HC Deb 17 May 1999 vol 331 cc813-27

'For section 79 of the Social Security Contributions and Benefits Act there shall be substituted—

"79.—(1) A person who is above the specified age and who is entitled to a retirement pension of any category shall be entitled to an increase of the pension, to be known as 'age addition'.

(2) Where a person is in receipt of a pension or allowance payable by the Secretary of State by virtue of any enactment or instrument (whether passed or made before or after this Act) and—

  1. he is above the specified age; and
  2. (b) he fulfils such other conditions as may be prescribed,
he shall be entitled to an increase of that pension or allowance, also known as age addition.

(3) In this section 'specified age' means an age specified by the Secretary of State in regulations.

(4) Age addition shall be payable for the life of the person entitled, at weekly rates to be determined by the Secretary of State in regulations.

(5) Regulations under this section may—

  1. (a) specify one or more specified ages at which age addition shall be payable;
  2. (b) provide for different rates of age addition to be payable for persons of different specified ages.".'.—[Mr. Webb.]

Brought up, and read the First time.

Mr. Webb

I beg to move, That the clause be read a Second time.

New clause 2 gives the Secretary of State additional powers. After the debate that we have just had, many Labour Members may feel that giving the Secretary of State additional powers is the last thing that they want to do. The new clause allows the Secretary of State to do something that the Minister told us the social security system needs to do—not to leave policies set in stone for decades, but to reflect the changing patterns of a modern society.

The new clause, which is supported by my right hon. and hon. Friends and, I am pleased to say, the right hon. Member for Birkenhead (Mr. Field), calls on the Government to take an extra power. That power would enable them to pay age additions to the basic state pension not just at the age of 80, which is currently written into primary legislation, but at such ages and at such rates as the Government saw fit. The Secretary of State could decide to pay age additions at 75, 80 and 85. He could decide to pay age additions not at the current, rather insulting, 25p, but at whatever rate he saw fit. The new clause gives the Secretary of State new powers, but takes away none that he currently possesses. For that reason, I am sure the Government will welcome it with open arms.

New clause 2 is the thinking person's new clause. As evidence, I shall quote from a pamphlet from the Social Market Foundation produced in 1993. It is called, "The Age of Entitlement", and states:

There is a tendency for older pensioners to be the poorer ones… older pensioners tend to get left behind as living standards enjoyed by the rest of the population increase. After a decade or more of retirement the gap in incomes can become significant. The pamphlet continues:

These arguments constitute the case for a higher rate of pension payable to the over-80s. There is indeed a hint of this in our current pension arrangements, with a 25p pension increase payable on reaching the age of 80. This is a laughable attempt at implementing a sensible policy. Those are wise words, written—as the Minister suspects—not by me, but by the hon. Member for Havant (Mr. Willetts), the Conservative spokesman on education and employment matters, who is regarded by his friends, I gather, as Two Brains. If it is good enough for him, I hope that his hon. Friends in the Conservative party will see fit to support the new clause.

The policy is supported not only by the leading thinker in the Conservative party. The right hon. Member for Birkenhead, who repeatedly denies being asked to think the unthinkable, but says that he was called upon to think the doable and the workable, has lent his support to the motion, and was cited recently in the Financial Times publicly giving his backing to the idea of tiering the basic state pension to give additional support to older pensioners.

I have referred to two distinguished thinkers—one from the Conservative party and one from the Labour party—but what did the Government's independent pensions review group say in response to the pensions Green Paper? It said that the Government could

provide a non-trivial step increase in state pension rights at a relatively high age such as 80. The leading thinker of the Conservative party, one of the Labour party's leading thinkers and the Government's independent pensions review group all back higher pensions for older pensioners. The Liberal Democrats back higher pensions for older pensioners. We would not normally dream of putting ourselves in such exalted company, but there is a strong case for the measure.

2.45 am

When the age addition at 80 was introduced in 1971, the typical male aged 65 had one chance in three of reaching 80. Now, he has one chance in two. Rather than being a minority sport for men, reaching 80 is becoming the majority experience of those who reach pension age, but the state pension system and the basic state pension have not changed.

A few moments ago, the Minister ended his remarks with a flourish by saying why widows pension arrangements needed to move on. I believe that he used the phrase, "Things do not stand still." However, the 25p age addition to the basic state pension has stood still for 28 years. He implied that the modern social security system should take account of modern trends and modern demographics, but that provision is a relic of an era during which I was six. I should add, hastily, that that was over a quarter of a century ago.

The Minister may say, "Why do we need multiple additions to the basic pension? Surely an age addition at 80 is good enough." Why does he not consider income support, which has one rate for those slightly over pension age, a higher rate for those over 75 and another rate for the over-80s? That recognises the diversity within the large pensioner population.

What about the income tax system? Income tax allowances rise at 65, rise again at 75 and rise again at 80. The tax and social security systems recognise that pensioners are not a large homogenous lump to be treated identically, but have differing needs which can be met in differing ways. The new clause would allow the Secretary of State to take account of that in structuring the basic state pension.

