Pensions and Pensioners

HC Deb 06 November 2000 vol 356 cc33-85

Mr. Speaker

Before I call the hon. Member for Northavon (Mr. Webb) to move the motion, I should announce that I have selected the amendment in the name of the Prime Minister.

4.13 pm

Mr. Steve Webb (Northavon)

I beg to move, That this House believes that pensioners have been betrayed by both Conservative and Labour Governments over the last twenty years; notes that the Conservatives devalued the basic state pension, slashed future SERPS entitlements and oversaw the scandalous mis-selling of personal pensions; notes that the Labour Manifesto promised that pensioners would 'share fairly in the increasing prosperity of the nation', but that the Government now spends a smaller share of national income on pensioners than when Labour came to power; notes that pensioner poverty rose by 400,000 in the first two years of the present Government and that there were nearly 50,000 excess winter deaths in 1998–99 alone, mainly among pensioners; further notes that this year's 75p pension rise was an insult to pensioners and that despite a multi-million pound take-up campaign half a million pensioners still do not receive the means-tested assistance to which they are entitled; believes that the failure to adopt the recommendations of the Royal Commission on long-term care will still leave tens of thousands of pensioners having to sell their homes to pay for care; is concerned that hundreds of thousands of pensioners have faced delays in receiving their pension because of the Government's failure to deal with the problems of the NIRS2 computer system; and therefore calls upon the Chancellor of the Exchequer to announce a substantial increase in the rate of the basic state pension, with additional increases for the oldest pensioners, and to apologise for failing to deliver a decent pension to all pensioners. Today's debate is about pensions, but it is about much more besides. It is about the attitude of successive Governments to older people. The 75p pension rise has been much talked about and is a symptom of that attitude, but it is but one of many examples. The Government's failure to implement the recommendations of their own royal commission on long-term care is another example, to which I hope my hon. Friend the Member for Sutton and Cheam (Mr. Burstow) will be able to draw attention later in the debate. The Government's failure to legislate against age discrimination in the workplace—they went only for a feeble code of conduct—and to stamp out ageism in the national health service are but a few more examples. In failing to treat Britain's older people with true dignity, the Government are following the tradition set by their predecessors. For that reason, our motion refers not only to the current Government but to those in office over "the last twenty years", wherein pensioners have been second-class citizens.

The Government's attitude to older people was summarised by the Prime Minister telling the Labour party conference that he wanted Britain to be "a young country"—that all the things associated with youth were positive and that, by definition, an older and ageing country, which ours is, was a negative thing about which we should be concerned. That is symptomatic of the current Government's attitude. Later, I shall refer to key documents that the Government are concealing, which would reveal their failure to act in support of pensioners and their willingness to keep the pressure off in terms of pensions increases. The Government are sitting on two important documents that should be before the House, but are not. That is a matter of concern.

Our motion begins with the Conservatives' record. As the House will expect, I am a regular reader of Saga Magazine, and I am sure that the Minister of State is too. The magazine recently conducted a survey asking its readers their views on Conservative proposals on pensions—which I have heard described as robbing Peter to pay Peter, by taking pensioners' awards away with one hand and giving them back, plus a few pence, with the other. Although it might have been presumed that the readers would want more money on the pension, rather than in other forms, they voted substantially against the Conservative proposals. The reason was simple: as many said, "We don't trust the Tories on pensions."

Pensioners have long memories. They remember the Conservatives' record on pensions and they are not willing to trust the party again. That record is one of not believing in the state pension, of eroding the basic state pension during their 18 years in office, of attacking SERPS—the state earnings-related pension scheme—and of slashing entitlements. In addition, as the House knows, women whose husbands were concerned about making provision for them when they became widows are now reaping the harvest of changes that were sown by the Conservatives in the mid-1980s. Pensioners, rightly, do not trust the Conservatives on pensions.

What do the Conservatives offer pensioners for the future? They face a dilemma: they have to go into the next election pledged to cut taxes, but they still need something to say to pensioners. The entirety of the policy that they have announced is twofold. First, they pledge to take money that pensioners already receive and then to give it back to them; added to that will be some money taken from lone parents who are trying to find work and some taken from the poorest of the poor through the social fund, to a grand total of 42p. At the next election, the electorate will be faced with a choice between a party that gave them '75p and one that promises them 42p—what a choice.

In my customary fashion, I am being generous to the Conservatives by citing a figure of 42p. The Conservatives said that their pension increase next April would be £5.50–£2 for inflation and £3.08 for the gimmicks, leaving 42p. However, we now know that £2.25 will be needed to cover inflation. Although the hon. Member for Beckenham (Mrs. Lait) might provide one in her speech, we have not yet heard a revised figure for the increase. If it is still to be £5.50, with inflation taking £2.25 rather than £2, that leaves only 17p. Perhaps I have been too generous.

Secondly, those calculations are based on an equation that does not include tax, which leads me to one of the features of the Conservative proposals to which the readers of Saga Magazine objected most. The £150 winter fuel payment is tax free, as is the reduced television licence, worth more than £100. Once those pensioner benefits are subject to tax, many pensioners will be worse off overall. That is the best the Conservatives offer for the state pension in year 1; in years 2, 3, 4 and 5, they offer nothing. They would return to the old ways of nothing more than price indexation—nothing more than 75p and its equivalent.

As for the Conservatives' long-term plan, they have always wanted to privatise everything that moves—and, in the case of the railways, plenty of things that do not move—and pensions are no exception. They tried to go for the full Monty—to phase out the basic state pension. Before the previous general election, they cobbled together a policy that was roundly rejected, so now they are going to try to do it very slowly.

The Conservative party intends to start with the young, by telling them that they can opt out of national insurance and save for a private pension in future. However, there is a slight cash flow problem. If people in their 20s start paying less national insurance in return for the state saving some national insurance in 40 years, there will be a bit of a gap between the loss of revenue now and the saved expenditure in 40 years. Where will the money come from? That is another black hole in the Conservative spending plans.

Perhaps it is unnecessary to dwell too long on the Conservative record. The House is familiar with it; more important, pensioners are familiar with it. I have one thing to say about Conservative proposals for the future. I have seen examples from around the country of Conservative literature relating to the party's proposals for pensioners, and the figure of £5.50 features prominently. I am reminded of the situation that arises when one writes an article for a newspaper, and the sub-editors remove the final paragraph because there is insufficient space. In this instance, it is the paragraph which discloses where the £5.50 will come from. Mysteriously, those who read the first line will see that £5.50 is to go on the pension, but they may never read the line that states that £5.08 is to come off. I believe that that is dishonest, and I hope that the hon. Member for Beckenham will dissociate herself from any local Conservative association that is putting out such literature.

Mr. John Bercow (Buckingham)

I am grateful to the hon. Gentleman for giving way. He observed a few moments ago that the Conservative party is not trusted by pensioners on the subject of pensions. How, therefore, does he explain the fact that even at the 1997 general election, 44 per cent. of pensioners voted Conservative, only 34 per cent. voted Labour, and we cannot quite remember how poorly the Liberals did?

Mr. Webb

The hon. Gentleman underestimates pensioners by assuming that all they do is make a simple calculation of what their pensions will be. Pensioners look at a range of policies, not just pensions. Does the hon. Gentleman want to dispute the verdict of Saga Magazine readers on the Conservative pensions policy, which they rejected by an overwhelming majority when specifically asked about it a month or so ago?

The Conservative record is well known. We might have expected better from Labour. Many pensioners voted Labour in the hope of something better. In their manifesto, the Government set themselves the goal that pensioners would share fairly in the rising prosperity of the nation. How is that to be measured? Clearly, by the share of national income going from the Government to pensioners. One would not measure it narrowly, by looking just at pensions. One would look at the range of things given by Government to pensioners. I did that, in the form of a written question.

Mr. Gerald Kaufman (Manchester, Gorton)

The hon. Gentleman referred to an election manifesto. The Liberal Democrat election manifesto at the last election stated: The basic state pension will remain indexed to prices. That means that this year the Liberal Democrats would have increased the basic retirement pension by 75p. That is what the hon. Gentleman admitted to me in the debate on 8 June. It is sheer hypocrisy to describe as an insult what the Liberal Democrats themselves would have done.

Mr. Webb

I am well aware that the right hon. Gentleman is rattled by the local success of the Liberal Democrats and is nervous about the subject of the debate. Earlier this year, I moved a motion in the House condemning the 75p pension rise as inadequate. Perhaps the right hon. Gentleman was elsewhere. My right hon. and hon. Friends and I supported the motion. The right hon. Gentleman and his party voted that the pension rise was adequate, and the Conservative party abstained. That is what happened this year.

The Labour promise was that pensioners would share fairly in the rise in national prosperity, so the least one would expect is that pensioners' share of national income from the Government would rise. For goodness' sake, doing better than the Tories is not much to ask, but they have not done so. Under this Government, the share of national income going to pensioners is lower than in the final year of the Conservative Government. No Labour-supporting pensioner who voted for this Government can have expected that to be the outcome.

There is plenty more evidence of the disappointment caused by the Government on pensions. The Government's own figures show that the number of pensioners living in poverty rose by 400,000 in the first two years of the Labour Government. The Government will say, "Since then, we have done A, B and C." Is it acceptable for two years to go by, with hundreds of thousands more pensioners living in poverty, before the Government get around to doing something as an election approaches?

Last December, we highlighted the figure for excess winter deaths—the number of deaths that exceed the expected figure. Those numbers are not large in much colder climates, but they reach extraordinary levels in this country. We have been trying to get the figures for last winter, but we are not being told them. My noble Friend Lord Russell asked for that information almost six weeks ago after one of our researchers phoned the Office for National Statistics and was told that the figures were ready but that we had to ask a parliamentary question to get them.

