HC Deb 19 April 1999 vol 329 cc553-5
3. Mr. Peter Viggers (Gosport)

What percentage of amounts paid out by his Department are subject to means testing. [79730]

The Minister of State, Department of Social Security (Mr. Stephen Timms)

In 1997–98, 34 per cent. of social security expenditure went on means-tested benefits. In 1979, the figure was 16 per cent.

Mr. Viggers

Is the Minister aware that, in a recent debate, I pointed out that the combination of the means-tested guaranteed minimum pension, housing benefit and council tax benefit meant that people had to save a staggering £80,000 to be better off than those who had done nothing at all to save for their retirement provision? The Minister has not previously replied to that point, but will he comment on that figure? Will he confirm that what the Government now propose is the greatest ever extension to means testing and the greatest ever disincentive to saving for one's retirement?

Mr. Timms

The figure that the hon. Gentleman quotes is inaccurate. It is important that people get the full benefit of their work and savings when they retire. That is why we have designed the state second pension as we have.

I do not agree that the minimum income guarantee, which took effect last week, should rise in line with prices only—the implication of what the hon. Gentleman said. Although that would lead to there being fewer people on means-tested benefits, it would also mean lower incomes for 2 million low-income pensioners, of whom there are 1,500 in Gosport. If that is Conservative party policy, I hope that one of the hon. Members on the Opposition Front Bench will seek an opportunity to explain it. The Government's policy is that even the least well-off pensioners should be able to share in the benefits of rising national prosperity.

Mr. Harry Barnes (North East Derbyshire)

The Conservatives do not have a leg to stand on when it comes to means testing, but the left wing of the Labour party has two solid legs. Will the Welfare Reform and Pensions Bill and various other proposals before the House at present extend means testing? Some Labour Members would be very disappointed by a move in that direction.

Mr. Timms

I have said that the state second pension has been designed to avoid means testing. People should be able to look forward in retirement to an income that is above the means-tested threshold. The state second pension has been designed so that all people who work and contribute throughout their lives will have, on retirement, a retirement income above the minimum income guarantee level.

Furthermore, carers—people who have been out of work as a result of caring responsibilities—and the long-term disabled with broken work records are for the first time being credited into the state second pension. As a result, they, too, will have an income in retirement above the minimum income guarantee level. I hope that my hon. Friend will warmly welcome those proposals.

Mr. Iain Duncan Smith (Chingford and Woodford Green)

The Minister has failed to answer a point raised, strangely, by hon. Members from both sides of the House. The Government say that they want to raise pensioners' incomes and to break dependency, but the minimum income guarantee, which is linked to the means test, will drive more and more otherwise independent people down into dependency.

Independent figures show that one person in five is dependent on income support at present, and that the number will rise to one in three by the early part of the new century. Is not that a travesty and a defeat for a Government who say that they are going to break dependency, but who in fact will make more people dependent and raise the cost of welfare?

Mr. Timms

The figure would be one in three if we continued with the policies that we inherited from the Conservative Government. That is where we are heading, and that is why we made our proposals for reform. The state second pension will reduce the proportion of pensioners who are in receipt of means-tested benefits. The hon. Gentleman should explain to the House and to all those pensioners on income support why his party apparently wants to increase the minimum income guarantee only in line with prices. What does he have against people on income support? The Government's view is that even the least well-off pensioners—those on income support—should be able to share in the benefits of rising national prosperity.