Will older pensioners always be poorer? Do we want to enshrine in legislation a structure that is not necessary? Will older pensioners catch up? If anything, the evidence is to the contrary. In 1979, which is the earliest year for which the Government produce their pensioner income series, the newly retired single female pensioner had a typical weekly income of £60 a week, in today's money. Her elderly counterpart aged over 80 had a weekly income of £58, which is virtually the same. In the mid-1990s, there was a substantial gap. A newly retired single female pensioner could expect £96 a week; her elderly counterpart could expect £83 a week. If anything, this policy is for today and for tomorrow. That gap is growing, not diminishing, and the provision could be included in legislation now to meet present and future needs.

At pension conferences, the Minister speaks of the three pillars of the Government's pensions policy: a minimum income guarantee for the poorest pensioners; stakeholder pensions for those who lack private provision; and a state second pension for the low earners. Higher state pensions for older pensioners are not inconsistent with that vision—they would get the Government off the hook. As one of the principal Opposition parties, it is not normally our role to do that, but, because we want good rather than bad policy, and in a spirit of co-operation, we offer them a route off that hook.

Why would that policy get the Government off the hook? The Minister has said that he wants to do most for those most in need. As he well knows, the neediest pensioners are not those on income support, but those who are entitled to it but fail to claim. The Government's best guess is that there may be 500,000 such people. They have received precious little so far—of the £2.5 billion for the income guarantee, they have not received a penny. The only way to guarantee those people money is through the basic pension, targeted on older pensioners. We know that two thirds of the pensioners who fail to take up the income support to which they are entitled are over the age of 75, so the new clause gets the Government off the hook with today's pensioners. In addition, it deals with the Government's big problem with tomorrow's pensioners.

The Government have set up an extraordinary pensions proposal, whereby the basic pension will be massively below the poverty line. They propose to fill that gap with a state second pension, which edges people just above the poverty line in the year in which they retire. Within a few years of retirement, however, according to written answers given to me, income from the basic state pension and the state second pension—it is pegged to prices—will have fallen back below the poverty line. Ten years after retirement, at the age of 75 or 80, people will be well below the poverty line. If the Government take advantage of new clause 2 and tier the basic pension so that 10 or 15 years after retirement people have a more generous state pension, they will not fall below the poverty line. All their additional savings will be on top of their pension income and there will be no disincentive.

There are two extreme positions on pensions. The first puts everything into universal provision. The Government's response to that is that it is expensive and poorly targeted. The second relies heavily on means-tested provision. The Government's projections assume that in 2050, 2 million or more pensioners will receive means-tested pensions. That cannot be a sustainable long-term approach. If the Government use tiering and target by age, they will have a well-targeted strategy that does not discourage people from saving.

When I have put that proposal to the Minister before, his response has been, "You can't spend this money because some of it will not be well targeted." Some of it will go to the woopies—well-off older people. That is fine. If a certain amount goes to the well-off over-80s, good luck to them. However, the Minister will have to explain to the House how he can support a Chancellor who gave £100 in the Budget to every single pensioner household in the land. That is completely untargeted expenditure.

Mr. Duncan Smith

The new clause does not specify ages or amounts. That is probably a good thing, but I am interested in the hon. Gentleman's view about age breaks. Will he explain it?

Mr. Webb

I shall complete the point that I was making, and then respond to the hon. Gentleman's question.

The Minister's key objection seems to be that, although targeting by age is fairly effective, because poverty increases with age, it is not perfectly targeted in the sense that he believes income support to be perfectly targeted on the poor. I hope that he accepts that income support is not perfectly targeted on the poor, because it misses half a million of the poorest in the land who fail to claim. He must also accept that his Government, at precisely the same time, are giving money to pensioners in an untargeted way. He cannot have it both ways. If paying £100 to every pensioner household in the land is a good idea, why is not a targeted increase in the basic state pension, which is more targeted than that, a good idea? He cannot say that it is because it is not targeted.

The hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) asks at what age we would set the age break. We have suggested a first cut-off at the age of 75 and a second at the age of 80. We have used the illustrative figures of £3 at 75 and £5 at 80. Interestingly, that proposal would cost exactly the same as the Chancellor's £100 for every pensioner household in the land, but would do more for the poorest households because they tend to be the oldest ones.

We would not want to enshrine those age cut-offs in primary legislation because the state pension was initially introduced—by a Liberal Government, as I recall—as an insurance against extreme old age and the risk of living too long. It was to cover the final years of life. Life expectancies are increasing all the time, so we would want to look at those age cut-offs and at people's life expectancies, and adjust them accordingly. The new clause would free the Government from the rigidity in the current primary legislation.

The new clause contains a proposal that the Government must welcome. It gives the Secretary of State a new power, which he may or may not wish to exercise. If he chooses not to exercise it, it is in place for when I, or one of my colleagues, become his successor and can implement it on the first day of a Liberal Democrat Government. Failing that, it would provide a structure that would allow us to target without means testing. Surely that is the right balance to strike. The Government are encouraging people to save, but the savings they make will be taken from them in reduced income support payments.