I tabled a question to the Treasury a couple of weeks ago and was given a named-day answer. I was told that we would get the figures soon. We phoned today and were told that they were still being "worked on". The Government want to get the figures off the political agenda. They want to announce a big pension increase before they receive the flak. They are sitting on the information, which should be before the House now.

As the hon. Member for Newport, West (Mr. Flynn) knows, that is not the only information on which the Government are sitting. I am sure that the hon. Gentleman will try to make that point during the debate. The Government Actuary's Department has been asked to produce a report on the funds available to the Government, the cost of higher pensions and the state of the national insurance fund. The Government Actuary wrote to the Southwark pensioners action group and said that his report was more or less ready at the end of September and would be finalised in the next few days and sent to the Government. I am grateful to the group for letting me know his comments. I have it on good authority that the report was sent to the Government. However, in a written answer today, the Minister said that it was being finalised. We bet it is being finalised!

One imagines that the figure for the national insurance fund balance was so huge that the Government had to get some different figures. That is the problem. There is key evidence for the Government's overflowing finances and the Government's record on pensions, but the Government are sitting on it—so much for freedom of information.

Mr. John Butterfill (Bournemouth, West)

Does the hon. Gentleman seriously suggest that the Government would try to manipulate the report of the Government Actuary's Department?

Mr. Webb

Yes. [Interruption.] I make no bones about it; yes is the answer to the question. I believe that the Government were sent a report, which did not provide the answers that they wanted. I hope that the Minister will explain the delay in making known the contents, given that he has had the report for approximately a month. What extra questions has he asked the Government Actuary? What was the bottom line? Perhaps the Minister will tell us now; he has seen the report. The Government Actuary knew the figures at the end of September; I hope that the Minister will give us the figures.

Mr. Paul Flynn (Newport, West)

A little more than an hour ago, a journalist told me that the Department received the report on 6 October—the date it was expected—and that it would be published next Thursday. That is significant. That was the reason for a long point of order that you allowed me to make last week, Mr. Speaker. It is worrying that information crucial to deciding whether restoring the link is affordable has been kept from the House for a month.

Mr. Webb

I pay tribute to the hon. Gentleman for his dogged pursuit of the matter. I have written to the Minister about it, and, so far as I know, I have not received a reply.

Mr. Simon Hughes (Southwark, North and Bermondsey)

Does my hon. Friend know that he is describing common Government practice? My right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) and others have made the point that Governments publish independent reports only with their spin on them, rather than letting the public read and judge the reports, and responding to them alone. The freedom of information measure has not yet been amended at the other end of the building to deal with that because the Government continue to refuse to allow facts that are given to them to be free from Government constraint, and to insist that they should not be generally available.

Mr. Webb

My hon. Friend makes an important point. Freedom of information is sometimes viewed as an esoteric issue that is only for the cognoscenti, yet it clearly has practical consequences in the case of BSE, rail and pensions.

A couple of administrative issues that relate to the way in which the Government have run pensions remain a shambles and are symptomatic of the lack of priority that is given to the needs of pensioners. The first is the infamous NIRS2 computer system. In the fourth year of the Parliament, the Government are still incapable of paying pensioners the right pension on the day that they are entitled to it. The hon. Member for Buckingham (Mr. Bercow) has pursued the issue in the House.

I tabled a question to the Treasury—I know that that is usually a triumph of hope over experience. I asked what progress there had been on the NIRS2 system. The Paymaster General replied: Following the well-documented problems … considerable progress has … been made and the Inland Revenue now regards the system as stable.—[Official Report, 31 October 2000; Vol. 355, c. 409W.] There was an answer to the hon. Member for Havant (Mr. Willetts), a Conservative spokesman, on 2 November. He asked how many pensioners are not receiving their pensions on time. The reply was as follows: As at 15 September 2000, Benefit Agency offices had 97,000 pension awards waiting to be reviewed.—[Official Report, 2 November 2000; Vol. 355, c. 573W.] If that is stable, is it being suggested that that is the way we can expect things to be indefinitely?

I raised the issue of delays in state pension payments in an Adjournment debate in July 1999. I was assured that the problem would be sorted out by Christmas. Which Christmas? When will the problem be sorted out? How long will pensioners have to wait?

It is not only the computer system that the Government seem unable to run. I mentioned earlier the position of widows' state earnings-related pension schemes.

Mr. Butterfill

Before the hon. Gentleman leaves the computer system, is he aware that each of the seven different types of benefit that are payable by the Benefits Agency has its own separate computer system, none of which is capable of interfacing with the other systems? Even if the Government get NIRS2 right, they cannot get the benefit right.

Mr. Webb

The hon. Gentleman is right. There are fundamental issues that have gone unaddressed by consecutive Governments. I shall give some evidence of the scale of the problem. The Financial Times reports that there are 7m cases on the computer system with data missing today, compared with 2.5m in 1998. The situation is getting worse, not better, and the Government have failed to address it.

I understand that Age Concern is taking the Government to the European courts on the issue of widows' SERPS. The Government have said that men—it is typically men—who inquired about SERPS rules in the early 1990s and were given duff information can claim protected pension rights, on condition that they can show that they would or might have acted differently if they had received the correct information.—[Official Report, 26 October 2000; Vol. 355, c. 166W.] I have discussed the matter with some of the folk who have been through the personal pension mis-selling follow-up. Each case is painstakingly examined and the process is taking a long time to complete. However, the work is being done thoroughly. How can anyone prove that seven or eight years ago he saw a duff leaflet—[Interruption.] I think that the Minister said from a sedentary position, "He does not have to prove." The individual will have to say that he received a duff leaflet and show that he would have or might have acted differently. That person would have to produce the scheme of which he was a member at the time, the alternative schemes that were available and the situation and provision of the spouse. How will that be done? I believe that the Government are giving a misleading impression to the many men in this position—there are some women—who have been told that they will be protected. They will find out in a few years' time, when we know how the scheme will work, that they will not be protected. What they will have to prove will be impossible to prove. I hope that the Minister will clarify what exactly these men will have to provide.

I shall set out the Liberal Democrat approach to the issue. First, I shall reflect briefly on the Government's strategy for pensioners. Almost certainly, "strategy" is completely the wrong word. It is a dog's breakfast. The Government have been making it up as they have gone along, and there is still a lack of coherence. A few months after the general election, there was a massive increase in the level of the means test, and a renaming, which is essential. It is the minimum income guarantee.

We know that about 500,000 pensioners—

Mr. Bill Rammell (Harlow)

Will the hon. Gentleman give way?

Mr. Webb

No, I would like to make some progress. I will give way later.

About 500,000 pensioners are not claiming the money to which they are entitled. When the Government said that they are prioritising the poorest pensioners, they have it wrong. The poorest pensioners are not those who claim their entitlement. There are about 500,000 with an entitlement who are living below the poverty line but do not claim.

To be fair, the Government have ridden into battle. Thora Hird was brought forward to tackle the issue. The most recent figure that we have been given in a written answer—perhaps the Minister can update us—is that 30,000 of the 500,000 have now claimed their benefit. After the millions of pounds spent on publicity and on sending nearly 2 million letters to pensioners—at least three quarters of them did not have an entitlement—they have managed to increase by 30,000 the numbers of those who claim. Therefore, 470,000 pensioners are still going without. Aiming for a target of 500,000 and hitting 30,000 is a pretty poor performance. Is the Minister satisfied with that?

Reliance on the means test—which, of course, the Chancellor will increase massively on Wednesday—means missing the poorest pensioners in the land. The basic state pension reaches those pensioners like nothing else. That is why we believe in it.

Mr. Rammell

The same Liberal Democrat manifesto as my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) mentioned commits the Liberal Democrats not only to increasing the pension in line with prices, but to introducing a top-up of the basic state pension to meet the needs of the poorest pensioners. How is that different from the minimum income guarantee?

Mr. Webb

The hon. Gentleman is right. I am well aware of what the manifesto said. We committed ourselves to ensuring that the incomes of those pensioners would rise at least in line with earnings. That is the basis on which we will work, but we need to go beyond that.

Mr. Rammell

rose—

Mr. Webb

If the hon. Gentleman will allow me, I will tell him what we want to do in addition.

The minimum income guarantee sounded like a good idea. The Government thought that if they changed the name, came up with a new scheme and got Thora Hird involved, all would be well, but there was a problem. They realised that by creating a chasm between the basic pension and the means test, they were also creating a savings trap. They were discouraging pensioners from saving for the future and saying to today's pensioners who had already saved, "What was the point of saving? You've got your small pension, but all it's doing is disqualifying you from the minimum income guarantee."

What do the Government do? Instead of closing the gap between the pension and the means test, they increase it. If the Chancellor does what is widely expected of him on Wednesday and puts a fiver on the pension and takes the MIG up to £90, he will increase the gap between the basic state pension and the means test, which will push more pensioners on to means testing. I recently asked how many extra pensioners will be means-tested as a result of the increase under the new package, and was told that nearly 100,000 extra pensioners are to be means-tested.

The Government decided to do something else to deal with the hole that they had dug themselves into by creating a huge gap between the basic pension and the minimum income guarantee. Instead of putting the pension up, they decided to have another scheme called pensioner credit, but because it is so complicated, they have said that it will be years before they can introduce it.

In the meantime, however, they needed something else, which I think the Chancellor called transitional measures. What transitional measures could the Government possibly take between now and 2003? Well, let us think: what is happening between now and 2003? Oh, an election, so the Government decide to introduce transitional measures which will put money on the basic state pension, the very thing that they have spent several years telling us is a bad idea.

