HC Deb 12 November 1996 vol 285 cc146-8
10. Mrs. Roe

To ask the Secretary of State for Social Security what changes he has made in his policy towards the basic pension since the last election; and if he will make a statement. [1707]

Mr. Heald

We remain committed to maintaining the value of the basic pension, which will continue to be the foundation on which people can build retirement income.

Mrs. Roe

Will my hon. Friend confirm that, if pensions had been uprated in line with earnings, as advocated by Baroness Castle, taxpayers would now be paying around £8 billion a year more? Does he agree that to buy off support for the proposal by promising an upward review of pensions in the next Parliament is bound to be cripplingly expensive, yet that is exactly what the Labour leader has done?

Mr. Heald

At its conference, the Labour party bowed to trade unions and to Baroness Castle. It is clearly not ruling out restoring the earnings link or reversing our changes to the state earnings-related pension scheme. That could change the picture£which is so well described in the Social Security Select Committee's report£of the British pensions system as affordable by the year 2030 while others are not. Such a change would be worrying and irresponsible.

Ms Lynne

Is the Minister aware that pensioners find it difficult to manage on a basic state pension and that £1 billion a year is not claimed in income-related benefit by the poorest pensioners who do not know what they are entitled to? Will the Minister consider introducing a take-up campaign to ensure that pensioners are aware of what they are entitled to because if they do not receive income support, they are not allowed to receive even cold weather payments?

Mr. Heald

The Government are doing three things. They are maintaining the value of the basic pension, encouraging private provision and targeting help on people most in need—£1.2 billion a year extra since 1988. The hon. Lady is right to say that it is important that pensioners know what their entitlements are. We spend £26 million a year informing the public of the benefits available. We send out information to 80,000 information points—everything from citizens advice bureaux to doctors surgeries. In addition, we send our advisers to explain to pensioners groups what the entitlements are. No other strategy would work better than what we are doing.

Mr. Nigel Evans

It is right to applaud the two thirds of pensioners who have occupational pensions, but there remains one third who do not have them. Will my hon. Friend confirm that Government policies will ensure that the incomes of those pensioners will be protected through the basic state pension? Will he further confirm that the last time those pensioners had a real devaluation in their spending power was between 1974 and 1979, when inflation let rip and those who had saved money from their wages during their working years found their savings greatly depleted due to the inflationary policies of the Labour Government?

Mr. Heald

My hon. Friend is right. Under Labour, when inflation was running at 27 per cent., pensioners were robbed of the savings they had accumulated throughout their lives. The rise in state pensions during the whole of the period of the Labour Government was equivalent to the rise in average incomes for pensioners that this Government have produced every year since 1979. The Government's policies protect the interests of pensioners and I am sure that pensioners in my hon. Friend's constituency will appreciate that.

Ms Harman

Does the Minister recognise that pensioners feel betrayed by the Government? They do not feel that the Government have protected their interests, because they have imposed VAT on gas and electricity, presided over the mis-selling of personal pensions, failed to get help to the 700,000 very poorest pensioners, forced pensioners to sell their homes to pay for nursing care, cut the value of SERPS and cut the value of the basic state pension. Is not that why pensioners will never again trust the Tories?

Mr. Heald

The Labour party has had 17 years to think of something better than what the Government are doing. It thought through the Social Justice Commission, and the right hon. Member for Sedgefield (Mr. Blair) described it as the best bit of work since Beveridge£and then dropped it. The hon. Member for Islington, South and Finsbury (Mr. Smith) was told to think the unthinkable, but he thought only the unaffordable and was moved on. Now, the policy of the hon. Member for Peckham (Ms Harman) is to think about it some more and have a review.

Ideas such as the flexible decade of retirement—proposed by Labour—which would allow people to retire on a pension at 60 would mean £15 billion a year in additional costs or a reduction in the state pension to £40 a week. The hon. Lady should come clean and say which she is proposing.

Mr. David Shaw

Will my hon. Friend assure me that Britain has the best balanced pension system in Europe, with a good balance between private and public pensions? Will he further assure me that the assets in our pension funds will not be used to meet the liabilities of pension funds in Europe?

Mr. Heald

My hon. Friend is right to say that this country has a partnership between the private sector, the public sector and the individual. Over time, it is delivering huge increases in pensioners' incomes£not just for those with average pensions, but for the bottom 20 per cent. whose incomes have risen in real terms by 20 per cent. since 1979. I can give my hon. Friend the assurance that we will ensure that we do not end up paying for other countries' pension liabilities.