The new clause is a way of getting money to today's poorest pensioners, who are most in need, and to tomorrow's poorest pensioners, and it gives them an incentive to save to top that up. It would give the Secretary of State new powers to make sensible reforms to the pension system, and I commend it to the House.

Mr. Quentin Davies

Conservative Members are not desperately attracted by the prospect of joining the new form of Lib-Lab pact that is being put together by the right hon. Member for Birkenhead (Mr. Field) and the hon. Member for Northavon (Mr. Webb). We would be wise to maintain our freedom to manoeuvre for a little longer. Nevertheless, there are at least two aspects of the hon. Gentleman's proposals, supported as they are by the right hon. Gentleman, that we think are on the right lines.

The right hon. Member for Birkenhead and the hon. Member for Northavon are certainly on the right lines by trying to do something for the mass of pensioners who do not qualify for income support. Normally speaking, an intention to do something for the mass of pensioners who do not qualify for or claim income support would be platitudinous and scarcely worthy of comment. Such is the state of affairs brought about by two years of this Government, that it is remarkable that someone is thinking of this category of pensioner. What is striking about the Government is that they have done nothing for pensioners who do not qualify for income support. They have come up with some hare-brained schemes for prospective pensioners that will not work. Such people are now providing for their pension or could be induced to provide for their pension if better and more sensibly thought out policies were introduced.

The Government have come up with the minimum income guarantee for those who qualify, which is merely a repackaging of means-tested income support, which they love so much. They have done nothing for retired people who do not qualify for income support or are too proud to claim it. That is a disgraceful record, and it does not stop there. Not only have they done nothing for this deserving category of citizens, many of whom fought in the second world war and have been through much tougher times in the past 50, 60, 70 or 80 years than many of us could conceive of, but they have attacked them in the most brutal fashion. Pensioners will have to pay tax at 20 per cent. and will not qualify for the 10 per cent. tax rate on their savings income.

The Government have gone even further than that. Pensioners who are not supposed to be paying tax, because their total incomes are below the threshold fixed by Parliament at which income tax becomes payable, will nevertheless be forced to pay tax on their pathetically small savings income. The Government have not merely neglected this particularly deserving group of our fellow citizens, they have brutally and cynically attacked them.

Mr. Peter L. Pike (Burnley)

I remind the hon. Gentleman that the Government have provided a 100 per cent. winter fuel payment for all pensioners next year. The Conservative Government intended to increase VAT on fuel to 17.5 per cent., whereas this Government have reduced it to 5 per cent.

Mr. Davies

I am afraid to say that the hon. Gentleman is wrong. Those payments are means tested. [HON. MEMBERS: "No."] That is what I am complaining about.

Mr. Bayley

It is a universal payment—£100 to every pensioner household in the land.

3 am

Mr. Davies

I accept that, but £100 is pretty pathetic compensation for what the Government are doing.

It at least represents a brave attempt, and a welcome departure, that the right hon. Member for Birkenhead and the hon. Member for Northavon should try to do something for a category of pensioners for which nothing, or virtually nothing, has been done by this Government.

There is a second aspect to the proposal, which I must say we strongly support. We think that it is on much better lines than those on which the Government have been working. When the economy permits it—when we can afford it nationally—it would be far better to try to do something to reinforce the national insurance system by rewarding contributions made out of people's incomes over many years, to make it clear that there is a reality in the national insurance system: that people who contribute are not just throwing their money away. It is not just a form of tax; it is and genuinely remains a social insurance system, rather than simply reserving any money that is available for an expansion of means-tested benefits.

The Government have a fatal obsession with means testing. Never but never, Mr. Deputy Speaker, do I believe that anyone in this country would suppose that one of the great negative achievements of this Government—I do not offer any positive achievements—would be, having come to power in 1997, to extend means testing to bring about the biggest expansion of it since the 1930s, and as a result to reverse so much of the good work that has been done by all parties to build up our national insurance system over the generations.

Given those aspects—the desire to see what can be done for a category of our fellow citizens who have been shamefully neglected, and the intention to do that by strengthening the national insurance system—we think that those who tabled the new clause are on the right lines. In due time, we shall present our own proposals, which—I can tell the House this now—will be a good deal closer to the principles enshrined in the proposal than the policies of the so-called new Labour Government.

Mr. Garnier

I thank my hon. Friend the Member for Grantham and Stamford (Mr. Davies) for presenting our proposals so clearly. I agreed with much of what he said.

I am happy to have understood that, before long, those on the Conservative Front Bench will produce proposals that will come close to the proposals in new clause 2. There is much in new clause 2 that I think Conservatives can recommend, although I disagree profoundly with other parts of it.

I received quite a lot of criticism in the last Parliament when I suggested to a number of my constituents in the local press that the 25p increase for pensioners over 80 was an insult, and a misuse of public money. I believed that because the 25p accumulated across the cohort of pensioners over 80 could have been better spent on the poorest pensioners over that age. Some pensioners over 80 might not need the extra 25p, and the agglomerated 25ps could be directed better to help others.