The Government have said that they could not possibly put money into the basic state pension because it is poorly targeted, but they have now decided to pay £150 to every pensioner regardless of means. It is a complete mess.

There is no coherence to the Government's approach. There are pension increases when an election is on the way, but only a 75p increase when it is not. That summarises the Government's approach. More schemes, more claim forms. Why does it have to be so complicated?

Mr. Tom Levitt (High Peak)

If the hon. Gentleman wants all funding for pensioners to be given through the basic state pension, what would be an adequate amount to replace what he is describing as gimmicks and what we describe as targeting resources where they are most needed? How would he pay for that?

Mr. Webb

The £150 winter fuel payment, to which I presume the hon. Gentleman's remarks also refer—he is not indicating whether that is so—goes to every pensioner household in the land, regardless of means. It is impossible to imagine anything more untargeted. It is so untargeted that his right hon. Friend the Minister of State will get it this winter.

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle)

He is not a pensioner.

Mr. Bercow

He is only 59.

Mr. Webb

I would not begrudge him £150—I am sure he needs it. [Interruption.]

Mr. Deputy Speaker (Mr. Michael Lord)

Order. There are far too many interventions from a sedentary position on both sides of the House, but particularly from Labour Members. The hon. Gentleman must be allowed to carry on with his remarks.

Mr. Webb

There is a rag bag of schemes—take-up campaigns, publicity campaigns and new schemes to deal with the problems of the old schemes. Even the free television licence scheme is a shambles. Many other hon. Members may have had my experience of receiving a letter asking whether I am over 75 and want to claim. Plenty of pensioners have received cheques to refund the money that they spent on the licence. Many pensioners do not have bank accounts, so they are being asked to send the cheques back so that they can have some money to take to the post office. This lot could not organise—well, it is a complete shambles.

What, then, is our priority? The hon. Member for High Peak (Mr. Levitt) asked what should be done—

Mr. Kaufman

Will the hon. Gentleman give way?

Mr. Webb

No, I will not.

The hon. Member for High Peak asked what level of pension we proposed, and I am keen to give him a specific figure. At our party conference a few weeks ago, I moved a motion on our new pensions policy, which our party has overwhelmingly endorsed. I can put on record precisely the policy on which we shall go into the next general election.

We propose that those who benefited from the Lawson tax cuts of 1988 and are always on the top incomes, having done two, three, four or five times as well as those on average earnings—that is, those on more than £100,000 a year—should be asked to pay more tax on their slice of income above £100,000. They, after all, are most able to do so. That would raise enough to allow us to put money on to the basic pension.

We propose that, over and above the figure that the Chancellor announces for next April, there should be rises of a minimum of £5 a week for all newly retired pensioners, of £10 a week for those aged between 75 and 79, and of £15 a week for those aged 80 or more. Those figures are in addition to inflation, in addition to what the Chancellor announces, and in addition to the other payments that the pensioners currently receive.

The payments will not be means-tested, but they will be intelligently targeted. That is the beauty of our proposals.

Mr. Rammell

rose—

Mr. Webb

I think I had better ensure that I set out the entire policy.

I mentioned an increase of £15 a week for those over 80. Why should the amount be tapered according to age? Because there is a strong link between the oldest pensioners and the poorest. I have received letters from pensioners up and down the land, and those in most need are often the oldest. Almost all are women, who are given a particularly raw deal in regard to both state and private pensions. We can give extra help to those in most need without forcing them through additional means-testing. That is the clear distinction between what the Liberal Democrats advocate and what the other parties advocate.

Mr. Levitt

Will the hon. Gentleman give way?

Mr. Webb

No; I am about to finish my speech.

The Conservatives propose to give people back their own money, plus 42p top whack. Labour proposes a pre-election giveaway. On Wednesday, the Chancellor of the Exchequer will stand up and do a Chris Tarrant routine: "£2.25 for inflation—but we don't want to give you that! £3.40 for the earnings link—but we don't want to give you that!" It will be £5; it will be £8. Who wants to be a millionaire?

Labour will be throwing the money at pensioners because there is an election around the corner. Pensioners, however, will remember what the Government did when there was not an election around the corner. They will remember which was the only major party in the House that voted against the 75p—the Conservatives abstained. At the next election, when Conservative candidates show themselves to have undergone a damascene conversion to the basic state pension, they will need to be reminded that, given the chance to decide whether 75p was enough, they said "We do not really know." I note that the Conservative party declined to table an amendment to today's motion. Clearly, only one party is expressing serious opposition to the Government on pensions: the Liberal Democrats.

We believe that a substantial increase is needed in the basic pension. The Chancellor has created a huge gulf between the pension and the means test, and on Wednesday, whatever he says, he will increase that gap. We believe that there should be fewer pensioners on means-tested benefits, not more. We believe in a decent basic state pension, and we believe that we will be the only party to go into the next election committed to that.

4.44 pm

The Minister of State, Department of Social Security (Mr. Jeff Rooker)

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof: endorses the Government's approach to pensions and other policies for pensioners; notes that the Government has already committed £6½ billion more to pensioner benefits during this Parliament than was planned by the Conservatives, while ensuring that this additional expenditure is funded prudently and consistently with the Government's fiscal rules; strongly agrees with the Government that the basic state pension should be retained as the foundation of pension provision, and that most should be done for those pensioners who need most help through the Minimum Income Guarantee; supports the additional help for pensioner households, including winter fuel payments, which now gives them the equivalent of a further £3 a week and free TV licences for the over 75s, which were introduced from 1st November 2000; also supports the wide range of other measures taken by the Government for pensioners, the record investment in the National Health Service, free eye tests, help with home insulation and concessionary public transport fares and reductions in income taxation; and further agrees with the Government that the next priority should be to help pensioners with moderate savings and small occupational pensions to ensure that their thrift is rewarded and that they are able to share in the rising prosperity of the nation. I do not wish to be misunderstood, but I am one of the few Members of Parliament who can say with some certainty that I have a limited amount of time in which to listen to this drivel. The reality is that the speech of the hon. Member for Northavon (Mr. Webb) was thirty minutes of drivel. I shall do my best to answer some of his points, some of his highly misleading statements and, indeed, the contemptible scare stories that were deliberately designed to frighten people outside the House.

The hon. Gentleman started off with a point about age discrimination. I wholly agree with part of his speech, as age discrimination is rampant throughout society in this country and goes across the board, whether in jobs or the health service. It is not the easiest thing in the world to deal with that but, as the House knows, we have attempted to tackle it in employment on a voluntary basis. We also made it abundantly clear with the publication of the report "Winning the Generation Game" that we are considering going beyond a voluntary approach. The hon. Gentleman therefore made a valid point.

The hon. Gentleman made some assertions on the share of the gross national product going to pensioners, but did not provide figures or Hansard references. He was on the verge of giving a quote or reference, but did not do so. I suspect that he got a quote from a parliamentary answer that appeared some months ago. I have read the motion and done Liberal Democrat Members the justice of taking it seriously, even if I cannot take the hon. Gentleman's speech seriously. I went back and looked for that parliamentary answer because I recall it—although parliamentary answers in March are not good up-to-date information in November.

One should look at expenditure on pensioners, including retirement pensions, winter fuel payments, means-tested benefits and other benefits paid to pensioners, as well as concessionary TV licences, which came in last week, and compare the last year of the previous Government, 1996–97, with the planning year 2001–02, which begins next April. Even before the Chancellor's statement on Wednesday about what will happen next April, the percentage of the gross national product spent on pensions is higher than it was in the last year of the Tory Government.

Mr. Webb

What about the first four years?

Mr. Rooker

It is no good the hon. Gentleman saying that, as he said that we have spent less. I am telling him that we have spent more, even before the Chancellor's statement on Wednesday.

Mr. Webb

And now?

Mr. Rooker

It is no good, the hon. Gentleman cannot go back and rewrite his speech.

Mr. Matthew Taylor (Truro and St. Austell)

Will the Minister give way?

Mr. Rooker

No, I shall not, as I am going to make my speech in my own way and answer some of the drivel that we heard before it becomes folklore that is repeated by Liberal Democrat councillors and campaigners up and down the country.

Mr. Flynn

Will my right hon. Friend give way?

Mr. Rooker

In a moment, but first I want to put the matter on the record so that no one can go round using the hon. Gentleman's statement, as they will have the knowledge that I rebutted it with figures, which are 5.32 per cent. and 5.33 per cent. That is a small difference, but it is bigger than the hon. Gentleman said it was, even before this Wednesday's announcement.

Mr. Flynn

Will my right hon. Friend give way?

Mr. Rooker

In a moment. I may be able to save my hon. Friend time, although I shall gladly give way if he is not happy with what I say.

The hon. Member for Northavon raised the matter of the Government Actuary's report and, in response to a question asked by the hon. Member for Bournemouth, West (Mr. Butterfill), said that the Government were seeking to manipulate it. I do not think that the Government Actuary would admit to that, and it is useful for me to put on the record the fact that we have answered parliamentary questions on the matter in the last couple of weeks. I do not resile in any way from what I said when the Government accepted Baroness Castle's amendment at the final stages of the Child Support, Pensions and Social Security Bill last year. It is true to say that the Government Actuary is finalising his report on the effect on the national insurance fund of an earnings uprating of basic state retirement pension, and it will be published when it is completed. That is the phrase that we have used in parliamentary answers and in answers to letters from right hon. and hon. Members, but it is important to point out that, on Friday, Baroness Castle received a letter from the Government Actuary in which he answered some specific questions. He said: I can confirm that I submitted a report to the Secretary of State during the week ended 6 October, as indicated by Mr. Young in his letter to the Secretary of the Southwark Pensioners Action Group, which is what the hon. Member for Northavon quoted. The Government Actuary went on: In my letter to the Secretary of State covering the report I made it clear that the report did not cover the Government's proposals for uprating in April 2001. In pursuance of my responsibilities with respect to the uprating orders I would either have to amend this report or lay a supplementary report detailing these effects. The Secretary of State wants Parliament to have all the relevant information before it debates the uprating orders. That is the commitment that the Secretary of State for Social Security made clear. Before Parliament is asked to approve the uprating orders, the House will have all the relevant information, including all the reports available. That commitment has been given and will be met. It is outrageous for hon. Members to imply that the Government are deceiving the House or that Ministers are lying.

