HC Deb 09 November 1999 vol 337 cc907-23

5 pm

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

I should like to make a short statement on the annual uprating of benefits. I also want to set out how we are delivering a better deal for pensioners.

First, on uprating, I can confirm that most national insurance benefits will rise by the retail prices index, which is 1. 1 per cent. That means that, to protect the basic state pension from inflation, we shall increase it in line with prices to £67. 50. For couples, that rises to £107. 90. Most income-related benefits will rise by the Rossi index—1. 6 per cent.—in the normal way. I shall place details of the uprating in the Vote Office, and I shall arrange for the figures to be published in the Official Report shortly, in the usual way.

Today, we have already announced significant help for children. I now want to set out the additional help that we are giving to pensioners. The help will mean that our oldest, poorest pensioners will be more than £500 a year better off since we came to power. That is real help from this Government for those in real need. We are determined to tackle pensioner poverty, because retirement should be a time in life to look forward to. For many it is, but for too many it is not. We are determined to help every pensioner to have a secure and fulfilling retirement.

However, we inherited two problems. The first is a problem for the future. If we had done nothing, one in three people could have depended on means-tested benefits in retirement. That was the legacy we faced, which no Government could tolerate. So, we are tackling that with our reforms for the long term. We are reforming the state earnings-related pension scheme—SERPS—with the state second pension, and we are introducing the new stakeholder pension schemes. Because of our proposals, people can look forward to a decent income in retirement after a lifetime of hard work.

However, the second problem that we inherited is immediate, and it needs to be confronted now. Since 1979. pensioner incomes as a whole have increased, but the gap between the better-off pensioners and the poor widened dramatically. The incomes of the 2 million better-off pensioners rose by two thirds, but the 2 million poorest pensioners missed out, their incomes rising by only a third.

Too many pensioners have spent the past 20 years living in poverty, afraid to turn on their heating, struggling to make ends meet and sometimes living in fear and isolation. That cannot be right, which is why we are acting now by delivering a fair deal for pensioners with more cash help for the poorest, help with fuel bills and action to tackle isolation.

Our priority is to direct help to those hardest hit over the past 20 years, those who missed out in the rising national prosperity. That is why we have introduced the minimum income guarantee, which will provide extra help for those who need it most, and that is why we are increasing the minimum income guarantee in line with earnings from next April. Therefore, it will be worth £78. 45 for single pensioners and £121. 95 for couples. For single pensioners aged between 75 and 79 that rises to £80. 85, and to £125. 35 for couples. For those over 80 that increases to £86. 05 and to £131. 05.

The universal basic state pension remains the foundation of pension provision in this country. However, Governments over the past 50 years have known that the basic state pension would not do enough on its own. That is why the graduated pension scheme was introduced in 1961 and why SERPS was introduced in 1978. That is why we are introducing radical reforms for the future, and it is also why we have already introduced the minimum income guarantee, which gives direct cash help to the poorest now and helps those who would otherwise have to live on the basic state pension with no income from a funded pension to top it up.

An across-the-board increase in the basic state pension would not begin to tackle the pensioner poverty that we inherited. The poorest would lose their benefit pound for pound, and they would be no better off as a result. That is why our approach—providing extra help for the poorest pensioners—is not only the right thing to do; it is the only fair thing to do, and it is the only way seriously to tackle pensioner poverty today. So, that is why I can announce today that we shall increase the minimum income guarantee in line with earnings each and every year during this Parliament.

We are helping 1. 5 million of our poorest pensioner households more than ever before, because we are determined to make sure that retirement is a time to look forward to, and of course for most pensioners it is. However, it can be difficult for pensioners on fixed incomes to meet the cost of one-off annual bills. Older pensioners can find that particularly hard, since they are more likely to be living on low incomes. Nearly half of pensioners over 75 are among the poorest third in relation to incomes.

To solve that problem and to address the particular needs of older pensioners, the Chancellor today announced free television licences for pensioners aged 75 and over. That will provide help for pensioners who need extra help after a lifetime of hard work and caring. It will help 3 million households from next autumn and will be worth up to £101. The measure will help to prevent isolation and it will help older pensioners to keep in touch and to stay informed. We are helping to make sure that older, poorer pensioners have access to something that so many of us take for granted. Details of how we shall do that will be published shortly.

