HC Deb 08 March 1999 vol 327 cc2-4
2. Peter Viggers (Gosport)

What proportion of total payments made by his Department are means-tested. [73039]

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

The proportion of total social security expenditure going on means-tested benefits was 34 per cent. in 1997–98. In 1979, it was 16 per cent.

Mr. Viggers

Does the Secretary of State agree that means-tested benefits are much more expensive to administer than universal benefits and can be grossly unfair? Is it not a fact that someone who has saved for his or her retirement can actually be worse off than someone who has made no provision and who will get the benefit of the minimum income guarantee, together with housing benefits and council tax benefit? How can he possibly begin to justify that to decent and respectable people who want to remain independent?

Mr. Darling

If means-tested benefits are unfair, they were as unfair in 1979 as they are now. The hon. Gentleman supported the previous Government when they doubled the number of means-tested benefits.

When we came into office, we found that the disparity in income had grown dramatically over 18 years, and we deliberately set about doing far more for poorer people— by introducing the working families tax credit, the disability income guarantee, the minimum income guarantee for pensioners and other measures. We have also increased universal benefits, such as child benefit, and our pensions proposals are designed to ensure that we end one of the great scandals of today—that more than a third of pensioners are likely to rely on income-related benefits when they retire. We aim to lift those people out of that position.

The Government are taking action across the board, but I do not agree that means-tested benefits are inherently wrong. They do a great deal to help the poorest people in our society.

Mr.Derek Twigg (Halton)

Is my right hon. Friend aware that, when the Tories talk about means-tested benefits, my constituents live in fear that they really want to talk about cutting benefits and attacking people in poverty? Is not the difference between the parties that, when the Labour party talks about means-testing, we talk about ensuring that those most in need get the benefits that they deserve?

Mr.Darling

The working families tax credit has a very flat taper; it is designed to help people who would not otherwise receive help, and to make work pay. We are determined to do—as we said that we would in our manifesto—far more to help the poorest pensioners, some of whom did very badly in the previous 18 years. Unlike the Conservative party, we are genuinely anxious to tackle not just the immediate effects of poverty but, above all, the causes of poverty, into which far too many people have fallen.

Mr.Quentin Davies (Grantham and Stamford)

Is it not both unreasonable and thoroughly unfair that, according to the Government's proposals, the only pensioners who can look forward to their earnings in retirement being linked to average earnings will be those who qualify for income support—for the Government's so-called minimum income guarantee? Under the Government's proposals, nobody who has earned an occupational pension or a state retirement pension by contributing to the national insurance system for 40 years can dream of that measure of protection. Are not the Government thoroughly ashamed that, after all the rhetoric of the last Parliament and all the promises delivered by hundreds of Labour candidates before the general election, no move at all has been made to deliver on the promise to link the state retirement pension to earnings?

Mr.Darling

It is my recollection that the Conservative Government broke the earnings link with pensions in 1981, and we certainly made it very clear that we were not proposing to restore the earnings link with pensions. Instead, we have done two things. We have made proposals to put the long-term basis of pensions on a proper footing, with a new state second pension that will help those on the lowest earnings and that is designed to ensure that someone who works for a lifetime and saves during that period need not rely on income support at the point at which they retire. Our other proposals are all designed to alleviate the poverty that we inherited among pensioners and others. Across the board, the Government are determined not only to deal with the effects of poverty but to mount a sustained attack on the causes of poverty by making work pay and helping others who are unable to work.

Mr. Paul Flynn (Newport, West)

Would not the best way of achieving my right hon. Friend's aim of fewer pensioners reliant on income support and other means-tested benefits be to raise the level of the basic pension? The Conservative party broke the earnings link in 1980. If it had been maintained, the basic pension next month would be not £66 but £90. Does my right hon. Friend agree that most of the pensioners who will not receive the guaranteed minimum income—between 400,000 and 700,000 of them—are those who say, "For all our lives we have never taken any handouts and we will not start now"? They would accept an increase if it were an entitlement and on the basic pension, but they will not take it if it is on income support because they perceive it as a handout. We have enough money—more than £6 billion—and the cost would be £3 billion. Why do we not go some way towards undoing the damage done by the Conservative Government and raise the basic minimum pension to £75 this year?

Mr. Darling

The cost of increasing the pension to £75 this year would be substantial. I point out to my hon. Friend that more than half of those who do not receive the minimum income guarantee have excess capital of more than £20,000. About 190,000 people have capital of more than £50,000. In our pension proposals, we ensured that we had a new system through the state second pension that would benefit those who are on lower earnings throughout their lifetime. Alongside that is the £2.5 billion package that we announced last summer. We make no bones about it: we decided that, rather than spread the sum available far more thinly—something that would not have helped some of the poorest pensioners about whom my hon. Friend and I are most concerned— we would give far more help to those on lower incomes.

If we increased the basic state pension to £75 a week, that would cost about £3 billion. I believe that it is far better to spend our money helping those pensioners who did least well over the preceding 18 years, as well as putting into law proposals that will ensure that the problem is not so acute in years to come.