Mr. A. J. Beith (Berwick-upon-Tweed)

Will the Minister give way?

Mr. Rooker

I have not finished the letter yet. It goes on: Accordingly he— that is, the Secretary of State— asked, and I— that is, the Government Actuary— have agreed, to complete the report by adding a further section to take account of the Government's proposals for uprating in April 2001. The Secretary of State has asked me to complete that section in time for him to lay the report when he sets out his proposals to Parliament next week. As everyone knows, the Chancellor of the Exchequer will make the pre-Budget report statement on Wednesday and the Secretary of State for Social Security will come to the House and make a statement on Thursday, so there is nothing secret. Nothing is being hidden. It is only once our plans for next April's uprating have been announced—they will not be announced in the main until Wednesday and in more detail on Thursday—that the report can be published.

Therefore, it is not possible to publish the Government Actuary's report in a way that allows right hon. and hon. Members to have a meaningful debate, but when the House is asked to vote and to approve those orders—some time in the near future, subject to the business managers—the report will be available. It will be published on Thursday.

What is the problem with that? The report could not conceivably be published beforehand. Any report that was half completed and put in the hands of hon. Members for today's debate would not take account of what will be proposed for next April. Surely, it is relevant for Members to have the full picture before we get involved in a debate and in decision making.

Mr. Beith

May I suggest that, in any publicity the Government give to the figures to be announced on Wednesday and Thursday, any press release or briefing given by the Department contains the relevant passage from the Actuary's report, particularly if that briefing takes place before an announcement to the House?

Mr. Rooker

Drivel plus. The report will be published in full. We are not in the position of manipulating the Government Actuary's report.

Mr. Simon Hughes

You are delaying it.

Mr. Rooker

We are not delaying it—it is not finished. It cannot be finished until the Government Actuary is given the figures that the Chancellor will announce on Wednesday.

Mr. Beith

Has the Government Actuary been given the figures?

Mr. Rooker

The right hon. Gentleman cannot expect me to answer that.

Mr. Deputy Speaker

Order. Again, we cannot have conversations from sedentary positions with the Minister at the Dispatch Box. If Members want to intervene, they should stand up in the normal way and the Minister may or may not give way.

Mr. Rooker

As Liberal Democrat Members well know—and as they knew when they chose the subject of today's debate—they cannot have any information whatever on Wednesday's uprating statement. I can answer no questions today on Wednesday's statement.

Mr. Matthew Taylor

Will the Minister give way?

Mr. Rooker

No.

Mr. Flynn

Will my right hon. Friend give way?

Mr. Rooker

Yes; I promised my hon. Friend that I would.

Mr. Flynn

Does my right hon. Friend recall telling the House, on 24 July, that the earliest opportunity to publish the Government Actuary's report would be in January 2001? Does he also recall that the Deputy Government Actuary—in his letter to the Southwark Pensioners Action Group, of which I am a member—said: The report on the financial impact of price and earnings indexation of the basic pension— which is what he was talking about— is now at a very advanced state and I am hoping to be able to submit it … next week. The Deputy Government Actuary's letter was written on 28 September, since when I have tabled five parliamentary questions—including one during the recess—on the subject. However, I can generously describe the answers given to me by my right hon. Friend the Minister as evasive. Would it not be better if he had replied to those questions with the type of answers that he has just given the House?

Mr. Rooker

Indeed; that is precisely what I have done. As I said, The Government Actuary is currently finalising his report on the effect of the National Insurance Fund of an earnings uprating— of pensions— and it will be published when it completed.—[Official Report, 2 November 2000; Vol. 355, c. 575W.] The report will not be completed until the Government Actuary has the figures that the Chancellor will use on Wednesday. That is precisely what I said in parliamentary answers to my hon. Friend the Member for Newport, West (Mr. Flynn) and to other hon. Members.

I should address some of the other issues raised in the debate, including those on administration. I do not deny that NIRS2 is a problem that has not been solved. However, I am not going to review the history of NIRS2 or the preceding years in which competitive tendering was used. I should add that the word "stable", when used in relation to information technology systems, does not mean that those systems are 100 per cent. perfect.

Each month, about 50,000 plus people become pensioners. Currently, the system is not dealing correctly with payments to about 2,300 of those people, which is not satisfactory. Also, there is still a backlog of information from NIRS2 to the Benefits Agency. We are, however, working very quickly to correct the situation.

I do not think that it is a secret that the Department of Social Security is not proud of our IT systems, which are rubbish. Over the years, underinvestment in IT and purchase of the cheapest systems have brought us to the current sorry state. Although I shall not blame all that on the legacy that we inherited, everything cannot be put right in three years. We are purchasing and designing new systems. Had hon. Members examined some of the finer points of detail of the spending review 2000, they would have seen that more money is being made available to obtain those systems.

In his remarks on inherited SERPS, the hon. Member for Northavon showed himself to be a disgrace to his party and to the House. By refusing to accept that the Government have accepted, from the ombudsman and from the Public Accounts Committee, that the burden of proof is on the Government and not on the individual, he sought deliberately to create a disturbance among the public. Our difficulty in designing a scheme is that the burden of proof is on the Government, not on the individual. It is for the individual only to make a claim, subject to procedures that we will be introducing for debate.

The hon. Gentleman knows that it is untrue that individuals will have to satisfy the burden of proof, and it is dishonourable and disgraceful for him to repeat that statement on the Floor of the House.

Mr. Webb

The Minister is getting extremely carried away. It is a serious issue about which many pensioners have contacted me, because they are concerned about the Minister's utterances on it. I think that everyone agrees that those pensioners saw duff literature. Will he clarify whether the Government will seek to disprove their claims that they might have taken different action, or will their assertion that they might have taken different action be sufficient?

Mr. Rooker

The House can debate that when it debates the regulations—[Interruption.] No; the burden of proof is on the Government, not on claimants. I cannot express the position any clearer than that.

The hon. Member for Northavon is trying to twist my words. Claimants do not have to prove anything. They do not have to have documents; they only have to make a claim. They have to fill in a form and answer some questions. The onus of proof is on the Government, not on claimants. I have said that since March, and it is entirely false and disingenuous of the hon. Gentleman to try to assert otherwise.

In his speech, the hon. Member for Northavon talked about it taking years to introduce the pension credit. A few sentences later, he slipped in the date of 2003. We hope to get the pension credit up and running in two years, and we shall publish detailed information on that. As we have not yet published that information, and there is not much on the subject in the public domain—other than the speech of my right hon. Friend the Secretary of State for Social Security—the hon. Gentleman cannot say that that information is complicated. A consultation document on the subject will be published very shortly.

I am not sure what the hon. Member for Northavon said about his party's policy on the minimum income guarantee, because I was adding up the figures. He can make assumptions, based on press speculation—I cannot—about Wednesday's announcement. However, it did not seem that pensioners aged between 65 and 75 would end up with a pension that reached even the present MIG level of £78, let alone our £90 proposal. I say to pensioners who are now on £78.45p that it is not a princely sum—it is a safety net, and one cannot have a comfortable life on it. However, before April, the figure was £75; there has been an increase of £3.45. By next April, the figure will be £90—an increase of almost £12 a week. I do not hear many cheers from the Liberal Democrats about that increase for the poorest pensioners. I assume that they will vote against it, as they did with regard to the help for pensioners earlier this year.

Mr. Simon Hughes

Will the Minister give way?

Mr. Rooker

No, I will not. Let me finish this point.

The hon. Member for Northavon seemed to imply that the winter fuel help would disappear. From his calculations, I thought that it had disappeared. We know that it would disappear under the Tories' plans, and they have the brass neck to complain about us not getting money to men aged between 60 and 64 who have been working when they plan to take that money off them anyway.

This month, the over-75s start to get their free television licences. This week, the cheques start to go out for the winter fuel allowances. Those are not celebrated by Opposition parties. All they do is come here to whinge and moan. There will be good news later this week and we will be able to rebut in detail many of the assertions made by the hon. Member for Northavon.

The hon. Member for Northavon has not outlined to the House a cohesive strategy for pensioners. He let it slip that the Liberal Democrats' policy would be paid for by taxing those on £100,000. Earlier this year, they said that they would pay for the policy by abolishing SERPS—the additional pension. We have not heard that rebutted, so our assumption must be that the Liberal Democrats would still have to abolish SERPS to make their policy work. Those who have been on average earnings for the past 20-odd years will get SERPS payments of £70 a week. The Liberal Democrats are offering to take that away. That is more drivel.

5.2 pm

Mrs. Jacqui Lait (Beckenham)

I am glad to follow the Minister, but I hope that I do not get so excited. As all will be revealed on Wednesday, the Minister must feel—I have a great deal of sympathy with him—a bit like the emperor without any clothes.

