HC Deb 15 May 2000 vol 350 cc1-5
1. Mr. Owen Paterson (North Shropshire)

If he will make a statement on the Government's policies towards pensioners. [120936]

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

We have introduced long-term reforms to enable everyone to receive a decent pension after a lifetime of work. For today's pensioners, we are spending £6.5 billion more, with about half that amount going to Britain's 3 million poorest pensioners.

Mr. Paterson

One of the great successes of the previous Government—[Laughter.] One of the great successes of the previous Government was to encourage the establishment of pension funds, which now exceed those in the rest of Europe put together. The present Government responded with a £5 billion annual raid on pension funds, so the savings ratio is going down and the average 30-year-old must put away a further £200 a year to stay level. That policy is wicked and counterproductive. It was not forecast in the Labour manifesto. Will the Government withdraw it?

Mr. Darling

I have not come across the hon. Gentleman before, but I am glad to note that he has a sense of humour. He will be aware that occupational pensions had been growing for some considerable time before the last Conservative Government. Indeed, it is because of the success of occupational pension funds, which have been growing since the 1950s and 1960s, that so many people now have more income in retirement than they would otherwise have had.

One of the objects of the Government's reforms has been to ensure that, in future, 5 million more people will also have the option of getting into funded pensions through stakeholder pensions. We believe that the best way of ensuring that people have a decent income on which to retire is to encourage as many as appropriate to get into funded pensions. In addition, the state second pension will benefit 18 million people on lower incomes. Neither of those matters was dealt with by the previous Conservative Government.

Mr. Gerald Kaufman (Manchester, Gorton)

Although Labour Members have every right to urge the Government to give the best possible deal to pensioners, and to do even better than they are doing now, does my right hon. Friend agree that the Conservative party—which cut the link between earnings and pensions, which did not introduce free television licences, which would abolish the winter fuel allowance and which increased VAT on fuel—has no right even to raise the subject in the Chamber?

Mr. Darling

My right hon. Friend is right. It is interesting that despite what the Conservatives have been saying over the past few weeks, the shadow Chancellor repeated on television last week that the Conservatives were also committed to increasing pensions in line with prices, and no higher than that. In addition, the Conservatives are against the minimum income guarantee, which means that many pensioners would lose their £14 or £15 a week extra through that help; they would abolish the winter fuel payment, now worth £150; and they were the ones who doubled VAT on fuel, which hammered many of the poorest pensioners.

It is worth noting that because of this Government, over £6.5 billion more is being spent in support of pensioner incomes, and more than half that sum is going to the poorest 3 million pensioners. I believe that that is the right thing to do to tackle pensioner poverty which, like child poverty, has no place in a civilised, decent society. It is a scandal that the Tories presided over such high levels of pensioner poverty because of their unwillingness to do anything to help those who needed help most.

Mr. Steve Webb (Northavon)

The Secretary of State said that after a lifetime of hard work, people were entitled to a decent pension. However, he knows that millions of married women retire on, if anything at all, just a pittance—as little as 8p a week in pension—because they opted for the married women's reduced rate. Is the right hon. Gentleman aware that many of them claim that they were never told of the implications of that choice, or were actively misled? Will he join my call and institute an inquiry into the claims of those women, who feel a real sense of injustice?

Mr. Darling

I noticed in a Sunday newspaper a couple of weeks ago that the hon. Gentleman raised the point and said that he would take it up with me. I am surprised that he has waited for two weeks before doing so. Following that Sunday newspaper article, I decided to check what happened. The law was changed in 1977 because we did not want married women to pay the reduced stamp as they would lose out in later life. I looked at the leaflets that were available, which I may say are infinitely better than the ones produced by the last lot on inherited SERPS, because they explained what happened. If the hon. Gentleman can come up with anyone who has been misled, which he has not done in the past two weeks—perhaps his first port of call should have been me, rather than a journalist—I will certainly look into it.

Mr. David Winnick (Walsall, North)

Does my right hon. Friend recall how time and again, during the period of the previous Administration, many of us virtually begged for some action to help pensioners during harsh winters, when the only scheme that was in operation meant that the temperature had to be freezing for seven consecutive days before it came into effect? Should we not warn pensioners of what would be likely to happen if there were a change of Government? Is my right hon. Friend aware that if there is any truth in the newspaper story that next year the winter fuel allowance will be consolidated into the pension, that would be most welcome? Many of the more elderly pensioners participated in the most crucial war that this country has ever waged, and we should always remember with gratitude the role that they played from 1939 to 1945.

