HC Deb 23 April 1996 vol 276 cc188-9
8. Mr. Leigh

To ask the Secretary of State for Social Security what estimate he has made of the savings to public funds arising from the decision to update pensions in line with prices rather than earnings. [24676]

Mr. Heald

If pensions had continued to be increased in line with the higher of earnings or prices since 1980, the additional cost to public funds would be £7.4 billion in 1996–97.

Mr. Leigh

With the Transport and General Workers Union urging my hon. Friend to restore the earnings link—something which is still Labour party policy and would cost £7.4 billion—does my hon. Friend agree that the advice that he is receiving from the Opposition is not so much to think the unthinkable as to spend the unaffordable?

Mr. Heald

I certainly agree with that. It is true that Bill Morris has recently written to my right hon. Friend the Secretary of State on behalf of the TGWU calling for the restoration of the earnings link. On a historical note, Jack Jones recently visited me and advocated the same thing. So the TGWU, past and present, is united. We ought to bear in mind that the Labour party and the unions are linked, and that that is an unaffordable link for Britain.

Mr. Cousins

How much has been saved by uprating the allowance for the over-85s not with prices, not with earnings, but with thin air—nothing at all—during the entire period of the Conservative Government?

Mr. Heald

As the hon. Gentleman will know, the Government's policy is to target help on those most in need and, through the income support system, the Government have done that. Indeed, £1.2 billion extra has been provided and the pensioner premium for the over-80s is £37 per week for a couple. That provides real help to those who need it.

Mr. Anthony Coombs

Will my hon. Friend remind the House that taxpayer spending on basic pensions is at a record level even in real terms and that, as a result of the Government's reforms, not only do 66 per cent. of pensioners retire with an occupational pension but 75 per cent. of them retire with savings which are protected against inflation? Will he remind the House that the average income of pensioners has risen faster than the average rate of inflation—and, indeed, earnings—over the past 15 years?

Mr. Heald

My hon. Friend is right to say that the position of pensioners has been improved because incomes have increased by more than 50 per cent. on average since 1979 and as a result of a change in the living standards of pensioners. Let us take consumer durables as an example. In 1979, only 57 per cent. of pensioners had a telephone; the figure is now up to 93 per cent. In 1979, 46 per cent. had central heating; now almost 80 per cent. do. The proportion who have a fridge freezer has increased to 99 per cent. and those who have a washing machine has increased from 64 per cent. to 82 per cent. So it goes on. The living standards of our pensioners have been protected under the Conservatives.