I agree with the Minister's analysis of the speech by the hon. Member for Northavon (Mr. Webb), which was a classic Liberal Democrat speech—holier-than-thou, sanctimonious to the nth degree and of breathtaking cheek, particularly in the attempt to exempt his party from any electioneering. His speech was guaranteed to be attractive to a certain part of the electorate, without taking any responsibility. Suggestions have come today from the hon. Member for Northavon and, last week, from the hon. Member for Sutton and Cheam (Mr. Burstow) in Westminster Hall, on how much the Liberal Democrats intend to give pensioners. I cannot think of a better, or more expensive, way of appealing to one particular, but very large, group of the electorate.

It might be worth while to go through some of the information that we elicited from the Liberal Democrats in the debate in Westminster Hall on the exact cost of their proposals.

The hon. Member for Northavon set out what he thought was the cost of the £5, £10 and £15 hike, and he maintains that it can be covered by the 10 per cent. hike in the higher rate of tax for people earning more than £100,000. My calculations show that that hike would raise only £2.6 billion, and that the cost would be £4.5 billion.

Mr. Paul Burstow (Sutton and Cheam)

No, £3.1 billion.

Mrs. Lait

Well, I did not want to burden the House with figures, but I am willing to enlighten the Liberals as, judging by the puzzled face of the hon. Member for Northavon, they have not done their sums.

My calculations show that £5 a week for all pensioners would cost £2.8 billion; that the cost of the extra £5 for pensioners aged between 75 and 79 would be £500 million; and that the further £5 for the over-80s would be £1.2 billion: a total of £4.5 billion. The Liberals are £1.9 billion adrift on the total that they plan to spend.

Last week in Westminster Hall, the hon. Member for Sutton and Cheam declared that the Liberal Democrats' target was to offer single pensioners £90 a week and couples £135 a week. That was all hedged around with phrases about growth in the economy and not reaching that stage in one go. In fact, growth in the economy is usually linked to earnings. Despite the hon. Gentleman trying to obfuscate the situation, we know that the Liberal Democrat conference chucked out that proposal, possibly because the delegates did not want to frighten their supporters with the consequences, which, as worked out by the National Institute of Economic and Social Research—not a body known to favour Conservative philosophy—would be to put 5p on the basic rate of income tax.

The Liberal Democrats have adjusted their figure, as we heard last Tuesday. I was surprised that the hon. Member for Northavon did not use the figure, because it represented such a clear commitment and, given how much they are pandering to the pensioner vote, I should have thought that they would want to re-emphasise it.

However, the total cost of increasing the basic state pension to £90 for single pensioners and £135 for couples is £8.5 billion. I am prepared to subtract from that the £2.6 billion that we have already agreed would be raised by the tax hike, so that we get a difference of £5.9 billion, which is the equivalent of an increase of 2.3p in the basic rate of tax. Or are the Liberals planning to increase the higher rate of tax on those earning more than £100,000 to the 73p in the pound that I have calculated it would cost? Those of us of a certain age remember what that did to public finances in the 1970s.

We have heard a speech of such breathtaking electioneering cheek that the House can treat the suggestions in it with the contempt that they deserve and get back to the real world of trying to help pensioners.

I am concerned about a broader matter mentioned in the motion: long-term care policy. Most of us would agree that paying for nursing care in England and Wales is a recipe for bureaucracy. Anyone who has had anything to do with defining what is nursing care and what is not will know the difficulties.

In recent days, we have seen emerging the very difficulty that we warned about all along when we were debating the establishment of the Scottish Parliament. The Scots are being promised that all their care costs will be covered. They are in charge of their own budget and can make their own decisions; the Scottish Parliament and the Scottish people have to pay for it. We can clearly see a battle royal taking place between the Scottish and English Executives—between No. 10 and the Scottish Parliament. Scots are able to vote on English and Welsh issues but not the other way around. We will also have the dubious pleasure of watching those with a dual mandate having to vote against their Scottish parliamentary colleagues and for the London Government, or for the Scottish Parliament and against the London Government. It will be most interesting to see what happens when people who sit in both Parliaments have to vote.

Mr. Burstow

Is it now the Conservative party's official position in this House that personal care should be free on the basis of assessment of need, as the royal commission recommends?

Mrs. Lait

The point that I was making, which the hon. Gentleman obviously missed, was about the constitutional position known to many as the West Lothian question, which is the key to the illogicality of devolution. What happens on long-term care, as the hon. Gentleman should know, is the responsibility of the Department of Health, and some elements of social security may well be included. If he is not careful, he will get the same lecture on annuities as he got last Tuesday. He gave me the opportunity to give it then, and I am happy to give it again now, but I know that a number of Back Benchers wish to contribute to this debate on pensioners' income.

Many of us have seen the statistics arising from the Government's annual poverty report, which show that, since 1997, the number of pensioners in poverty has increased from 28 per cent. to 30 per cent.—[Interruption.] Indeed, it is not mentioned by the Government. Their attempts to change it—although who knows what will happen on Wednesday—appear to be falling on stony ground. We still see pensioners losing out, as has been discussed, from the minimum income guarantee.

We have all seen the Thora Hird advertisements on television. On my way here today, listening to BBC Radio Kent, I heard someone from the Benefits Agency explaining the minimum income guarantee and how it will work. I know that many letters have gone out to pensioners who could claim. From surgery experience, I am aware that some have still not received their letter or, if they have, that they thought that it was junk mail and chucked it in the bin. However, this past week has seen the figures so far emerging and they have not been a pretty sight.

In last Tuesday's debate, the Under-Secretary of State for Social Security, the hon. Member for City of York (Mr. Bayley), told us that 500,000 people have inquired about the campaign. However, it has taken parliamentary questions to extract the answers as to how many have been successful. On 31 October, we were told that 24,746 claimants had been successful so far and that 22,988 had been unsuccessful. Therefore, barely 10 per cent. of eligible people have replied; only half are getting anything, and the rumours are that they are finding the sums pretty small. I would be most interested to know the largest and smallest sums awarded so far, and the average payment.

Mr. Rooker

Because of the lack of time, I did not deal earlier with the take-up. The last time that I looked at the average figure of those successfully claiming, it was just over £20 a week. Furthermore, not all the 2.3 million letters have gone out; they are still being sent out at the rate of 30,000 a day.

Mrs. Lait

I am very pleased to have the average figure. We knew that the letters were still going out. However, more significantly, only 10 per cent. of people are replying at present. As anyone in marketing knows, 10 per cent. is a jolly good return. I congratulate the Government on attracting replies from 10 per cent. of people; a marketing company would consider 1 per cent. a very good return. However, 10 per cent. is still scandalously low, and I hope that more people will be able to claim that to which they are entitled.

People are losing out in other ways as well. We heard that a million people are still waiting for winter fuel payments. The Under-Secretary of State for Social Security, the hon. Member for Wallasey (Angela Eagle), said: all payments should be issued by the end of September.—[Official Report, 11 April 2000; Vol. 354, c. 271W.] Perhaps we could be updated on that as well, because we understand that a million people are still waiting.

It is worth stating that the length of time taken to deal with the problem has increased. However, the then Pensions Minister, the Financial Secretary to the Treasury, the hon. Member for East Ham (Mr. Timms), predicted that, by the end of the year, everybody would have received all of the benefits, plus any compensation …—[0fficial Report, 26 July 1999; Vol. 336, c. 97.] The Minister of State said that 2,300 new cases a month were emerging. I should be most grateful to him if he would confirm that figure because those cases are in addition to the 100,000 people who are still waiting.

Mr. Rooker

There was an argument about whether the system is stable. I shall not refer to my folder, but I said that being stable does not mean working at 100 per cent. accuracy. The system is not 100 per cent. accurate at present. About 650,000 people become pensioners each year—50,000 plus a month—but 2,300 are not dealt with accurately. I saw that figure this morning. However, that does not mean that they do not get their pensions. Some pensions are calculated on the basis of what the figure may be and involve an overpayment or an underpayment.

Mrs. Lait

I am grateful to the right hon. Gentleman. I accept that the word "stable" does not mean 100 per cent. accuracy, but I take that to mean that, of the new pensioners who can claim SERPS payments, approximately 2,300 a month are new cases. It is useful to have that information on the record. Taking into account all such matters—NIRS2, MIG and the winter fuel payment—it is interesting that 2.5 million people are awaiting the pleasure of the older person's champion, otherwise known as the Secretary of State. To add insult to injury, it now appears, from coverage in Pensions Week, that the reorganisation at the Department of Social Security has led to a shortage of pensions advisers, so much so that the Department has asked the National Association of Pension Funds to do its work for it.

We, and all other hon. Members, await with interest the Chancellor's statement on Wednesday, although I assume that information on the pensioners credit will be given on Thursday. We hope that the consultation document will be published on Wednesday, so that we have time to study it before Thursday's statement and can provide a relatively reasoned response, which we may otherwise not be able to give. I congratulate the Government on the fact that, unusually for them, they have so far failed to leak what is in that document or, indeed, to spin it.

Precise details about the pensioners credit are scarce, but I cannot understand how a pensioners credit and the transitional arrangements could be introduced without some sort of means test. Thousands of pensioners may have to fill in tax forms, as opposed to income support forms, but that still constitutes a means test.

Mr. Michael Jabez Foster (Hastings and Rye)

Does the hon. Lady regard herself as being subject to a means test when she completes her tax return?

Mrs. Lait

The pensioners credit has a great similarity to the working families tax credit and, as the hon. Gentleman will know, the tax credit is merely income support provided by another Department, and the pensioners credit will, in effect, be the same—hence a means test will be involved.

We shall make our own judgment of the Government's proposals when they are produced on Wednesday and Thursday, and so will the pensioners of the United Kingdom. To date, they and we are unimpressed by the Government's treatment of them.

