HC Deb 23 April 1996 vol 276 c180
2. Mrs. Lait

To ask the Secretary of State for Social Security what is the cost of the state pension (a) at present and (b) in 1979 in real terms. [24670]

The Secretary of State for Social Security (Mr. Peter Lilley)

Since 1978–79, expenditure on state pensions has increased in real terms by about a third—from £22.6 billion to £30.1 billion in 1995–96.

Mrs. Lait

Does my right hon. Friend agree that if the earnings link was restored that figure would be increased by about £8 billion a year, which is equivalent to some 5p on the basic rate of income tax or to an increase in VAT to 22.5 per cent? Is it not a cruel hoax on pensioners to suggest that that earnings link could be restored, as was promised by the Labour candidate in Hastings and Rye?

Mr. Lilley

My hon. Friend makes a good point. It will be interesting to see whether Labour Front-Bench spokesmen repudiate the promises that have been made by Labour candidates in Hastings and Rye and elsewhere which would cost the British taxpayer the equivalent of several pence on the basic rate of tax. Until they repudiate that policy it will hang round their necks like an albatross.

Mr. Sheerman

What does it say about poverty in our country when, in 1979, the state pension was 23 per cent. of average earnings and is now 17 per cent? That represents something chilling for elderly people in our country.

Mr. Lilley

The hon. Member seems to think that pensioners should and do rely solely on the basic pension. I am happy to say that an increasing proportion have additional resources on top of that. As a result, pensioners' incomes as a whole have risen more rapidly than those of the population as a whole. We have made extra provision for those at the bottom: we have provided £1.2 billion a year extra through income-related benefits for people who, by misfortune, do not have any resources of their own on top of basic pension. Our record stands in good comparison with anything that the last Labour Government achieved.