HC Deb 03 February 1992 vol 203 cc5-6
6. Mr. Burns

To ask the Secretary of State for Social Security what proportion of pensioners are in the top half of the income distribution; and what was the comparable figure for 1979.

Mr. Newton

Twenty eight per cent. of pensioners were in the top half of the income distribution in 1987 compared with 24 per cent. in 1979.

Mr. Burns

I thank my right hon. Friend for that answer. Will he confirm that pensioners are worried about a return to the rampant inflation of the mid-1970s and, although it does not directly affect people who have reached state retirement age, a 9 per cent. tax being put on the savings of people who are saving for retirement? People considering retiring early would be caught by that punitive tax.

Mr. Newton

Pensioners were among those who were hardest hit by the rates of taxation and inflation of the 1970s. I am grateful for my hon. Friend's second point, because it is not yet widely understood by the three quarters of people who go into retirement with savings of their own that, as they approach retirement, their ability to build up those savings would be subject to a 9 per cent. tax as a result of one of the Opposition's proposals.

Mr. Frank Field

If a higher proportion of pensioners are now in the top half of the distribution, who has taken their place in the lower half, and why? What part have the Government's unemployment policies played in that?

Mr. Newton

I do not think that there is any question of the Government pursuing a policy of unemployment, as the hon. Gentleman well knows. The increased number of pensioners in the top half of the income distribution is the result of pensioners' average net incomes rising by a third or more in real terms because of the policies of the Government.

Mrs. Roe

Does my right hon. Friend agree that many people confuse the level of the state pension with the amount of money that pensioners have available to pay all their weekly bills? Is not it true that the majority of pensioners have extra income from savings, from an occupational pension or from other benefits such as income support?

Mr. Newton

Yes, indeed. As I said earlier, more than three quarters of recently retiring pensioners now have income from savings, and more than 60 per cent. of them also have income from occupational pensions. In both cases, the incomes have risen substantially.

Mr. Allen

Will the Secretary of State concede that many people are doing better, which we welcome, because of the state earnings-related pension scheme which was introduced by the Labour Government? The people who are not doing well are those without additional income on lower incomes, such as single pensioners, who have lost the equivalent of £15 a week, and married couple pensioners, who have lost the equivalent of £25 a week. Will the Secretary of State take this chance—one of his last—to apologise to pensioners for what he has done?

Mr. Newton

I make two points: first, the incomes of pensioners in the lowest quintile have risen by 15 per cent. in real terms over this period, and those pensioners will have benefited further since those statistics were compiled by the increases amounting to a third of a billion pounds that have been made in income support premiums in the past three years. Secondly, it is not SERPS that is the major factor in this increase but the increased income from savings and occupational pensions.

Mr. Harris

Do not the figures given by my hon. Friend underline the point that many pensioners are well off—and we welcome that—and that that is a justification of the Government's policy of targeting extra help on those who really need it? When will the Opposition grasp that simple fact?

Mr. Newton

Certainly one of the satisfactory developments of recent years is that, taken as a whole and on average, pensioners' living standards have been rising. As I have said repeatedly, there remain a number of people for whom we think it is right to do more, and we have been doing more through the income support premiums.