§ 11. Mr. ButlerTo ask the Secretary of State for Social Security what assessment he has made of the annual effect of inflation on the number of pensioners eligible for social security payments in addition to the state pension. [28815]
§ The Parliamentary Under-Secretary of State for Social Security (Mr. Oliver Heald)Benefits for pensioners are uprated annually in line with inflation. The Government's low inflation policy has meant that benefits retain their value over the year—in contrast to 1974 to 1979, when inflation was running as high as 27 per cent. Pensioners' savings, too, are protected and able to grow. Investment income now contributes an average of £27.40 per week to their income—unlike the earlier period, when high inflation all but wiped out their savings' real value.
§ Mr. ButlerDoes my hon. Friend agree that Labour levels of inflation hurt pensioners in two ways: first, by weekly devaluations of the spending power of their benefits between upratings; and, secondly and most importantly, by wiping out the value of their savings? Does he have any estimate of the number of pensioners who, today, are still adversely affected by Labour's achievement of 25 per cent. annual inflation?
§ Mr. HealdAs a result of inflation in the 1970s, people who had saved all their lives saw their life savings destroyed by inflation. Under this Government, increasingly more pensioners have savings of higher value, leading to a rise in income of 50 per cent. in real terms since 1979.
Mr. William O'BrienWhat is the Minister's response to my constituents who received the pension increase that he outlined, but who then suffered a decrease in housing benefit and in council tax refund and who received from Yorkshire Water a demand that is 2.5 per cent. above the inflation rate—leaving them worse off than before the pension increase?
§ Mr. HealdThe increase—which was 3.9 per cent., based on the retail prices index in September—takes into account all increases in costs. The average income has now increased by 51 per cent. since 1979. That would not have happened under Labour.
§ Dr. SpinkDoes my hon. Friend agree that 66 per cent. of recently retired people now receive income from an occupational pension, compared to only 55 per cent. in 1979? What does he think an inflation rate of 27 per cent. would do to that occupational pension, were we to return to inflation rates that existed under the previous Labour Administration?
§ Mr. HealdThe same betrayal that happened in the 1970s would happen again. That is why it is vital that pensioners continue to support the Government, who have so much improved their position over the years.