New clause 2 suggests that it is impossible to assess the cost, as no figures are included. That point was anticipated by my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith), who asked the hon. Member for Northavon (Mr. Webb) what the age ranges and price ranges—if I may use that expression—were. I was interested to hear the hon. Gentleman's explanation. It appears from what he was saying and from the illustrations that he provided that the proposals would be cheaper and better directed than the Government's present proposals, with their so-called £100 gift.

That is one of the reasons why I hope that my hon. Friend the Member for Grantham and Stamford will persuade hon. Members to be encouraged by the new clause. We want better-targeted spending and the best use of public money in the funding of provision for our elderly citizens. I am greatly encouraged by his remarks. I am particularly encouraged that at least someone is doing some thinking about what to do with the pension arrangements.

Where I part company with those who support new clause 2 is in relation to its creation of unspecified new powers for the Minister, or Secretary of State. Subsection (2) refers to someone being above a specified age. I ask myself what the specified age is, and I am told by subsection (3) that it is an age specified by the Secretary of State in regulations. I am not sure that I would trust such a Government with any further powers. I am inimical to any proposals that create unspecified secondary powers through primary legislation. As I have said, I do not necessarily disagree with the thrust of the new clause, but I do not like the way in which the proposal is delivered into legislation.

It is a pity that, increasingly, primary legislation is no more than a Christmas tree, or a collection of coat hangers—I think that the hon. Member for Torridge and West Devon (Mr. Burnett) will remember the phrase from the Committee stage of the Access to Justice Bill, which was recently completed—by which the Government give themselves the ability to create secondary legislation by handing powers to members of the Executive. Here we have another example. I hope that the Liberal Democrats will not allow themselves to be persuaded by the present Government that that is a good way in which to make legislation.

The first concern arises when we deal with specified age. The second is to be found in subsection (2)(b), which says that someone above the specified age has to fulfil such other conditions as may be prescribed". There is a double vagueness. The conditions are not specified, and there may be some prescription, about which we know nothing. I do not believe that we have heard anything about that from the hon. Member for Northavon.

It may be that the hon. Member for Northavon has, in the back of his head, a fully worked out scheme and that it is only because of lack of time, or shortage of paper that he has been unable to inform the House, either on paper or orally, what the other conditions might be and how they may be prescribed.

Mr. Webb

May I briefly explain? The new clause mirrors the existing measure; the figure "80" is written into primary legislation. The first part of the new clause refers to the state retirement pension. The second vaguer bit relates to any other benefit where an age addition might be added. All that is beneficial to the claimant because he or she does not receive that addition at present.

The power that the hon. and learned Gentleman is worried about the Secretary of State exercising would be to introduce additions that do not currently exist: more age additions and other benefits. That is why it is vaguely drafted. The Secretary of State could not exercise those additional powers malignly, save possibly by abolishing the 25p age addition; that is the worst that he could do under the new clause. Otherwise, it would be entirely beneficial.

Mr. Garnier

I fully accept the sincerity and motives behind new clause 2. However, that does not stop me making the point that drafting legislation in such a manner is to be deprecated. I have a constitutional abhorrence of such legislation—which was passed increasingly by the previous Government, and is being passed increasingly by the current one. We should be aware of, and check, the practice.

I hope, however, that my criticisms of the way in which the new clause is drafted will not prevent my hon. Friend the Member for Chingford and Woodford Green, and others who take an interest in the matter, from making proposals that are worthy of consideration.

Subsection 4 of the new clause states:

Age additions shall be payable for the life of the person entitled, at weekly rates to be determined by the Secretary of State in regulations. Although I do not have to repeat the points that I am making, that is another example of vagueness. It is not sensible to deal with such a matter in that particular way.

I fully accept that the Bill would be very fat—fatter than it is already—if all its rules and regulations were included in primary legislation. However, it would be of assistance to the House—as it would have been to the Standing Committee when it considered similar matters—if draft rules had been available for consideration alongside the new clause.

In response to the intervention of my hon. Friend the Member for Chingford and Woodford Green, the hon. Member for Northavon was able to produce some additional information that, on another day, might have been available in written form. Sometimes, the Government produce explanatory notes, giving the public some idea of their intentions. In the case of this new clause, however, we have been left with nothing but what is stated on the amendment paper. I do not expect the hon. Member for Northavon to bob up every time that I make a criticism, but am simply stating, for the benefit of the House, my concerns about the way in which the legislation is being made. I urge the House to consider very carefully any other new clauses, or any Government proposals, that are so drafted.lb/> Subsection (5) of the new clause states:

Regulations under this section may—

(a) specify one or more specified ages at which age addition shall be payable". The hon. Member for Northavon has very helpfully provided us with some idea of what he had in mind there.

Subsection (5)(b) goes on to say that the regulations may provide for different rates of age addition to be payable for persons of different specified ages. I again applaud the hon. Member for Northavon for responding with some detail—in anticipation of my point—to the intervention of my hon. Friend the Member for Chingford and Woodford Green on that provision.