We are helping the poorest through the minimum income guarantee and we are helping the oldest with free TV licences. It is those pensioners who have most to gain through the winter fuel payments. This year, around 10 million pensioners in about 7. 5 million households will get £100, paid, for the first time, before Christmas. The first of this year's winter fuel payments were sent out yesterday.

Today we can go further. I can confirm that the £100 winter fuel payment will be paid each and every year from now on. That is on top of cutting VAT on fuel and on top of the home energy efficiency scheme, which will help the poorest with up to £2,000 to fit central heating from next year. All those measures have been taken by this Government. We are delivering lower fuel bills and providing pensioners with direct help to pay for them.

We always knew that the retail prices index would be low in September. We not only predicted it, we pre-empted it with all the additional help announced today: the increase in the minimum income guarantee in line with earnings for the rest of this Parliament; free television licences for pensioners over 75, and the fivefold increase in winter fuel payments paid every year from now on.

We have a lot more to do, but we have made a good start on preventing pensioner poverty in the future by reforming the system for the long term, and on tackling pensioner poverty now by delivering for today's pensioners an increased minimum income guarantee, winter fuel payments and free television licences.

We are building a better quality of life for all our pensioners by investing more in the national health service, tackling crime and taking two thirds of pensioners out of tax altogether. We are spending £4 billion on pensioners as a whole while, at the same time, we are getting the greatest help to those pensioners in the greatest need. That is all new help; it is all from this Government and it all delivers a better deal for pensioners. I commend the statement to the House.

Mr. David Willetts (Havant)

I begin by welcoming one of the few new announcements that we have had today. The Chancellor referred to the measure, but it was strangely missing from the Secretary of State's statement. I refer, of course, to the proposed new regime for unemployed benefit claimants who, we are told, will be required to sign on daily.

I recognised that policy announcement, and I think that it may be the first victory for the common-sense revolution. Only three weeks ago, we said: If unemployment claimants look as if they are working and claiming, or not taking jobsearch seriously, they will have to sign on at their Jobcentre on a daily basis. We therefore welcome the announcement. It is a pity that the Minister of State denounced that at the time as right-wing madness, but three weeks is a long time in politics. If the Secretary of State wants any advice on how to deliver that policy, we are, of course, willing to oblige.

Most of what the Secretary of State said was repeats. We had the minimum income guarantee for pensioners that we had heard about before. We had the winter fuel scheme, which is also a repeat. Stakeholder pensions are a repeat. The second state pension is a repeat. The home energy efficiency scheme is a repeat. In fact, it is no wonder that the TV licence is the centrepiece of the right hon. Gentleman's statement, because all he is showing is repeats.

What was conspicuous about the right hon. Gentleman's statement was the complete absence of a strategy for dealing with pensioner poverty. He began his statement by saying that if things had carried on, one in three pensioners would have been dependent on means-tested benefits. He then announced an increase in the basic pension of 1. 1 per cent. and—I should be grateful for his confirmation of this figure—an increase in the minimum income guarantee, which he does not like to call a means test although it is one, of 4. 9 per cent.

We should like to hear from the Secretary of State how many more pensioners he estimates will be brought within means-tested benefits as a result of the statement today. He cannot say in the same statement that he is trying to address the problem of more pensioners being dependent on means-tested benefits, and promptly announce a further increase in means-testing for pensioners.

Does not the right hon. Gentleman remember the Chancellor saying to the Labour party conference when he was in opposition: I want the next Labour Government to achieve what in 50 years of the Welfare State has never been achieved: the end of the means test for our elderly people"? What a contrast between what he said then and the statement today.

Elderly people will not let the Secretary of State off the hook with a 75p increase in the basic pension, when in his Department's expenditure plans published only in March, he assumed a 1. 3 per cent. increase in the basic pension—not the 1. 1 per cent. announced today, but a £90 million saving from pensioners, which he has simply pocketed.

Meanwhile, the right hon. Gentleman is hitting pensioners with a range of measures that take money away from those who had the prudence to save—the £5 billion a year attack on pension funds through advance corporation tax; the abolition of dividend tax credits which hit 300,000 pensioners who are not even within the range of income tax; the scrapping of the married couples allowance, with no replacement for the pensioners who will find in future that their age allowance has been taken away from them, at a cost of £500 in tax a year.