5.19 pm

Mr. Eddie O'Hara (Knowsley, South)

Our debate so far has been combative. As the chairman of the all-party group on ageing and older people, I shall refrain from making party-political points. Clearly, other hon. Members in the Chamber will make enough of them.

I pay tribute to the great deal that the Government have already done for pensioners. I recognise that the £6.5 billion allocated to pensioners in benefits and in kind during this Parliament is considerably more than the cost of uprating pensions in line with earnings. In view of my constituency's demography, the majority of pensioners there will benefit from the Government's policy of targeting the poorest pensioners.

I am pleased by the increase in the threshold for payments of the minimum income guarantee and the pension credit for pensioners with second pensions and modest savings. Those measures go some way towards addressing my concerns, which I have expressed on several occasions in the Chamber, about those pensioners who are just above the income support and minimum income guarantee thresholds, of whom there are many in my constituency. They are typical blue-collar workers with a small occupational pension from, for example, Plessey or British Insulated Calendar Cables.

On the other hand, I want to discuss several areas in which the Government have not yet quite got their approach right and to urge them to do so in future. My right hon. Friend the Minister commented on the state earnings-related pension scheme, and I do not envy the Government their problem with SERPS. It was not of their devising, although they have the unenviable task of having to sort it out. I hope that my right hon. Friend was right to say that the onus of proof will lie with the Government. I have previously expressed to him my concerns about the fact that any system of remedying the mess that is based on justification is designed to be inequitable and perhaps to disfavour those in most need. We shall see.

The 75p uprating of pensions in line with inflation last year will be discussed extensively in this debate. It was entirely logical to those in the Treasury who crunch numbers in the abstract, but it was psychologically crazy to anyone who knows and cares about real pensioners. On previous occasions, I referred to the prism—it might be a distorting mirror—through which pensioners will continue to view the Government's pensions policy. That is sad, in view of the fact that their policy contains many generous provisions.

The argument about whether pensions should be uprated in line with earnings is complex. The Government maintain that that would be unsustainable in the medium to long term, and that the concept is outmoded because, for many pensioners, the state pension is not the main element of their retirement income. I understand the Government's concern that an increase across the board would put pension payments into the pockets of those who least need them. They are better targeted at those who need them most, but it is surely not beyond the wit of the Treasury to find a means to claw back some money from those who do not need it.

I disagree with the suggestion of the hon. Member for Beckenham (Mrs. Lait) that clawing back through the tax system or the allowances system involves means-testing. It does not involve means-testing, as I understand it. Everyone who pays tax has to have an assessment, but those who pay large amounts in tax commonly have different reasons for being sensitive to means-testing than do those many pensioners who simply find it demeaning.

Mrs. Lait

The pensioners' credit is for people who have a small occupational pension and who do not already pay tax. Many of them will have to fill in some type of form—whether a tax or an income support form.

Mr. O'Hara

I do not agree with the hon. Lady that that equates to means-testing. I was referring to those people whom the Government rightly do not want to receive pension benefits that are better targeted elsewhere. Such people do not fill in their tax return; they have an accountant to do it for them.

Pensioners regard the pension to which they have contributed not as a benefit or a handout but as an entitlement for which they have paid through their contributions. We are advised that there is a surplus in the national insurance fund that could provide an increase in line with earnings—at least in the medium term. However, in the absence of the Government Actuary's report, it is difficult to make a judgment on that matter, although I note the Minister's reasons for the delay in publishing the report.

Surely there is room for some policy improvement—on increasing pensions in line with earnings rather than with prices. The minimum income guarantee is the Government's own estimate of the minimum decent income for a pensioner. In the medium term, could we not at least move towards that as the acceptable amount for the basic pension? At the least, could we not have a discretionary increase in excess of inflation? I look forward to hearing good news on that in the autumn statement, although I realise that the Minister cannot be drawn on that at present.

Mr. Simon Hughes

As this is the last relevant parliamentary debate to be held before the Chancellor makes his announcement on Wednesday and before the subsequent debates on its social security aspects, is the view of the all-party group on ageing and older people that it would be preferable for fewer people to be in receipt of means-tested pensions or pension top-ups and for more people to receive a higher non-means-tested basic allowance? That is certainly the view that pensioners of all parties have put to me. Everyone understands that they may have to fill in a tax return and pay tax, but surely it would be a bad result if this week's announcements meant that more people were means-tested.

Mr. O'Hara

I hesitate to speak for other members of the group, but my view is that there should be a more generous basic pension, across the board, even if it cannot at present be increased in line with earnings.

To help pensioners to share in the prosperity of our country—a laudable aim in the Government's manifesto for the previous general election—is not an act of charity. When pensioners were earning, they contributed to that prosperity. They worked and, in many cases, fought to lay the foundations for the prosperity that we enjoy. What better argument could there be for the Government to show a little more generosity towards older pensioners—those aged between 75 and 80—in the settlement to be announced in the autumn statement?

5.28 pm

Mr. John Butterfill (Bournemouth, West)

None of the parties can look back on their record on pensions with any great credit. The Liberal Democrats made an attack on the Conservatives' record when we were in office. Under Baroness Thatcher, it is certainly true that we broke formally the link with earnings, although during our period in office the increase was slightly higher than inflation—about 10 per cent. higher. Furthermore, we introduced the winter fuel allowance—[Interruption.]— Yes, we did. I point out to the Minister of State, Department of Social Security that the real link with earnings was first broken when his party was in office—under a Lib-Lab coalition—although the Minister himself, to his great honour, was extremely critical of his Government when he was a young Back Bencher; the figures were fiddled and he said that the earnings link had been broken.

The problem is that all parties in the House, knowing that it would never be possible to give pensioners a full pension that would sustain them throughout their retired lives, have somehow connived, particularly at election time, to hint that that might some day be possible. No one has done that more than the Liberal Democrats with their series of wholly unsustainable and inadequately costed proposals that they know that they will never have the opportunity to implement. They know that all they are doing is putting out fodder for their Focus magazines.

Mr. Webb

We have tabled interminable questions on these issues. The revenue from a 50p rate in a full year is £3.1 billion. The cost of our proposals—I can show the hon. Gentleman the written answers—net of savings on tax on means-tested benefits is £3.1 billion. What more can we do than that?

Mr. Butterfill

I prefer the figures that my hon. Friend the Member for Beckenham (Mrs. Lait) gave. Even if the hon. Gentleman were correct, he is saying that his proposal is affordable. Even if were affordable in the short term, it would not be affordable, as he well knows, in the long term. Indeed, the present system is not sustainable in the long term. Anyone who has studied the issue sensibly and for a length of time—many Members on both sides of the House have done so—knows that the present system is not sustainable in the long term because of a demographic time bomb. People are living longer and not a state in the western world is capable of sustaining a system that is wholly unfunded in the way that ours is. It is a pay-as-you-go scheme that will never be affordable in the long term.

Mr. Flynn

rose—

Mr. Butterfill

I give way to the hon. Gentleman, because he knows much about these matters.

Mr. Flynn

I refer to a booklet entitled "The Age of Entitlement" that was published by the hon. Member for Havant (Mr. Willetts). He refers to the myth of the demographic time bomb, which was used by the Conservative party when it was in government to wreck the national insurance system. In addition, the evidence given to the Select Committee on Social Security made it clear that the funds in the national insurance system now are enough to restore the link for the next five years and will be enough for the period after that if national insurance funding increases by just the rate of inflation.

Mr. Butterfill

The hon. Gentleman studies these matters carefully and he will know that there are many conflicting views. The majority view, which is expressed by all sorts of experts on the subject—I have read as many publications as the hon. Gentleman—is that the present system is not sustainable. Even if it were, it would be sustainable at a level of pension that would never be adequate for people to live on without additional savings of their own or the provision of means-tested benefits by the state. That is the point that I want to make. We must try to get away from the politicking and down to the reality of what can and should be done by all of us on an all-party basis to provide a sustainable decent standard of living for pensioners in future.

There are three groups in society. The young have inherited a wonderful economic climate and will have the opportunity during their lifetimes to make themselves rich beyond the aspirations of any of us here. Most of us probably represent the middle group and then there are the significantly elderly—particularly those aged over 75—who fought in the last war and grew up in a period of austerity. They did not have the opportunities that we, and certainly the young, have had to save for their retirements. If we are going to make a change, we should single out the elderly and accept that we have an inter-generational responsibility to pay them, as of right, a decent pension.

For the intermediate group—that includes most of us; certainly anybody between the ages of 40 and 65, and perhaps those between the ages of 40 and 70—we should say that the present system will continue. We should tell them, "You should have been able to save something for your retirement. It is reasonable to assume that you might do so and, therefore, you will not be entitled to more than the present system provides." For those who fall through the net, there should be the prospect of some means-tested safety net.

Most people under the age of 40 view with horror the idea of having to live on a state retirement pension—and quite rightly so. They know that they must save for their old age and are quite prepared to do so. We should make that far more possible for them. At the moment, a series of incentives—many of them introduced by my party—is proving inadequate to persuade people to save.

The Government stakeholder pension scheme benefits nobody. The poorest group of people, whom the Government are keen to encourage, will find it better to be on the minimum guaranteed income and, frankly, it would be pension mis-selling to sell them a stakeholder policy. The richer group have better savings vehicles that are not encumbered by the ludicrous rules that currently apply to pension saving. Therefore, only a small group of people in the middle could benefit from stakeholder pensions, but they are not those whom the Minister of State and his party wanted to target.

Eventually, the answer must be to look at what has happened in other states, such as Australia, Argentina and Singapore. We need a compulsory retirement scheme into which everyone will have to pay. The young should be told that there will not be anything else and that they must save for their retirement. Then, we should concentrate on looking after the group of people to whom we all have an obligation—those who were not able to save during their working lives—and pay them a decent pension.