A matter of growing concern for me, and I believe also for other hon. Members, is that we should check the increasing practice of creating legislation in which Secretaries of State are given additional, but unspecified powers to make rules and regulations. Nevertheless, despite my criticisms, I am grateful to my hon. Friend the Member for Chingford and Woodford Green for stating that at least Conservative Members will sympathetically consider proposals of this nature, subject to the strength of the economy and to economic good sense.

Sir Richard Body (Boston and Skegness)

I agree wholeheartedly with my hon. and learned Friend the Member for Harborough (Mr. Garnier) in questioning whether such far-reaching power should be handed over to any Minister. However, I suspect that the intention of the hon. Member for Northavon (Mr. Webb) in moving new clause 2 was, once again, to raise a long-term issue from which so many of us run away. We all know that the ratio between those who are working and those who will be retired in 15 years' time will deteriorate quite dramatically, and that, by the time that we reach a certain year, we shall have to introduce some form of differential pensions.

In the past, we should have shuddered at such a thought and considered it quite unfair, but, today, I do not think that that is the case. Today's 60 or 65-year-olds are much fitter and healthier than those from earlier generations.

3.15 am

There are five travel agents in Boston. I believe that their main clients are pensioners, who hop into aircraft and fly to exotic places. Earlier generations would have been happy with a holiday down the road in Skegness. Things have changed tremendously. I can vouch for the fact that Skegness is a good place for a holiday. The air is very bracing.

It is still 17 May as far as the House is concerned, but in the real world outside it is 18 May. In an hour or two, I shall have been entitled to a retirement pension for seven years. I sometimes feel rather ashamed about receiving that money. I like to think that there are still a few people in Boston who think that I am fit to carry on working and not retire yet. These days, people are far more capable than in times past of working a few more years. The days when 65-year-olds were to be seen slopping around in their houses in slippered feet have long since gone. It is quite common to see people in old people's homes in their 90s, whereas anyone reaching 80 used to be a cause for major celebration in such homes.

We have to recognise that, as the standard of living of those in their 60s increases, we would be justified in introducing differential pensions so that, in the future, when funds are limited, the Minister will be justified in freezing the payments to those who are still in their 60s and giving an enhanced pension to those who are over 80. I see nothing unjust in that. It must happen. The new clause could be the mechanism to make it possible, but it is such a far-reaching proposal that it is not appropriate for secondary legislation. If we are to make such a drastic change in the system of pensions, it must be a matter for primary legislation, which should be debated fully on the Floor of the House before it is approved. Although I sympathise wholeheartedly with the aims behind the new clause, I shall not vote for it.

Mr. Rendel

1 should like to speak briefly on the new clause. There are three main areas in which the Government are proud of their policies for pensioners to date. One is the minimum income guarantee, which, as we have already heard, does not apply to the poorest pensioners—those who, for one reason or another, do not get income support but live below income support levels. The other two are the reduction in VAT on fuel and the winter fuel payment, both of which apply equally to all pensioners—those who are comparatively well off and those who are comparatively poor. The Government are clearly not aiming their main policies for pensioners at the poorest. In contrast, the new clause is clearly aimed at the poorest pensioners, because the more elderly pensioners tend to be the poorest.

One might expect our policy to meet with some dismay from the younger pensioners, many of whom are also in some poverty. I did not have local elections in my area recently, but, during the campaign, I visited several other areas to promote our policies. I am happy to report that younger pensioners accept almost unanimously that the older pensioners need a bit more. They find that it is a fair policy that should be implemented, and that where there is extra money, it should be given to the older pensioners.

Therefore, this is not only the right policy in moral terms—it targets those who are the poorest—but it will prove to be popular if the Government take it on. I urge them to do so.

Mr. Timms

The hon. Member for Northavon (Mr. Webb) made a characteristically interesting and thoughtful speech, which the House will have enjoyed. The House will have enjoyed also the reminder provided by the hon. Member for Boston and Skegness (Sir R. Body) of the bracing character of his constituency.

The context of the amendment is the proposal from the Liberal Democrats to extend the age addition so that it is payable from the age of 75 at an increased rate of £3 per week, which would be further increased to £5 per week from the age of 80. The problem is not just that that is not a well-targeted proposal, as the hon. Member for Northavon accepted.

Mr. Webb

I did not.

Mr. Timms

The hon. Gentleman made the point that I would say that it was not well targeted, which I am doing. The problem is that, for most on income support, it would provide no help at all.

By contrast, the minimum income guarantee—which we introduced last month—which increases income support for pensioners by three times the rate of inflation, is making a substantial difference. We have already announced that, next April, the increase in rates will be based on earnings. Next year, an older pensioner couple—where one member is over 80—on income support will be more than £400 a year better off in real terms over two years.

By contrast, the proposal from the Liberal Democrats would provide over 80s with £260 a year and would provide nothing at all to most of those who receive income support. Our long-term aim, as resources permit, is for the minimum income guarantee to be increased in line with earnings, thus further enhancing the amount of the premium that older pensioners receive.