The Government are taking from prudent pensioners who saved, in order to finance a further increase in means-testing. It is the wrong way to go.

May I also ask the Secretary of State about his policy on benefits and assistance for families? For the past year, he has fought to get through the House a measure, the working families tax credit, for which the central argument was that it was important for benefits to be delivered through the tax system. Has he any evidence whatever that paying a benefit of given value through the tax system rather than the benefits system has any effect on incentives or behaviour?

Perhaps the penny has dropped for the Chancellor. He announced today that a year after the working families tax credit comes in, he will promptly extract from the tax credit all the payments in respect of children, and convert them back into a benefit to be paid, usually, to the mother. After one year of the tax credit being paid through the tax system, a significant chunk of it will return to the benefits system. I should be interested to hear from the Secretary of State how he can defend that as a consistent and coherent strategy for dealing with incentives for families.

Finally, as he hears the Chancellor arguing the case for lower marginal rates for entrepreneurs, does the Secretary of State have a pang of guilt about the fact that later today he will impose a 73 per cent. marginal rate of tax on people in receipt of incapacity benefit, simply because they had the prudence to save?

Mr. Darling

On the last point, I am particularly pleased that we will increase the amount of money that we give to young severely disabled people by £26 a week. The Conservative party did nothing about that for the 18 years that it was in power.

The hon. Gentleman asks about our strategy. Let me remind him of the strategy. He complains that some of what I say is repeated, but good stories are worth repetition. Thanks to Conservative policies, one in three people were heading towards retirement on means-tested benefits because they were getting so little through the pension system that we inherited.

The changes that we are making—reforming SERPS and increasing the amount of money that lower paid workers get—will mean that most people, after working for a lifetime, will be able to retire above the means-tested level. Most people would consider that a strategy worthy of support.

Let me also set out what we are doing for today's pensioners, about which the hon. Gentleman also complains. As is clear from what the shadow Chancellor said last year, the Conservative party opposes all the additional expenditure that the Government have put in place since taking office. We are facing up to the fact that, during the past 20 years, more than 2 million pensioners lost out as a result of the Conservative party's policies.

The hon. Gentleman has told us time and again that he is against the minimum income guarantee. That means that the 2 million pensioners now receiving the minimum income guarantee would be £8 a week worse off as a result of Conservative party policy. He complains that we are bringing more people into the minimum income guarantee, and, yes, 25,000 to 30,000 people will come into the minimum income guarantee, but the point is that they will be getting more money as a result. I am willing to stand at the Dispatch Box again and again to defend giving more money to the poorest pensioners in Britain—those who lost out under the Tory Government.

As the shadow Chancellor has made clear, the Conservative party is against the winter fuel payment, £100 for every pensioner household, which benefits the poorest pensioners most. The hon. Gentleman has not told us what he thinks about free television licences for 75-year-olds. Presumably, if all Government expenditure is reckless, he must be against that as well.

The point is that, unlike the previous Government, we are determined to tackle pensioner poverty. We are not prepared to put up with a situation where people who have worked hard all their lives and have spent a lifetime caring for people end up with so little money that they are frightened to turn up their heating and do not know whether they can make ends meet. I am more than happy to go into the next election defending what we have done for today's pensioners, as well as the reforms that we are making for tomorrow.

Mr. Frank Field (Birkenhead)

I warmly welcome my right hon. Friend's statement today, during which he rightly condemned the Conservative party for allowing one in three pensioners to be dependent on means-tested assistance, but what will that proportion be when our programme for pension reform is fully implemented?

Mr. Darling

My right hon. Friend knows that the proportion of people on means-tested benefits during the course of their retirement will fall. It will take some time for our pension proposals to take place, because we are talking about saving over the next 30, 40 and 50 years. [Interruption.] It must have occurred even to Conservative Members that it takes some considerable time to build up a pension. They may have managed to go a long way towards running down pensions in the 20 years that they were in power, but we have put in place reforms to the pension system which will mean that those who have worked hard throughout their lives will be able to retire on a pension above income support levels.

