HC Deb 25 February 1997 vol 291 cc134-5
3. Mrs. Ann Winterton

To ask the Secretary of State for Social Security if he will make a statement on the future of the state retirement pension. [15739]

Mr. Lilley

The basic pension is the cornerstone of income in retirement. We remain committed to protecting the value of state pensions, and they will be increased in line with prices from April at a gross cost of £730 million.

Mrs. Winterton

Bearing in mind that pensioners' incomes have risen 60 per cent. in real terms since 1979, will my right hon. Friend advise pensioners to beware of the Opposition's policies, which would undermine savings by allowing inflation to rise, tax private pension funds that had invested in the privatised utilities, and fail to match the Conservative record of uprating each year the state retirement pension by at least as much as price inflation?

Mr. Lilley

My hon. Friend can be reassured. We will give such warnings loud and clear to all the pensioners in this country. What she says is correct. The utilities tax would bear heavily on the pension funds that pay the pensions of retired people. She is right, too, to warn of the past failure and possible future failure of Labour Governments to uprate the basic pension. They did not do so properly in 1976, and it cost pensioners then £1 billion. Pensioners should be warned that the shadow Chancellor recently said: there cannot be an assumption that totals will be automatically adjusted upwards in the event of changes in inflation. I asked for an assurance from the Opposition that they would continue uprating, but assurance came there none.

Mr. Denham

Will the Secretary of State condemn every Tory candidate who claims that Labour would cut the basic state pension by £20 a week? Will he condemn that concerted lie campaign, which is designed to create alarm and fear among elderly people, or does he support that disgraceful campaign—yes or no?

Mr. Lilley

I happen to have with me a copy of a letter from the shadow spokesman for social security, which she wrote to me spontaneously. It states: We anticipate … a lower level of basic state pension. It also states: We would seek the advice of the Government Actuary. I have sought that advice for her. He said that if her objective of making the pension available at age 60 were to be possible without a £15 billion extra cost, it would be necessary to reduce the basic state pension by £20 a week. Accordingly, I am happy to endorse my hon. Friends and candidates who are telling the truth loud and clear, far and wide.

Mr. Fabricant

Is my right hon. Friend aware that I took advice from an expert on pensions—my mother? She is 85 years of age and has just moved up to Lichfield. She first went on the state pension in 1972. She tells me that the worst time for pensions was in 1975 and 1976, when inflation was running at 25 per cent. and the Government cut the Christmas bonus. Can my right hon. Friend tell me which party was in power at that time?

Mr. Lilley

I can certainly remind my hon. Friend—I am sure that his expert mother has reminded him, too—that it was the Labour party which failed to uprate basic pensions at that time, which cost pensioners £1 billion and which is now warning us that, in order to keep within the totals that we have established for Departments, it will not necessarily adjust those totals upwards, in line with inflation.