HC Deb 28 July 1997 vol 299 cc8-9
7. Ann Clwyd

To ask the Secretary of State for Social Security when she expects the review of the reduced earnings allowance to be completed; and if she will make a statement. [9034]

Mr. Denham

We have completed the review of reduced earnings allowance. Those affected by the transfer of over-pension-age recipients of reduced earnings allowance to the retirement allowance 16 months ago were harshly treated by the previous Government. Many people lost up to £30 a week in benefit with little or no advance warning, and without the transitional protection which we proposed at the time.

Regretfully, however, we have concluded that we cannot remedy that injustice without breaking our manifesto commitment to keep within current spending totals. We have also concluded that retirement allowance is the right benefit for those recipients who are over retirement age. We are determined that reduced-earnings-allowance recipients will receive sufficient advance warning in future. The Benefits Agency will remind people receiving REA of the forthcoming transfer to retirement allowance well in advance of retirement.

Ann Clwyd

Well, I am very sorry to hear that answer, particular given that my hon. Friend described the situation in which such people were left as harsh. My right hon. Friend the Secretary of State said to me in a letter last year that those people had been left in an appalling situation. We are talking about 20,000 people, many of whom live in the poorest parts of the country. Certainly in Wales, many are widows and living on very low incomes. They have already taken a 75 per cent. cut in their income through the withdrawal of the reduced earnings allowance. If it was wrong last year, why is it right this year?

Mr. Denham

I have recognised the hardship caused by the previous Government's action. I am sure that my hon. Friend will recognise the difficulty in putting right every single injustice perpetrated by that Government. To restore reduced earnings allowance to those who are transferred on to retirement allowance would cost about £45 million a year and would require us to cut expenditure elsewhere. This Government have not been afraid to take the difficult decisions necessary in order to stick within our manifesto commitments.

Mr. Garnier

As the Minister fairly said, it was right that those who were about to retire should receive advance warning of changes of plans. Where, therefore, in the Labour party's manifesto will pensioners and future pensioners find a reference to advance corporation tax?

Madam Speaker

I am not clear whether that was a substantive question. If the hon. and learned Member wants an answer, perhaps he will table a substantive question, to which I am sure that he will be given a response.