§ 13. Mr. Jeremy Corbyn (Islington, North)What estimate he has made of the cost of linking the minimum income guarantee for pensions to average earnings. [84003]
§ The Secretary of State for Social Security (Mr. Alistair Darling)We intend to raise the minimum income guarantee for pensioners in line with earnings as resources allow, so that even the least well-off among today's pensioners can share in rising prosperity. We have pledged to raise it in line with earnings next April and estimate that that will cost an additional £220 million.
§ Mr. CorbynAs the Secretary of State accepts the need to raise the minimum income guarantee in line with earnings, does he not accept that the basic state pension should also be raised in line with earnings, instead of being raised only in line with prices, which means that pensioners are significantly worse off than they were when the Tories broke the link? Should not the Government at least redress that imbalance?
§ Mr. DarlingNo, I do not agree with my hon. Friend, because that would not help the poorest pensioners. I have made it clear in the House before that the Government's priority is to address a major problem that we faced on coming into office: the fact that many pensioners live on very low incomes. That is why we are investing more than £4 billion over this Parliament. The new minimum income guarantee for pensioners targets help on the poorest pensioners. We have increased the winter fuel allowance fivefold, to £100, for every pensioner household, starting this winter. We have also reformed pensions in the long term, particularly through the new state second pension, which will greatly increase the pension that low earners can accrue during their lifetimes.
The Government's strategy is to do far more than ever before to help pensioners who have lost out because of the policies of the previous Government. My hon. Friend's proposal would benefit middle and some higher income pensioners, but poorer pensioners would not benefit at all, which we want to avoid. I believe that the Government's strategy is right because it does more to help the pensioners who need help most.
§ Mr. Peter Viggers (Gosport)Why do Ministers continue to say, more in hope than belief, that there is no disincentive to save? I am sure that the Secretary of State saw the reply to the parliamentary question that I tabled earlier this month showing that a single pensioner receives £60 a week more if he has done nothing to save for his retirement than someone who has savings of more than £16,000. The accumulated facts show that it would cost £43,000 to buy an annuity with that return. [Interruption.] Those facts were revealed in an answer given by the Minister of State, who is even now briefing the Secretary of State. Does not that mean that people must save £43,000 or not bother at all? Is not that the most massive disincentive to saving?
§ Mr. DarlingNo. The hypothesis behind the hon. Gentleman's question is unrealistic. Pensioners in the position that he described would have a SERPS entitlement that he seems to have ignored. Let me deal with the minimum income guarantee, which is what he is complaining about. As I understand it, in so far as the Conservatives have a policy on welfare, they are against the minimum income guarantee. That would mean that 1.5 million pensioners would lose out immediately.
The Government's clear priority is to help the poorest pensioners. If the hon. Gentleman does not accept that, he must accept that the logic of what he says is to remove 18 the support that we give them so that they would be poorer still. Most people would think it right to help pensioners who, often through no fault of their own, are on very low incomes. That is why we increased the minimum income guarantee, which will mean that some pensioners will gain £160 in real terms—something that the Tory party would have denied them.
The Tory party has to come clean with people; if Tory Members are against the minimum income guarantee, they must be in favour of reducing the income and the living standards of 1.5 million pensioners.