HC Deb 02 April 1990 vol 170 cc883-5
11. Mr. David Nicholson

To ask the Secretary of State for Social Security what proportion of (a) all pensioners and (b) recently retired pensioners are receiving income from savings.

Mrs. Gillian Shephard

The latest available figures show that in 1987, 73 per cent. of all pensioners and 82 per cent. of recently retired pensioners received income from savings.

Mr. Nicholson

Does my hon. Friend agree that those figures are encouraging, and is she aware that in 1987 only 24 per cent. of pensioners were in the bottom fifth of national income distribution, whereas in 1979 the figure was 38 per cent? Does she agree that that, too, is encouraging and does she further agree that the Budget will further encourage savings?

Mrs. Shephard

My hon. Friend was right to draw attention to the encouragement to save given in the Budget of my right hon. Friend the Chancellor of the Exchequer, particularly the measure known as TESSAs, or tax-exempt special savings accounts, which will further increase the value of pensioners' savings. The abolition of the composite rate of tax will also particularly help pensioners.

Mr. James Lamond

Will the Minister clear up the points raised earlier by the hon. Member for Portsmouth, South (Mr. Martin)? Why are pensioners' savings over £3,000 deemed by her Department and other Departments to give them a return of 20.8 per cent. per annum, when nowhere can that percentage return be found with safety? Should pensioners look for another Barlow Clowes in order to achieve it? Can the Minister give us a list, which we should be happy to pass on to our pensioners, of where they can find that return on their savings?

Mrs. Shephard

The point about the £1 per week in income that is assumed for each £250 of capital over £3,000 is that it helps to take into account the resources of a claimant in order to target help on those most in need. It is true that some claimants will be taken out of entitlement to benefit because their total income, including tariff income—which is not actual income from savings —is sufficiently high to disqualify them. I assure the hon. Gentleman that it is not a matter of taking out pound For pound. The assumption is that there is an income of £1 per £250, but the amount that is taken from the allowance paid in benefit is 15p in each pound, which is a generous taper —much more generous than under the previous arrangement.

Mr. Cormack

Does my hon. Friend accept that as it is proper to encourage saving now for the future, we should not penalise those who saved in the past, and there should be a closer relationship between deemed income and real income? Would she kindly have a word with her right hon. Friend the Chancellor of the Exchequer who has shown himself to be devoted to savers and savings?

Mrs. Shephard

I am sure that my hon. Friend is capable himself of having a word with our right hon. Friend the Chancellor of the Exchequer. He should realise that as a result of the measures, among people with £10,000 of savings, there will be about 70,000 gainers in community charge benefit and about 25,000 gainers in housing benefit. In both cases, it is about half the total number of gainers. That is not a discouragement to savers.

12. Mr. Winnick

To ask the Secretary of State for Social Security what estimation has been made by his Department of the effect of the budget on pensioners' households.

Mrs. Gillian Shephard

I am sure that hon. Members on both sides of the House will welcome the changes announced by my right hon. Friend the Chancellor of the Exchequer in his Budget last month—many of which will benefit pensioners, and some of which I have already mentioned.

Mr. Winnick

Welcome as the raising of the ceiling on savings undoubtedly is—the Opposition have pressed for it for a long time—what justification can there possibly be for pensioners whose total income is £61.81 a week to pay £18 a week in rent, due entirely to the drastic cut in housing benefit in 1988, details of which—and of other cases from my constituency—I have sent to the Minister? Why do the Government continue to treat pensioners with such contempt?

Mrs. Shephard

There will be many gainers within housing benefit, precisely from the announcements made by my right hon. Friend the Chancellor of the Exchequer. Some 75,000 pensioners as individuals will gain from those announcements.