The Conservative party is still committed to a policy of wholesale privatisation of the pension system—ideological nonsense. We are ensuring that we help today's pensioners as well as pensioners in the future.

Mr. Steve Webb (Northavon)

I commiserate with the Secretary of State for having to listen to the Chancellor give away the goodies on television licences and then having the humiliation of announcing a pathetic 75p increase in the state pension. Can he confirm that that is the lowest ever state pension relative to the means test? Can he also confirm that, if council taxes for pensioners rise by £40 next April, as they did last April, that will take up the whole of the pensions rise, leaving pensioners with nothing for any other price increase next year? What did the Secretary of State mean when he said that most national insurance benefits will rise by 1. 1 per cent.? Will any rise be less than 1. 1 per cent.? Can he confirm that he plans to take action on the disincentive to save in the means-tested benefits system? So far he has told us that he will be pushing more pensioners on to means-tested benefits and penalising those who have saved. Is he content to be the Secretary of State who has brought Britain the lowest ever pension figure relative to the means test?

Mr. Darling

Even for the Liberals, that takes the biscuit. Let me make one or two things clear to the hon. Gentleman. He asked about the uprating of benefits. No benefits will go up by less than the Rossi index or the RPI. He may be interested to know—I am grateful to him for allowing me the opportunity to point this out—that the amount of money paid under the minimum income guarantee goes up by considerably more than an inflationary increase, and the child benefits and child premiums go up considerably more than they would have done under inflation, both of which measures I would have hoped the Liberals would have supported.

The hon. Gentleman mentioned pensions. I make no bones about the fact that the Government's strategy is primarily geared to helping those pensioners who need help most—those who lost out over the past 20 years. An across-the-board increase, whether prices or earnings related, would not help the pensioners on the lowest incomes because they would lose it pound for pound. That is why we have introduced the minimum income guarantee, the winter fuel payment and free television licences for the poorer pensioners aged over 75, most of whom live in some of the poorest households. Had pensions been earnings linked this year, they would have gone up by slightly more than £3 a week, but because of what the Government have done most pensioners will receive slightly more than £4 a week. They have done better as a result of the policies that we have put in place. His proposals, which he published about two months ago, involved abolishing the state earnings-related pension scheme and would have ensured that the state second pension was not put in place. They would have completely undermined the pensions programme. That sounds like a particularly mad proposal, even for the Liberals.

Mr. Ernie Ross (Dundee, West)

I welcome my right hon. Friend's announcement. Can he confirm that our manifesto committed us, particularly with regard to pensioners, to considering the restoration of the link with earnings as and when we could afford it? His announcement that the minimum income guarantee each year will be increased in line not only with prices, but with earnings, is a start. All the pensioner households in my constituency will certainly welcome the announcement of free television licences for over-75s.

Mr. Darling

I am grateful to my hon. Friend. Most Labour Members are determined to do as much as we possibly can for pensioners, particularly those who lost out in the Tory years. We have linked the minimum income guarantee to earnings. That will help the poorest pensioners—all of us have come across them in our constituencies—who did particularly badly in the Tory years. I am sure that the free television licence will benefit older pensioners, many of whom live in households whose incomes are particularly low, feel isolated and cannot keep in touch. They find meeting the cost of a one-off bill, such as that for the television licence, a disproportionately heavy burden to bear. We are making progress because we are determined that all pensioners should share in this country's rising prosperity, but we have a clear obligation to tackle pensioner poverty, which the Conservative party did nothing about during the 20 years in which it had the opportunity to do so.

Mr. Edward Leigh (Gainsborough)

How does the relatively modest increase of 1. 1 per cent. in universal benefits, such as the basic state pension, compare with the relatively generous increase of 4. 9 per cent. in means-tested benefits, such as the minimum pension guarantee? Will that make it more or less likely that Mr. and Mrs. Prudence will make provision and save for their old age?

Mr. Darling

Most people are making provision not only for their old age, but for other things. As the Chancellor made clear in his pre-Budget statement, we want to encourage that. I find it interesting that the Conservatives increased pensions and other benefits in line with prices for 18 years. It is most curious that, after two years in opposition, they seem to be hinting that they would have a different policy today. I doubt it.

