HC Deb 12 November 1996 vol 285 cc149-50
12. Mr. Evennett

To ask the Secretary of Srate for Social Security what work he has commissioned from the Government Actuary to examine the cost of allowing people to claim a full state pension at 60 years. [1709]

Mr. Lilley

The cost of allowing people to draw their pension at age 60 would be an extra £15 billion per year.

Mr. Evennett

I thank my right hon. Friend for that very informative reply. Does he agree that such a proposal would require huge increases in taxation, or a reduction in the value of the pension? Furthermore, is he aware that the Labour party is merely trying to lure pensioners with those promises? But pensioners will not be fooled. They know that they have had a very good deal under the Government, and they will stick with us.

Mr. Lilley

My hon. Friend is right: the Opposition's policy is to allow people to draw their pension at age 60. The cost of doing so would be an extra £15 billion, unless the level of the basic pension were reduced. The former Opposition spokesman used to refuse to tell me which option they would choose. Imagine my astonishment, therefore, when the hon. Member for Peckham (Ms Harman) wrote to me to say: we anticipate … a lower level of basic state pension. She went on to say that she would ask the Government Actuary's Department by how much the basic state pension would have to be cut to eliminate the cost to taxpayers. I have asked the Government Actuary for her. He says that the basic state pension would have to be cut by £20 for a single person for the rest of their life.

Mr. Denham

Why is the Secretary of State wasting the time of the Government Actuary's Department by asking what the cost of retirement on a full state pension would be at 60, when no political party is making that proposal? Is this not another example of civil servants' time being wasted on party-political propaganda? Instead, why does he not accept the growing case for flexibility in the state retirement age? Why does he insist on a one-size-fits-all welfare state when different people want to live their lives in different ways? Why should not people have some choice in the way in which they take the pension benefits that they have paid for? As long as personal choice is not subsidised by others, and no one needs to be worse off, why does he want to stop people having the right to choose when they draw their pension?

Mr. Lilley

I asked the Government Actuary to cost Labour's proposal of allowing people to retire at 60 because the hon. Member for Peckham wrote to me suggesting that I did. It is wrong to suggest that Labour's policy would give pensioners more flexibility than ours does. At present and in future, anyone who defers retiring by a year can increase their pension by 7 per cent. for the rest of their life; deferring for two years leads to an increase of 14 per cent., and so on. The only difference in Labour's proposals is that pensioners would start with a basic pension £20 lower.