bury St E')	Maclean, David
Griffiths, Peter (Portsmouth N)	McLoughlin, Patrick
Grist, Ian	McNair-Wilson, P. (New Forest)
Ground, Patrick	Major, Rt Hon John
Grylls, Michael	Malins, Humfrey
Gummer, Rt Hon John Selwyn	Mans, Keith
Hague, William	Maples, John
Hamilton, Hon Archie (Epsom)	Marshall, Michael (Arundel)
Hamilton, Neil (Tatton)	Martin, David (Portsmouth S)
Hampson, Dr Keith	Mates, Michael
Hanley, Jeremy	Maude, Hon Francis
Hannam, John	Mawhinney, Dr Brian
Hargreaves, A. (B'ham H'll Gr')	Maxwell-Hyslop, Robin
Hargreaves, Ken (Hyndburn)	Mayhew, Rt Hon Sir Patrick
Harris, David	Meyer, Sir Anthony
Hawkins, Christopher	Miller, Sir Hal
Hayes, Jerry	Mitchell, Andrew (Gedling)
Hayhoe, Rt Hon Sir Barney	Mitchell, Sir David
Hayward, Robert	Moate, Roger
Heddle, John	Montgomery, Sir Fergus
Higgins, Rt Hon Terence L.	Moore, Rt Hon John
Hill, James	Morris, M (N'hampton S)
Hogg, Hon Douglas (Gr'th'm)	Morrison, Sir Charles
Howard, Michael	Morrison, Rt Hon P (Chester)
Howarth, Alan (Strat'd-on-A)	Moss, Malcolm
Howarth, G. (Cannock & B'wd)	Moynihan, Hon Colin
Howe, Rt Hon Sir Geoffrey	Neale, Gerrard
Howell, Rt Hon David (G'dford)	Needham, Richard
Howell, Ralph (North Norfolk)	Neubert, Michael
Hughes, Robert G. (Harrow W)	Newton, Rt Hon Tony
Hunt, David (Wirral W)	Nicholls, Patrick
Hunt, John (Ravensbourne)	Nicholson, David (Taunton)
Hurd, Rt Hon Douglas	Nicholson, Emma (Devon West)
Irvine, Michael	Norris, Steve
Irving, Charles	Onslow, Rt Hon Cranley
Jack, Michael	Oppenheim, Phillip
Janman, Tim	Paice, James
Jessel, Toby	Patnick, Irvine
Johnson Smith, Sir Geoffrey	Patten, Chris (Bath)

Patten, John (Oxford W)	Summerson, Hugo
Pawsey, James	Tapsell, Sir Peter
Peacock, Mrs Elizabeth	Taylor, Ian (Esher)
Porter, Barry (Wirral S)	Taylor, John M (Solihull)
Porter, David (Waveney)	Tebbit, Rt Hon Norman
Portillo, Michael	Temple-Morris, Peter
Powell, William (Corby)	Thompson, Patrick (Norwich N)
Price, Sir David	Thorne, Neil
Raffan, Keith	Thurnham, Peter
Raison, Rt Hon Timothy	Townend, John (Bridlington)
Rathbone, Tim	Townsend, Cyril D. (B'heath)
Redwood, John	Tracey, Richard
Renton, Tim	Tredinnick, David
Rhodes James, Robert	Trippier, David
Riddick, Graham	Twinn, Dr Ian
Ridley, Rt Hon Nicholas	Vaughan, Sir Gerard
Roberts, Wyn (Conwy)	Waddington, Rt Hon David
Roe, Mrs Marion	Wakeham, Rt Hon John
Rossi, Sir Hugh	Waldegrave, Hon William
Rost, Peter	Walden, George
Rumbold, Mrs Angela	Walker, Bill (T'side North)
Ryder, Richard	Waller, Gary
Sainsbury, Hon Tim	Walters, Sir Dennis
Sayeed, Jonathan	Ward, John
Scott, Nicholas	Wardle, Charles (Bexhill)
Shaw, David (Dover)	Warren, Kenneth
Shaw, Sir Giles (Pudsey)	Watts, John
Shaw, Sir Michael (Scarb')	Wells, Bowen
Shephard, Mrs G. (Norfolk SW)	Wheeler, John
Shepherd, Richard (Aldridge)	Whitney, Ray
Shersby, Michael	Widdecombe, Ann
Sims, Roger	Wiggin, Jerry
Smith, Sir Dudley (Warwick)	Wilkinson, John
Smith, Tim (Beaconsfield)	Wilshire, David
Spicer, Sir Jim (Dorset W)	Winterton, Mrs Ann
Spicer, Michael (S Worcs)	Winterton, Nicholas
Squire, Robin	Wolfson, Mark
Stanbrook, Ivor	Wood, Timothy
Stanley, Rt Hon Sir John	Woodcock, Mike
Steen, Anthony	Yeo, Tim
Stern, Michael	Young, Sir George (Acton)
Stevens, Lewis	Younger, Rt Hon George
Stewart, Allan (Eastwood)
Stewart, Andy (Sherwood)	Tellers for the Noes:
Stradling Thomas, Sir John	Mr. David Lightbown and Mr. David Heathcoat-Amory.
Sumberg, David

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to. MADAM DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House notes that it is now one year since the Government introduced a simpler, fairer, more flexible system of income-related benefits and that the uprating which took place yesterday added a further £2.2 billion to spending on social security, now running at £51 billion a year; and congratulates the Government on the success of its economic policies which have enabled it not only to fulfil the pledge to maintain the value of the basic retirement pension in line with price movements but also to use the new system of income-related benefits to direct additional help this year of over a quarter of a billion pounds beyond the normal uprating to those in greatest need.