Mr. Ivan Henderson (Harwich)

I represent more than 30,000 pensioners. Having met their representatives yesterday, I can tell my right hon. Friend that they welcome their £100 winter fuel payments for this year, next year and the year after, but what more can the Government do to ensure that pensioners who are entitled to do so receive benefit so that they can take advantage of the minimum pension guarantee?

Mr. Darling

My hon. Friend makes an important point. We think that about 500,000 pensioners who ought to be receiving benefits to which they are entitled are not claiming them. Three weeks ago I published research highlighting the scale of the problem and I hope to announce, in the not too distant future, proposals showing the Government's determination to ensure that people entitled to help—through the minimum income guarantee or other benefits—receive it.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

I am very pleased that the Secretary of State has made such a point, because the minimum income guarantee is based on the fact that people claim that to which they are entitled. Does he therefore accept that the many people who are eligible for benefits but are not claiming them will be left with nothing more than a 75p increase as a result of his statement?

The pilot studies of take-up seem to have fizzled out. It is urgent that the Secretary of State takes action to remedy the problem before he can be safe in the assumption that he is tackling pensioner poverty. The Government have said that they are looking at capital thresholds for means-tested benefits. Increasing such thresholds would be an easy way of addressing the problem.

Mr. Darling

The hon. Gentleman raises several points. On the latter, the Government have made it clear that we are concerned about capital limits. We want to encourage people to save, and they ought to be rewarded for doing so.

On take-up, the pilot projects have not fizzled out. They are being assessed and, as I said to my hon. Friend the Member for Harwich (Mr. Henderson), we hope to announce the conclusion of them before announcing further steps to ensure that pensioners who are entitled to the minimum income guarantee and other benefits receive them.

Yes, the basic state pension's value is being maintained, but the minimum income guarantee goes to those poorest pensioners who lost out. I would have hoped that the hon. Gentleman would agree that our concern must be particularly for pensioners who have received the least over the past few years. The winter fuel payment—quite significant help—will be going to every eligible pensioner household in the next few weeks. In addition, of course, from next year, there will be free television licences for over-75s. I remind the hon. Gentleman, too, that we took 200,000 pensioners who were paying tax out of such a bracket. All that adds up to valuable support for pensioners who, as I say, were neglected for far too long under the Conservatives.

Mr. Paul Flynn (Newport, West)

As one of the 100 Members of Parliament who have long campaigned for the restoration of the link between pensions and earnings, may I congratulate the Government on giving benefits to pensioners that are at least equivalent to—and possibly higher than—the amount that they would have received had the link been restored? None the less, there is a serious problem, and the campaign to restore the link must go on.

At least 500,000 pensioners do not claim the minimum income guarantee, although they are the poorest pensioners. The reason is that they have worked all their lives, never claimed any benefit, made contributions at the rate of inflation for 45 years or so and will not demean themselves by filling out forms and claiming a hand-out. They see the basic state pension as a right. There is therefore a great difference between increasing it and giving more hand-outs.

Although the Government are right to give prime attention to helping the poorest pensioners, the Minister and I were elected on a pledge that all pensioners would share fairly in the growing prosperity of the nation.

We must address the fact that a group of the poorest pensioners are losing out before we return to the country to ask for their support.

Mr. Darling

My hon. Friend is right that everyone on the Labour Benches was elected on a pledge to ensure that pensioners shared fairly in the country's rising prosperity. We are delivering on that. I think that my hon. Friend would accept that we are right to concentrate the additional money that we are making available—some £4 billion—on the poorest pensioners who have lost out over the past 20 years. An across-the-board increase does not help the poorest pensioners, because they lose any such increase pound for pound. Many at the top end of the scale would not of course notice the difference in their weekly income.

I do not regard claiming an entitlement from the state as in any way demeaning. We must ensure that we make it far easier for people who are entitled to claim something from the state to do so. I readily agree that the Benefits Agency and the Department of Social Security have some way to go in doing that. However, having given people a right under the minimum guarantee, I am determined to ensure, as my hon. Friend would agree, that every single pensioner who is entitled to receive MIG and other benefits does so. The steps that we shall be announcing in the not too distant future will ensure that that occurs.