The hon. Member for Northavon has been clear-he supports the minimum income guarantee for pensioners. The hon. Member for Newbury (Mr. Rendel) has been rather more equivocal. However, there is no doubt in my mind that what we are doing is the most effective way of helping those who need help most. We are addressing also the problem of those who do not claim but should, and our mechanism enables us to make a real difference in providing help to the least-well-off pensioners as quickly as possible.

In the long term, our proposals for pension reform outlined in the Green Paper—in particular the introduction of stakeholder pension schemes and the new state second pension —will ensure that everyone with a lifetime of work behind them will build up rights to a pension that will take them above the minimum income guarantee on retirement.

Hon. Members should consider that extending the payment of the age addition in the way that has been proposed would cost around £910 million gross, or £600 million net. That extra money would go to all pensioners, but it would be poorly targeted. The poorest pensioners—those who receive income support—would get no increase at all.

The £100 winter fuel payment is going to every pensioner, but that provides a benefit, worth £100, to every single pensioner—whereas increasing the state pension does not, because the level of income of those on income support does not increase. The £100 payment provides the full benefit of that payment to everybody who receives it.

Mr. Webb

Would the Minister describe paying £100 to every pensioner household in the land as targeted?

Mr. Timms

It has certainly been extremely well received by my constituents and those of my hon. Friends. That is something to be said for it.

Although we appreciate hon. Members' concerns, we have already done a good deal in terms of increasing the incomes of older pensioners, reducing taxes through increased tax allowances and providing help in other ways to older pensioners. The new clause is not the most effective way forward. We do not plan to use such powers, although my right hon. Friend may be grateful for the suggestion that he should have them. I urge hon. Members to reject the new clause.

Mr. Webb

That is the reply that we expected. I sought to anticipate all those remarks, but we got them none the less. The Minister is not comparing like with like. The Government are putting £2.5 billion into the minimum income guarantee over three years, which is £800 million a year, and £600 million a year into the winter fuel payments. The question is how the money is best spent. The Government seem to think that it is right to spread half of it thinly and evenly, yet the Minister's objection to our relatively targeted strategy is that it is not targeted enough. There is obviously a complete inconsistency at the heart of that response.

I tabled a parliamentary question asking what the 25p figure would be if the £2.5 billion over three years had been spent instead on the over-80s age addition. The answer was £11. That is the equivalent of the money that the Government are putting into the minimum income guarantee. It would provide substantially more for the over-80s, and we could probably do more for the over-75s as well.

Mr. Duncan Smith

Does the hon. Gentleman agree that the Government may have decided to spend money in that way because two, three or four years down the road, they will have the option of not increasing the amount or even of reducing it, which would not have been the case if it had gone on to the state pension?

Mr. Webb

The hon. Gentleman is right to point out that the £100 has no statutory indexation arrangements attached to it, so it may be a good gimmick in the run-up to the next general election, but we do not know what will happen thereafter.

The new clause would enable the Government to create a more rational structure for the basic state pension without denying them the opportunity to carry on exactly as they are. Should they decide, in response to developments in pensioner incomes and living standards, that the proposal offers a more sensible structure, the power would be there, ready for them to use.

We are disappointed that the Government have chosen not to take advantage of our kind invitation, so we want to see whether the House shares that disappointment, by pressing the motion to a vote.

Question put, That the clause be read a Second time:—

The House divided: Ayes 41, Noes 361.