5.37 pm

Mr. Michael Jabez Foster (Hastings and Rye)

Given that about a third of my electorate are retired, my concern is that we need to do better—even than we have already. I know, however, having gone around the constituency just recently, that many of my constituents already recognise just how much better things are than they were three years ago.

I do not think that people will forget that, in 18 years, the previous Government badly short-changed pensioners. Many will recall the hardship that pensioners suffered without relief. Even when the economy was going well during the many years of rising prosperity, there was nothing for pensioners beyond a basic increase in line with prices. That makes it clear where the Conservatives have been coming from. That record will not be forgotten; pensioners were not born yesterday.

When I faced the electorate in 1997, not one of my political opponents proposed anything more than an uprating of pensions in line with prices. That was true of the Liberal Democrat candidate, as it was of everyone else. However, because things have gone well, the Government have done better than could possibly have been envisaged. Benefits such as the minimum income guarantee, the uprating in line with wages, fuel payments and free television licences for older pensioners could not have been expected in 1997. Those things are appreciated, but I acknowledge, as I am sure many hon. Members would, that pensioners need and want more.

I have spoken to a number of pensioners over past weeks and found that, on analysis of their incomes, very few regard themselves as worse off under the Labour party. In fact, I have found quite the reverse. Pensioners get excited at public meetings, but when I had the opportunity to offer to write a cheque for the difference to anyone who was worse off, no one came forward. That is not to suggest that the pensioner's lot is sufficient, but they are better off under Labour than they were three years ago, and certainly better off than they would have been under the policies of the other two major parties.

My concern centres on the way in which things could get worse—indeed, they could only get worse if the Conservatives were to have the opportunity they seek—for the one third of my pensioner constituents who are on or near the level of the minimum income guarantee. They would lose from the minimum income guarantee no longer being upgraded according to wages, as well as on the winter fuel payment and free television licences. Happily, most of my constituents have seen though the Conservatives' hall of mirrors and are unlikely to fall for it. It is by one's deeds that one is judged and the Tories have a long way to go, especially among our experienced constituents, who remember them for what they did, not for what they say.

For all their good will, the Liberals never promised more than Labour has provided—how could they, when they reject the means by which the Labour Government have delivered an economy that is able to create options to pay more? If the Liberals early spending commitments had been implemented and their refusal to back the new deal had been accepted, we would be looking, not at a budget surplus this year, but at a deficit that would make it impossible to help those to whom we want to give priority.

It is important that we abandon the dangerous idea, often mentioned by hon. Members, of linking pensions with national insurance contributions. I had the Library calculate current pensions based on 40 years' national insurance contributions at the basic rate. The result would be a pension of £40 a week—of course, that pension would be upgraded according to inflation, but it is significantly less than is already paid. When the Tories talk about privatisation, with private pensions replacing the state system, we must remember that pensioners have made a wider contribution to our society, for which they should be rewarded; that contribution is more than merely the national insurance contributions they made, which would pay far less than even the current meagre pension.

Mr. Flynn

Does my hon. Friend recall that there was a substantial sum known as the Treasury supplement which was paid into the national insurance fund from 1911 to the mid-1980s, to which all those who are pensioners today have contributed? Therefore, one cannot measure the pension only using national insurance contributions; one has to take into account the sums paid through the Treasury supplement, which was interrupted in the late 1980s by the Conservatives.

Mr. Foster

I accept my hon. Friend's point that pensioners have made a contribution greater than their national insurance contributions alone. My point is that, often, the Liberal Democrats and the Conservatives imply that national insurance contributions alone could pay for a pension greater than that which pensioners now receive. That is far from the truth. If the sums involved in national insurance contributions were paid into a private scheme, as the Conservatives would have us do, the resulting pension would be far smaller than the one that is currently paid. Their calculations are invalid. Whether or not they have been able to contribute through taxation, people's broader contribution to society should be taken into account.

I strongly support the Government's desire to improve the lot of all pensioners while simultaneously targeting the greatest benefits on those in greatest need. However, I believe that there is a weakness in the way we attract claims from those who are deserving of extra help. The problem is that we have mixed up supplementary pensions with the income support system: there is a significant difference between those who require temporary assistance while awaiting employment opportunities, for example, and those who have completed their years of toil and now look forward to security in retirement.

The supplementary pension that is sometimes necessary to produce a minimum guaranteed income should not be referred to as "income support". It is a supplementary pension for which people have worked and which they deserve. The perceived degradation of older people claiming an income support payment could easily be alleviated by changing the name of the payment—perhaps by using the term "supplementary pension" to refer to that special payment applied only to older people who require extra help.

I do not accept, as is sometimes suggested by the Government in answer to questions, that legislation is required to change the terminology on a form. That could be done without a great deal of effort. When the next version of the form is printed, perhaps the heading could be something other than "Income Support".

I commend the Government for their work in targeting groups that may be eligible, but while the term "income support" persists, there will be those who refuse to claim it. Many pensioners, rightly or wrongly, associate income support with folk sitting outside McDonald's with their dogs and their begging bowls. That is not an image that pensioners are prepared to accept.

I plead with the Government to look again at the administrative apparatus for delivering the minimum income pension. That should refer to a minimum retirement income, and the difference between other incomes and that level should be made up by a retirement supplement.

Terminology is important. To some extent pensioners have been aided by the introduction of telephone claims, but they will not fill in forms that warn of the dire consequences of fraud. More work needs to be done on that. However well-meaning Department of Social Security staff are, specially trained staff are needed to work with the claims of elderly people. Pensioner applicants are not skivers and must not be made to feel uncomfortable when they make their claims.

Much has been done, but much remains to be done for our pensioners. A change in the name of that additional benefit would make an enormous difference to many people in my constituency and elsewhere.

5.46 pm

Mr. Paul Burstow (Sutton and Cheam)

The hon. Member for Hastings and Rye (Mr. Foster) referred to the Liberal Democrats' commitment to additional investment in public services early in the life of the present Parliament. Hon. Members on both sides will recall that on a number of occasions we highlighted what we believed to be weaknesses in public services that needed early investment. It is only recently that the Prime Minister has acknowledged those weaknesses and the fact that the Government failed to invest in the early days of their Administration to address them. For that reason, we continue to have NHS winter crisis after winter crisis.

Mr. Jeremy Corbyn (Islington, North)

Will the hon. Gentleman give way?

Mr. Burstow

Briefly, as I must make progress.

Mr. Corbyn

I entirely agree with the hon. Gentleman's point about investment in the public services. In a spare moment, will he ask Islington Liberal Democrats why they are closing day centres for the elderly, other day centres and luncheon clubs?

Mr. Burstow

One of the reasons, I suspect, is that the Government have decided that the data changes that would lead to an increase in standard spending assessments for London this year will not come through. Consequently, London will lose substantial resources. I imagine that that causes concern to the hon. Gentleman as well. I shall bear in mind what he said and find out whether that is, indeed, the case.

I return to the subject on which I intended to speak—long-term care. At the last Labour party conference before the 1997 general election, the then Leader of the Opposition, now the Prime Minister, gave this pledge: I don't want to live in a country where the only way pensioners can get long term care is by selling their homes. That was clear and unambiguous, and it was deservedly welcomed by many across the country. It was a promise to act to end the grotesque spectacle of the debt collector pursuing the dementia sufferer for care home fees.

Three years on and one royal commission later, what is left of the Prime Minister's promise? Nothing but bitter disappointment and a sense of betrayal among many people outside. What do the Government propose to put in place of the Prime Minister's pledge to the Labour party conference in 1997? The sop offered by Government is that nursing care will be free in future. Legislation will be needed to bring that about, and it will not start until 2003 at the earliest.

Everyone in the country, and many of my constituents to whom I have spoken directly about the matter, thought that nursing care was free anyway. They are puzzled about why the Government intend to give them the great gift of free nursing care.

The message about the Government's views on long-term care is plain. Care is free for those who have a medical condition from which they can recover. That applies to every aspect of the care: hotel accommodation, food, personal care and nursing care costs. Everything is free, and so it should be. That is part of our commitment to a universal, free health-care system. However, care for those who suffer from a chronic medical condition such as Parkinson's disease or dementia comes with a bill attached. Liberal Democrats are clear and unequivocal about our commitment to making personal care free on the basis of an assessment of need.

Mr. Rammell

If the commitment is clear and unequivocal, why does the Liberal Democrat alternative Budget for 2000 include only a costed commitment to pay immediately for nursing care?

Mr. Burstow

If the hon. Gentleman had read on, he would have realised that we are also committed to funding all personal care. It is clearly stated in the same document. During our previous debate on the subject, the hon. Gentleman did not have a copy of the alternative Budget. I am glad that he now has it. He can read that it goes on to refer to a first step towards implementing the royal commission's proposals for free personal care.

Mr. Rammell

Will the hon. Gentleman give way?

Mr. Burstow

I shall not give way because I have answered the hon. Gentleman's point. The royal commission's recommendations are also clear. It was right to recommend that personal care should be free.

With chronic health conditions, it is difficult to predict or anticipate the way in which the risk will fall on an individual, and whether someone will need long-term care. Consequently, the costs fall disproportionately on a few people. We believe that the costs of long-term care should be spread across the whole community and ultimately met through taxation. The royal commission also took that view after undertaking the inquiry that the Government requested to ascertain the way in which we can construct a fair, effective and sustainable system for financing long-term care. Unfortunately, the Government chose to miss the opportunity of accepting the royal commission's proposals. Instead, they plumped for short-term fix. We have had what could be described as an adjournment of the debate on long-term care. The Government will return to it because they must do that.