Mr. Simon Burns (West Chelmsford)

Undoubtedly, pensioners will welcome the statement about the television licence and the help with winter fuel bills. However, does the right hon. Gentleman realise that his other comments will sound hollow to them, especially after next April, bearing in mind what they said when the retail prices index figures for September were announced and they discovered that their increase would be only 75p a week, despite the fact that they will face additional council tax bills and higher retail prices? Pensioners will be confused by the idea that a Cabinet Minister can proclaim a 1. 1 per cent. increase as such a good deal, because they know that his pay has increased by more than double that rate.

Mr. Darling

The hon. Gentleman is the first Conservative—and, for all I know, the only Conservative—to welcome the introduction of free television licences and the help with winter fuel bills. I am glad that he has done so, although it will no doubt occur to him that there is something contradictory in welcoming those while denouncing our public expenditure plans—[Interruption.] Is he saying that he does not denounce our plans? A rebel already!

Secondly, the hon. Gentleman cannot both criticise the increases that I have announced today, and back the shadow Social Security spokesman, who is pledged to slash social security spending. As nearly half social security spending goes on pensions, if the Conservatives really want to slash that spending, they will have to tell us which pensioners will lose out and what benefits will go.

Mr. Christopher Leslie (Shipley)

I am still a few years away from my own entitlement to the free television licence for those over 75, but may I say how enormously welcome it will be to thousands of my constituents. Is it not increasingly clear that the Conservatives would snatch that free television licence from thousands—no, millions—of pensioners?

Mr. Darling

I said that retirement should be a life to look forward to, and my hon. Friend has a long time to look forward to it. He is right; the Conservatives, because of their opposition to our public expenditure plans, would remove the winter fuel payments. They are also against the minimum income guarantee, so their policy would cost the poorest pensioners about £8 a week—and they would deny the funding for the free television licences. They are therefore in no position to say that if they were in power things would be better. People will look back at what they did over the past 20 years; the Conservatives are the reason why there is so much pensioner poverty today.

Mr. Roy Beggs (East Antrim)

Pensioners in Northern Ireland will welcome the £100 winter fuel payment, and no doubt those over 75 will welcome the free television licence. However, partly because of the high unemployment that we have had, and also because of the lack of opportunity to invest in private pensions, they are among the poorest pensioners in the United Kingdom, and there will be disappointment at the bottom end of the income scale. Can the Secretary of State assure me that every effort will be made to ensure that those in Northern Ireland who qualify for the minimum income guarantee will be encouraged to apply for the benefits to which they are entitled?

Mr. Darling

I am sure that people in Northern Ireland will welcome the minimum income guarantee in particular. The hon. Gentleman is right to say that many pensioners there did very badly during the 18 years that the Tories were in power, and those people will look to the minimum income guarantee to protect them. As for the take-up campaign, as the hon. Gentleman will be aware, social security in Northern Ireland is a matter for the Secretary of State for Northern Ireland, but I am sure that my right hon. Friend will want to take appropriate action there as well.

Mr. Jeremy Corbyn (Islington, North)

I thank the Secretary of State for his statement. However, will he confirm that the Government's objective is to reduce the proportion of state expenditure that goes on pensions from 60 to 40 per cent. over the next 50 years? Does he not understand that the refusal to uprate the basic state pension in line with earnings has created much ill feeling among many pensioners organisations, and that his argument that to do so would lead to extensive clawback is a self-fulfilling prophecy? If he altered the rules on clawback of other benefits, the benefit that pensioners would derive from an increase in the state pension in line with earnings, rather than an inadequate 75p increase, would do much to eliminate pensioner poverty. Above all, it would guarantee an adequate level of state pension for the future, which his current system does not do. All it does is create an expensive minimum income guarantee, which is costly to administer. A basic non-means-tested rise would be much cheaper to administer.

Mr. Darling

Let me deal first with the Government's long-term plans, which are to encourage moderate and higher earners to get funded pensions, because we believe that they will then be far better off. History shows that that is the case. We will spend some £10 billion, despite the changes that we are making, but our policy is clear—we want as many people as possible who can get funded pensions to get them. Alongside that, through the reforms we are making to the state earnings-related pension, with the state second pension, we are ensuring that those on low earnings—less than £9,000 a year—double the amount of pension they will get. I hope that my hon. Friend welcomes that.