Division No.182] [3.41 amm
Allan, Richard Jones, Nigel (Cheltenham)
Ballard, Jackie Kirkwood, Archy
Beggs, Roy Livsey, Richard
Beith, Rt Hon A J Llwyd, Elfyn
Brake, Tom Michie, Mrs Ray (Argyll & Bute)
Breed, Colin Moore, Michael
Bruce, Malcolm (Gordon) Oaten, Mark
Burnett, John Öpik, Lembit
Burstow, Paul Rendel, David
Cable, Dr Vincent Russell, Bob (Colchester)
Campbell, Rt Hon Menzies Sanders, Adrian
(NE Fife) Simth, Sir Robert (W Ab'd'ns)
Chidgey, David Smyth, Rev Martin (Belfast S)
Cotter, Brian Swinney, John
Davey, Edward (Kingston) Thompson, William
Donaldson, Jeffrey Tonge, Dr Jenny
Ewing, Mrs Margaret Tyler,Paul
Forsythe, Clifford Webb, Steve
Foster, Don (Bath) Willis, Phil
George, Andrew (St Ives)
Gorrie, Donald Tellers for the Ayes:
Harvey, Nick Mr. Andrew Stunell and
Hughes, Simon (Southwark N) Mr. David Heath.
Adams, Mrs Irene (Paisley N) Brinton, Mrs Helen
Ainger, Nick Brown, Rt Hon Nick (Newcastle E)
Ainsworth, Robert (Cov'try NE) Brown, Russell (Dumfries)
Alexander, Douglas Browne, Desmond
Anderson, Donald (Swansea E) Buck, Ms Karen
Anderson, Janet (Rossendale) Burden, Richard
Armstrong, Rt Hon Ms Hilary Burgon, Colin
Ashton, Joe Butler, Mrs Christine
Atherton, Ms Candy Byers, Rt Hon Stephen
Atkins, Charlotte Campbell, Alan (Tynemouth)
Austin, John campbell, Mra Anne (C'bridge)
Banks, Tony campbell, Ronnie (Blyth V)
Barnes, Harry Campbell— Savours, Dale
Barron, Kevin Canavan, Dennis
Battle, John Cann, Jamie
Bayley, Hugh Caplin, Ivor
Beard, Nigel casale, Roger
Beckett, Rt Hon Mrs Margaret Caton, Martin
Begg, Miss Anne Cawsey, lan
Bell, Stuart (Middlesbrough) Chapman, Ben (Wirral S)
Benn, Rt Hon Tony Chaytor, David
Bennett, Andrew F clapham, Michael
Benton, Joe Clark, Rt Hon David (S Shields)
Bemiingham, Gerald clark, Dr Lynda (Edinburgh Pentlands)
Berry, Roger Clark, Pale (Gillingham)
Best, Harold Clarke, Charles (Norwich S)
Betts, Clive Clarke, Rt Hon Tom (Coatbridge)
Blears, Ms Hazel clarke, Tony (Northampton S)
Blizzard, Bob Coffey, Ms Ann
Blunkett, Rt Hon David Coaker, Vernon
Boateng, Paul Cohen, Harry
Borrow, David Coleman, lain
Bradley, Keith (Withington) colman, Tony
Bradley, Peter (The Wrekin) Connarty, Michael
Bradshaw, Ben Corbet, Robin
Corbyn, Jeremy Heppell, John
Corston, Ms Jean Hesford, Stephen
Cousins, Jim Hewitt, Ms Patricia
Cox, Tom Hill, Keith
Cranston, Ross Hinchliffe, David
Crausby, David Hodge, Ms Margaret
Cryer, John (Hornchurch) Hoey, Kate
Cummings, John Home Robertson, John
Cunningham, Rt Hon Dr Jack Hood, Jimmy
(Copeland) Hoon, Geoffrey
Cunningham, Jim (Cov'try S) Hope, Phil
Curtis—Thomas, Mrs Claire Hopkins, Kelvin
Dayell, Tam Howarth, Alan (Newport E)
Darling, Rt Hon Alistair Howarth, George (Knowsley N)
Darvill, Keith Howells, Dr Kim
Davey, Valerie (Bristol W) Hoyle, Lindsay
Davidson, Ian Hughes, Ms Beverley (Stretford)
Davies, Rt Hon Denzil (Llanelli) Hughes, Kevin (Doncaster N)
Davies, Geraint (Croydon C) Humble, Mrs Joan
Dawson, Hilton Hurst, Alan
Dean, Mrs Janet Hutton, John
Denham, John Iddon, Dr Brian
Dismore, Andrew Illsley, Eric
Dobbin, Jim Ingram, Rt Hon Adam
Donohoe, Brian H Jackson, Ms Glenda (Hampstead)
Doran, Frank Jackson, Helen (Hillsborough)
Dowd, Jim Jamieson, David
Drew, David Jenkins, Brian
Drown, Ms Julia Johnson, Alan (Hull W & Hessle)
Dunwoody, Mrs Gwyneth Johnson, Miss Melanie
Eagle, Angela (Wallasey) (Welwyn Hatfield)
Eagle, Maria (L'pool Garston) Jones, Barry (Alyn & Deeside)
Edwards, Huw Jones, Mrs Fiona (Newark)
Efford, Clive Jones, Helen (Warrington N)
Ellman, Mrs Louise Jones, Ms Jenny
Ennis, Jeff (Wolverhton SW)
Field, Rt Hon Frank Jones, Jon Owen (Cardiff C)
Fisher, Mark Jones, Martyn (Clwyd S)
Fitzpatrick, Jim Kaufman, Rt Hon Gerald
Fitzsimons, Lorna Keeble, Ms Sally
Flynn, Paul Keen, Alan (Feltham & Heston)
Follett, Barbara Keen, Ann (Brentford & Isleworth)
Foster, Michael Jabez (Hastings) Kelly, Ms Ruth
Foster, Michael J Worcester) Kemp, Fraser
Foulkes, George Kennedy, Jane (Wavertree)