Mr. Darling

On the last point, I wholeheartedly agree with my hon. Friend. Many people who are retiring, or have retired, are on low incomes because either they did not make enough contributions to receive a pension or they did not have the opportunity to save through an occupational or other second pension. When we came into office, 2 million pensioners were living on very low incomes, so we introduced the minimum income guarantee. We are spending some £6.5 billion—£2.5 billion more than it would have cost simply to restore the earnings link—almost half of which goes to the poorest 3 million pensioners who lost out in the Tory years.

My hon. Friend is also right about the winter fuel payment. The only action that the Tories took on winter fuel bills in the last Parliament was to double VAT on fuel. We have reduced VAT as well as introducing the minimum income guarantee.

Mr. David Willetts (Havant)

Does the Secretary of State recall an article in The Times last week headed, "Darling U-turn over Pensions"? It was a report of the Secretary of State's speech at the annual dinner of the Association of British Insurers. I was so keen for the speech to reach a wider audience that I tabled a parliamentary question asking the Secretary of State to place a copy in the Library. He replied: My remarks to the annual dinner of the Association of British Insurers were not delivered from a prepared text.—[Official Report, 11 May 2000; Vol. 349, c. 478W.] I have a document that looks suspiciously like the prepared text of the Secretary of State's remarks to the ABI. He knows his obligations under the ministerial code, so why did he not place the text in the Library? The explanation is clear: there has been a U-turn.

The Secretary of State used to say that stakeholder pensions were for people on low and moderate earnings; he now claims that they are for people on high earnings. He has changed his mind because he knows that the policy would otherwise fail. He will not tempt low earners with stakeholder pensions; instead, there will be a churning of people out of existing pension schemes into stakeholder pensions. The speech prepared the ground for the policy failure. It is not the speech that is ill prepared; it is the policy that is unprepared.

Mr. Darling

I shall deal with the hon. Gentleman's points in two parts. I take his allegation seriously. He claims that I delivered a speech from a prepared text; I did not—he has a draft that was placed in the Library by mistake. If I had placed it in the Library and said that it was a copy of my text, it would have been misleading because it is not the speech that I delivered to the ABI.

The hon. Gentleman was especially interested in my comment about stakeholder pensions. He will see from the draft that it is not there.

Mr. Willetts

It is.

Mr. Darling

No, it is not—the words I used are not there.

I saw the article in The Times; it was completely misleading. I said that we had always made it clear that the target audience for stakeholder pensions was moderate and higher earners, as we stated in the Green Paper that we published in December 1998. I contrasted that with the state second pension, which is aimed at lower earners who earn less than £9,500 a year. Our pensions policy is devised to help those on moderate and higher earnings through stakeholder pensions, occupational pensions and other methods; the state second pension is devised to help those on lower incomes.

Mr. Peter L. Pike (Burnley)

Does my right hon. Friend accept that far too many people who are entitled to the minimum income guarantee do not get it? How will he ensure that pensioners who are most in need receive the money to which they are entitled? If they do not receive it, the system fails.

Mr. Darling

My hon. Friend is right. We are writing to all pensioners who, according to our records, may be entitled to the minimum income guarantee. On top of that, we shall run a major television advertising campaign, which will start to be shown on television from the end of this month until the autumn. We hope that we can thereby reach as many people as possible who are entitled to the minimum income guarantee because we want them to claim it.

Mr. Dafydd Wigley (Caernarfon)

Is the Secretary of State aware that the proportion of average wages represented by the basic state pension has dropped to 16.5 per cent., compared with 23.1 per cent. in the 1980s? Does he not accept that pensioners have a right to benefit from that general increase in incomes—a right towards which they have contributed by virtue of their national insurance contributions, and which they earned during their working lives?

Mr. Darling

The right hon. Gentleman will be aware that pensioners' incomes do not consist of only the basic state pension; most people who retire now receive the basic state pension plus a second pension, either through SERPS—or, in future, the state second pension—or through their occupational pension, for which they have always received help through tax relief and so on.

I should have thought that, coming from where he does, the right hon. Gentleman would have agreed with the main thrust of our policy, which is to ensure that we spend half the amount of money that we spend on pensioners on those who lost out—those who have either retired or who are retiring on very low incomes.

If we had introduced the earnings link, clearly that would have cost us less than we are spending, but it would not have helped the poorest pensioners. They benefit not only through the minimum income guarantee, but through the winter fuel payment, which is neither taxable nor taken into account for benefit purposes. I make no apology for the fact that the Government's first priority has been to help those poorest pensioners. The next job is to ensure that those with modest occupational pensions and modest savings are helped through the new pensioner credit.