My hon. Friend also asked about the earnings link. Restoring the earnings link would, by 2020, cost some £18 billion. That would have to be funded, so we have to ask whether that is the best way to help pensioners. I believe that the best way to help pensioners is to continue the policies that I have announced today and ensure that we give most help to those pensioners who have lost out—today's pensioners who have done so badly over the past 20 years—and for the future, to encourage future pensioners who can save to do so. For those future pensioners now on moderate or low earnings, we will give additional state help.

Mr. Owen Paterson (North Shropshire)

The Red Book published in March at the time of the Budget predicted that social security spending would increase dramatically in every successive year up to 2002. Is that forecast still valid?

Mr. Darling

Social security spending is rising at well under half the rate that it rose under the Conservatives. That is because we have public expenditure under control, and we are not spending money on economic waste because of high unemployment. We are spending far more money on those people who should be supported—those who lost out under the Conservative party during its 18 years in office.

Dr. Lynne Jones (Birmingham, Selly Oak)

I am reassured that my right hon. Friend wishes to reduce the proportion of pensioners reliant on means-tested benefits. As a measure of the success of the Government's policies, will he introduce targets for the reduction in the number of pensioners living below the poverty line and the number reliant on means-tested benefits?

Mr. Darling

In case my hon. Friend has not had the opportunity to read the report we published in September, which set out the Government's strategy for combating poverty and the causes of poverty and promoting opportunity for people, I can tell her that it sets out targets for pensioners and the rest of the age range. If she has not read it, I strongly commend what I believe to be an excellent document.

Mr. Paul Burstow (Sutton and Cheam)

Given that the oldest pensioners tend to be the poorest pensioners and that the Government intend to target the television licence fee concession on the basis of age, why has not the Secretary of State taken the opportunity of this statement to announce a long-overdue increase in the age addition for the over-80s, which has not been increased from 25p since 1971?

Mr. Darling

I should have thought that a £100 television licence was quite an increase from the 25p the hon. Gentleman mentions. I think that he would agree that we have done much more to help older, poorer pensioners than the proposals made by his party's spokesman would achieve, which would have been paid for by abolishing SERPS and would have undermined today's pension industry—something that I would have thought would cause concern to most reasonable people.

Mr. Vernon Coaker (Gedling)

I congratulate my right hon. Friend on the policies he has adopted to try to help pensioners. Will he continue to try to explain to the British people—and, as seems necessary, to the British Parliament—that pensioners are not a homogenous group of poor people? Some pensioners are rich, some are in the middle and some are poor. The fact that my right hon. Friend is pursuing a variety of policies means that we can target help on pensioners who need it, without wasting money on those who do not.

Mr. Darling

My hon. Friend is right. Too often, people assume that all pensioners are the same. In the past 20 years, the income of pensioners as a whole has risen by more than that of any other sector of society. The problem is that, although the income of the 2 million better-off pensioners went up by two thirds, the income of the 2 million at the other end of the scale went up by less than a third, in some cases.

The Government have to devise a pension strategy that meets the needs of all pensioners and takes pensioners as we find them today. That is why we have introduced the minimum income guarantee for the poorest pensioners. The winter fuel payment benefits all pensioners, but disproportionately benefits those on lower incomes. In addition, the free television licence will benefit the older, poorer pensioners.

The changes that we have made to take 200,000 pensioners out of tax will benefit those who are better off. The Government's pensions strategy is therefore designed to deal with the needs of today's pensioners, no matter who or where they are.

Miss Julie Kirkbride (Bromsgrove)

I commiserate with the Secretary of State on having only one new announcement to make at the Dispatch Box today. Clearly, his statement that pensions will rise only by a measly 75p this year is very unpopular with Labour Back Bench Members.

I welcome the Chancellor's announcement of free television licences for pensioners over 75, as will Sir Denis and Lady Thatcher, who will be beneficiaries of the proposals. However, I remind the Secretary of State of what my hon. Friend the Member for Havant (Mr. Willetts) said about the Government's figure for the rise in pensions. The right hon. Gentleman spoke of a rise of 1. 3 per cent., but does he accept that the true rise, as my hon. Friend said, will be of only 1. 1 per cent., and that £90 million will have been taken out of the mouths of pensioners?