Fyfe, Maria Khabra, Piara S
Gapes, Mike Kidney, David
Gardiner, Barry Kilfoyle, Peter
George, Bruce (Walsall S) King, Andy (Rugby & Kenilworth)
Gerrard, Neil King, Ms Oona (Bethnal Green)
Gibson, Dr Ian Kingham, Ms Tess
Gilroy, Mrs Linda Kumer, Dr Ashok
Godman, Dr Norman A Ladyman, Dr Stephen
Godsiff, Roger Lawrence, Ms Jackie
Goggins, Paul Laxton, Bob
Gordon, Mrs Eileen Lepper, David
Griffiths, Jane (Reading E) Leslie, Christopher
Griffiths, Nigel (Edinburgh S) Levitt, Tom
Griffiths, Win (Bridgend) Lewis, Ivan (Bury S)
Grocott, Bruce Lewis, Terry (Worsley)
Grogan, John Liddell, Rt Hon Mrs Helen
Hain, Peter Linton, Martin
Hall, Mike (Weaver Vale) Lloyd, Tony (Manchester C)
Hall, Patrick (Bedford) Lock, David
Hamilton, Fabian (Leeds NE) Love, Andrew
Hanson, David McAllion, John
Harman, Rt Hon Ms Harriet McAvoy, Thomas
Heal, Mrs Sylvia McCabe, Steve
Healey, John McCafferty, Ms Chris
Henderson, Doug (Newcastle N) McDonagh, Siobhain
Henderson, Ivan (Harwich) Macdonald, Calum
Hepburn, Stephen
McDonnell, John Ruane, Chris
McFall, John Ruddock, Joan
McIsaac, Shona Russell, Ms Christine (Chester)
McKenna, Mrs Rosemary Ryan, Ms Joan
Mackinlay, Andrew Salter, Martin
McLeish, Henry Sarwar, Mohammad
McNamara, Kevin Savidge, Malcolm
McNulty, Tony Sawford, Phil
MacShane, Denis Sedgemore, Brian
Mactaggart, Fiona Shaw, Jonathan
McWalter, Tony Short, Rt Hon Clare
Mahon, Mrs Alice Simpson, Alan (Nottingham S)
Mallaber, Judy Singh, Marsha
Mandelson, Rt Hon Peter Skinner, Dennis
Marsden, Gordon (Blackpool S) Smith, Rt Hon Andrew (Oxford E)
Marsden, Paul (Shrewsbury) Smith, Angela (Basildon)
Marshall, David (Shettleston) Smith, Rt Hon Chris (Islington S)
Marshall—Andrews, Robert Smith, Miss Geraldine
Martlew, Eric (Morecambe & Lunesdale)
Maxton, John Smith, Jacqui (Redditch)
Meacher, Rt Hon Michael Smith, John (Glamorgan)
Meale, Alan Smith, Llew (Blaenau Gwent)
Merron, Gillian Snape, Peter
Michie, Bill (Shefld Heeley) Soley, Clive
Milbum, Rt Hon Alan Southworth, Ms Helen
Mitchell, Austin Spellar, John
Miller, Andrew Squire, Ms Rachel
Moffatt, Laura Starkey, Dr Phyllis
Moonie, Dr Lewis Steinberg, Gerry
Moran, Ms Margaret Stevenson, George
Morgan, Ms Julie (Cardiff N) Stinchcombe, paul
Morley, Elliot Stoate, Dr Howard
Mountford, Kali Strang, Rt Hon Dr Gavin
Mudie, George Stringer, Graham
Mullin, Chris Stuart, Ms Gisela
Murphy, Denis (Wansbeck) Sutcliffe, Gerry
Murphy, Jim (Eastwood) Taylor, Rt Hon Mrs Ann
Naysmith, Dr Doug (Dewsbury)
Norris, Dan Taylor, Ms Dart (Stockton S)
O'Brien, Bill (Nomranton) Temple—Morris, Peter
O'Brien, Mike (N Warks) Thomas, Gareth (Clwyd W)
O'Hara, Eddie Thomas, Gareth R (Harrow W)
Olner, Bill Timms, Stephen
O'Neill, Martin Tipping, Paddy
Organ, Mrs Diana Todd, Mark
Osborne, Ms Sandra Touhig, Don
Pearson, Ian Trickett, Jon
Pendry, Tom Truswell, Paul
Perham, Ms Linda Turner, Dennis (WolverhIon SE)
Pickthall, Colin Turner, Dr Desmond (Kemptown)
Pike, Peter L Turner, Dr George (NW Norfolk)
Plaskitt, James Twigg, Derek (Halton)
Pollard, Kerry Twigg, Stephen (Enfield)
Pope, Greg Vaz, Keith
Pound, Stephen Vis, Dr Rudi
Powell, Sir Raymond Walley, Ms Joan
Prentice, Ms Bridget (Lewisham E) Ward, Ms Claire
Prentice, Gordon (Pendle) Wareing, Robert N
Primarolo, Dawn Watts, David
Prosser, Gwyn White, Brian
Purchase, Ken Whitehead, Dr Alan
Quinn, Lawrie Wicks, Malcolm
Radice, Giles Williams, Rt Hon Alan
Rammell, Bill (Swansea)
Raynsford, Nick Williams, Alan W (E Carmarthen)
Reid, Rt Hon Dr John (Hamilton N) William, Mrs Betty (Conwy)
Robertson, Rt Hon George Wilson, Brian
(Hamilton S) Winnick, David
Roche, Mrs Barbara Winterton, Ms Rosie (Doncaster C)
Rooker, Jeff Wood, Mike
Rooney, Terry
Ross, Ernie (Dundee VV)
Rowlands, Ted
Roy, Frank
Woolas, Phil Wyatt, Derek
Worthington, Tony Tellers for the Noes:
Wright, Anthony D (Gt Yarmouth) Mr. Graham Allen and
Wright, Dr Tony (Cannock) Mrs. Anne McGuire.

Question accordingly negatived.

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