HC Deb 11 January 1999 vol 323 cc11-2
6. Mr. Jeremy Corbyn (Islington, North)

What plans he has to re-link the calculation of the state old-age pension with average earnings. [63191]

The Secretary of State for Social Security (Mr. Alistair Darling)

As I announced in my statement on 15 December, the basic state pension will remain a contributory non-means-tested benefit, uprated, as we promised, at least in line with prices.

Mr. Corbyn

Does not my right hon. Friend understand that many pensioners are rightly angry that the Tory Government broke the link with earnings in 1980 and that pensioners have subsequently lost at least £25 a week from their state pension? Does he accept that means-tested benefits and private pensions are more expensive to administer and less secure for pensioners? Is not the best way to raise the living standards of the oldest people in our society to raise the basic state pension in line with earnings, as the previous Labour Government did, to ensure that we eliminate poverty among the elderly?

Mr. Darling

No, I do not accept that. Over the past few years, in addition to the basic state pension, many more pensioners have had rights to occupational pensions, private pensions and so on. If we were to uprate the basic state pension in line with earnings, in 2010 the cost would be £11 billion. That would do little for the poorest pensioners, while giving money to people who might not need it that much. As I made clear in my statement last year, our strategy is to do far more for poorer pensioners, who would have retired on benefits had it not been for the change of policy that I announced. As a result of our proposals, those who earn less than £9,000 will double the rate at which they accrue a pension. That is a better use of public funds. It will do far more for poorer people, who will see a real benefit and enjoy a decent retirement when they reach that stage.

Mr. Peter Viggers (Gosport)

Can the Secretary of State confirm that, so modest and, indeed, so feeble are his proposals for pensions, that by 2050 there will be 8 million pensioners eking out an existence on means-tested income support?

Mr. Darling

I do not accept that. Indeed, the pension proposals that I set out at the end of last year have been quite widely welcomed. The object of the exercise was to ensure that people who had worked throughout their lives would retire on a pension above income support. That is not the case under the present policies, which we inherited and the hon. Gentleman supported. The Government's proposals mean that most people who work throughout their life will be able to enjoy a retirement in which they will have a decent income to enjoy the years that lie ahead of them.