Mr. Darling

Talking of Lady Thatcher—which we sometimes do—I seem to remember that she was head of a Government who, some years ago, took concessionary television licences away from an awful lot of pensioners. I suspect that those pensioners will remember that. They will not be consoled by the fact that there are now two Conservatives prepared to welcome the Government's initiative in providing free television licences for all 75-year-olds.

However, the hon. Lady will have to have a word with the Opposition spokesman, the hon. Member for Havant (Mr. Willetts). At the Tory party conference, he pledged that a Tory Government would slash social security spending. [Interruption.] No wonder she is pointing at him. Her welcome for the steps that we are taking, and his policy pledges, are totally inconsistent.

Mr. John Bercow (Buckingham)

How does the Secretary of State justify the fact that, by the year 2001, an estimated 300,000 taxpayers, including 90,000 sole earners, will have to pay a marginal tax rate of 46 per cent. because of the tapering of the new child care element of the working families tax credit? Is the right hon. Gentleman proud that he intends to plunder the pockets of the people in that way?

Mr. Darling

I am very proud of the fact that this Labour Government introduced the working families tax credit. What is more, I am proud too that the Government reduced the marginal rates of tax effectively being paid by people who, when they went into work, found themselves worse off because of the Tory benefit rules.

I shall also be very happy to go into the next election pointing out that Conservative Members have pledged to get rid of the working families tax credit. That will mean a huge tax increase for the many people who have gained under this Labour Government.

Mr. Ian Bruce (South Dorset)

I welcome the announcement of free television licences for pensioners aged 75 and over, although I should be happy to explain sometime to the Secretary of State how licences could be done away with for every age group.

I congratulate the Secretary of State too on the way in which he very carefully did not say that every pensioner household would get the minimum income guarantee, as the House was told last year. Will he say how many million pensioner households on lower incomes will not get that guarantee, and whether he intends to raise the capital limits? Also, will he say how it can be fair that a 64-year-old man who spends £8,000 on a car before he retires will get the extra increase and the minimum guarantee, whereas the guy who saves his money will not? Surely that is not equitable among pensioners.

Mr. Darling

The Tory edifice is crumbling. The hon. Gentleman is the third Tory in a row to oppose the Conservative Front-Bench line on spending. He wants even more free television licences. He cannot have it both ways. The Conservative party opposes our public expenditure plans—those plans that are introducing the minimum income guarantee, free television licences, winter fuel payments and all the other help that is going to pensioners. For the avoidance of doubt, the minimum income guarantee goes to those pensioners who qualify for it. That is as plain as a pikestaff—even he should be able to see that.

At the end of the day, Opposition Members have to face up to the fact that for 18 years they did nothing for the poorest pensioners, who lost out as a result. It is this Government who are helping the poorest pensioners through the minimum income guarantee, winter fuel payments and free television licences. Britain's poorest and oldest pensioners will be £500 a year better off as a result of this Labour Government.

Mr. Eric Pickles (Brentwood and Ongar)

In reply to my hon. Friend the Member for Havant (Mr. Willetts), the right hon. Gentleman said that he was particularly proud of giving additional money to young disabled people. Is that pride tinged with a little shame that the money to pay for that is being taken away from older disabled people on slightly above the minimum income?

Mr. Darling

No, it is not. While Tory Back Benchers are willing to welcome free television licences for the over-75s, we have had not one word about it from those on the Front Bench. We can take it that the reason that Front-Bench Conservatives are saying nothing is that that is something else that would be cut under any future Conservative Government.

As for disability, I repeat that we are giving more money to the young severely disabled. We are giving nearly £40 a week more to three and four-year-olds who have difficulty in moving. In addition, we are spending more on the disabled person's tax credit, on the disability income guarantee, and on providing pensions for disabled people with broken work records and for carers, all of which is opposed by the Tory party, which shows yet again that the Tories' opposition to the Welfare Reform and Pensions Bill is opportunism pure and simple.

The Government have an excellent record. We are helping people who are disabled, helping pensioners, helping people get back into work and tackling poverty—something that the Tory party never did and never would do.

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