Dr. Jenny Tonge (Richmond Park)

Does not my hon. Friend agree that the Government discriminate against people who are mentally ill through their policies on long-term care, which affect sufferers of Alzheimer's disease and Parkinson's disease, which becomes a mental illness? That is grossly unfair.

Mr. Burstow

My hon. Friend is right about such discrimination. Their policies are also another form of age discrimination. It means that many people, who rightly expect that their nursing and personal care costs would be covered if they suffered from a chronic condition such as dementia, know that nothing will change as a result of the NHS plan. The Government's announcement will leave in place the postcode lottery of care that existed under the Conservatives for years. It will create new anomalies when the new definition of nursing care is interpreted.

The NHS plan leaves in place the perverse incentives that encourage local authorities to utilise residential care rather than help older people who remain in their homes. It leaves unanswered a fundamental question: where does the balance lie between an individual's personal responsibility and that of the state for meeting care costs? The Government have not provided a clear answer to that. They have put the matter into a siding, but they will have to return to it, and answer that question clearly and definitively.

As the hon. Member for Beckenham (Mrs. Lait) said, reports in The Sunday Times at the weekend, and in the Daily Mail today, describe the way in which the Scottish Executive will view long-term care. If those reports are correct, the Government will be put under a spotlight to explain why they have followed one road while the Scottish Executive have gone down another. The Scottish Executive appear set to go further than the Government. The new First Minister, the hon. Member for Central Fife (Mr. McLeish), is reported as saying that not only nursing care, but personal care should be free.

In The Sunday Times, the First Minister is quoted as saying: If you are rooted in public concern then you will know that if every organisation you talk to, every medical group, every local authority, the Sutherland people themselves, the PLP, the Liberal group— I believe that he means the Liberal Democrats— the opposition are all agreed, then sometimes you just have to say to yourselves: "Well, look. There is a firm body of opinion. Is what we have as a policy the right thing to do? Clearly, the First Minister believed that the Government of Scotland had not adopted the right policy by embracing the Westminster Government's policy of covering nursing care only. I welcome that decision, which is a step in the right direction. I hope that we, along with all the organisations in England and Wales that want the same policy as Scotland, can persuade the Government to provide it.

There has been no action on the matter during the whole Parliament. Plenty of debate has taken place, and the Government have often refused to set out their clear policy intent. They set up a royal commission within six months of the general election and we had to wait a year for it to report. That is unusually quick for a royal commission, and we welcomed that. Another 18 months passed before the Secretary of State told us at the Dispatch Box that he had to consider the report for another six months. In June or July, smuggled out under cover of the NHS plan, we received the extremely bad news that nothing would be done in this Parliament.

As my hon. Friend the Member for Northavon (Mr. Webb) spelled out, pensioners feel betrayed not only in the case of long-term care. There is genuine anger about the pension. I have met many of my older constituents, who feel insulted by the 75p increase in the basic state pension this year. Labour has presided over an increase in pensioner poverty—400,000 more pensioners live in poverty today than when the Government took office. The Government spend less of the national income on pensions now than when they took office—they have spent less in the first four years of the Parliament. The Minister may have wriggled at the Dispatch Box, but relying on future figures is not helpful and does not bear close scrutiny. When we consider the true figures for Government spending in their first four years in office, we realise that the prosperity of the nation is not being shared.

If Labour has made matters worse, the Conservatives are not the solution. Let us consider how much their pensions policy will cost. The hon. Member for Beckenham did an exercise to try to cost our policy. She needed only to read Hansard, which makes it clear that our policy will cost considerably less than the figures that she chose to peddle to the House. The Conservatives would scrap the winter allowance and the free television licence for the over-75s, and they would end the Christmas bonus.

What extra money would pensioners receive through Conservative pensions policy? My hon. Friend the Member for Northavon was generous; he said that they would receive 42p extra. However, the inflation increase of £2.25 would mean that pensioners would receive only 17p extra.

Mrs. Lait

Will the hon. Gentleman deny that, last Tuesday, he said that he wanted the basic state pension to be £90 for a single person and £135 for a couple? Will he also deny that the net cost of that could he 2.3p on the basic rate of income tax?

Mr. Burstow

I have the relevant copy of Hansard, and I urge the hon. Lady to read my speech, her speech and the interventions before she pursues that line of argument. The construction that she placed on my words—although I am happy to accept it—does not entirely reflect what I said. I was referring to the family budget unit's work on low cost, affordable pensions. The unit suggested two figures: £90 for a single person and £135 for couples. I said that we wanted to establish a commission to review the way in which pensions are increased year on year, and that the family budget unit's methodology should be considered as part of the commission's work.

Mr. Bercow

Will the hon. Gentleman give way?

Mr. Burstow

No, I have dealt with the hon. Lady's question clearly for the third or fourth time. She asked me similar questions during last Tuesday's debate.

As my hon. Friend the Member for Northavon rightly said, the Conservatives' proposal is the first case on record of robbing Peter to pay Peter. They would be taking money from pensioners and giving it back to them. We shall hear a great deal about pensions this week because of the pre-Budget statement, and those who consider the debate and the issues should carefully examine Conservative proposals and not take them at face value. They should look carefully at the contents of their pockets before accepting any pension proposals from the Conservatives. I think that they will find that they would be well and truly short changed.

That is hardly surprising when we consider the record of the Conservatives over the 18 years they were in office. It is undoubtedly true that the richest of our pensioners, who are a small minority of pensioners, enjoyed significant increases in their pensions. The poorest pensioners saw their incomes rise by only £10 a week. After 18 years of Tory rule, pensioners had only £10 to show for it. That was the consequence of a Conservative policy which was all about targeting extra help on the rich rather than doing something to help the poorest pensioners.

We are clear that the most effective way of getting extra help to pensioners is through the basic state pension. It is the most administratively cost-effective way of targeting extra help.

Mr. Bercow

Will the hon. Gentleman give way on that point?

Mr. Burstow

On the effective targeting of extra help?

Mr. Bercow

Yes. Given that the Liberal Democrats June 2000 policy document proposed a restoration of the earnings link, that their party conference took a different view and that the hon. Gentleman and his right hon. and hon. Friends were veritably at sixes and sevens on the subject, with no coherent overall position, will he now remove the fog of confusion that is descending?

Mr. Burstow

The hon. Gentleman intervened on a specific point and then moved on to another. He should draw out the document from the Library and read it. It does not state anything to do with the earnings link. An amendment to that effect was moved from the floor of the conference.

Mr. Bercow

I studied reports of the debates and the votes.

Mr. Burstow

The hon. Gentleman obviously blanked out during that part of the conference. He should check his facts. Central office briefing was completely wrong.

The most effective way of getting extra help to pensioners is through the basic pension. Administrative costs are about 6 per cent. of expenditure if there is targeting through a means test. They are about 0.9 per cent. if we proceed through the basic state pension. The Minister has accepted that it is far more costly to use a means test to get extra help to the poorest. As my hon. Friend the Member for Northavon rightly said, the poorest pensioners do not get the help because they are the ones who do not claim the minimum income guarantee.

As there is such a strong and clear link between poverty and old age, targeting extra help to pensioners aged 75 and 80 is the right way forward. We all know that at the age of 80 pensioners receive an extra 25p. That is not enough to buy a first-class stamp to send it back. When the increase was introduced in 1971, it was worth something.

Liberal Democrats want to increase the extra payment to £15 for a single pensioner and to £28 for a pensioner couple. The hon. Member for Bournemouth, West (Mr. Butterfill) says that our proposals cannot be afforded and cannot be implemented. We say that they can be afforded and delivered. There is clear evidence of a willingness outside the House to ensure that the basic state pension is increased. Even the evidence from the Department of Social Security bears that out. It is clear from social security research report 83 that the Department found from its research work that even people in work were prepared to pay enough to enable an extra £10, £20 or £30 a week to be paid through the basic state pension.

My hon. Friend the Member for Northavon has been chastised for not sticking to some of the commitments set out in the Liberal Democrat manifesto in 1997. I find it odd to be chastised for doing not less but wanting to be more ambitious and wanting to do more for our pensioners. It is rather novel to be challenged and chastised by the Government for taking such an approach.

The Prime Minister says that he has got the message about the 75p increase. On Wednesday, the Chancellor of the Exchequer should say clearly and effectively whether he understood the message. We believe, along with people outside the House, that a decent pension increase is long overdue. Too many years have passed during which we have seen the basic state pension wither away. It is time that we reversed that long-term decline and invested for a decent basic pension.

6.4 pm

Mr. Paul Flynn (Newport, West)

During the 10 years of miserable opposition that I suffered, along with my right hon. and hon. Friends, we dreamed about the day when we would reform the pension system on the lines that we preached throughout those 10 years. Indeed, they have been preached during the party's entire history. We said that we would rebuild the pension on the basis of the national insurance principle. I shall say many things in opposition to the Government's policy, but I shall do so with the support of my party's history, my party's present policy as decided at the most recent conference and the approval of two marvellous reports by no fewer than three Select Committees since June, and knowing that we are talking about a policy that has worked brilliantly.

We can go to our constituencies and say that there is a Labour good-news story on pensions. We have provided a good £6 billion more than the Conservatives would have made available if they had been re-elected. I do not understand how the perception of our policies is so badly wrong. Many pensioners believe that we have been mean with pensions. The fault is ours. It cannot be said that what has happened was not predicted. It was predicted in early-day motion 1 this year. Over the previous four years, pleas have been made, with the backing now of 106 Members, to restore the earnings link and start to ensure that the basic pension has a strengthened foundation, not a crumbling one.

To his great credit, the Welsh Liberal, David Lloyd George, introduced the national insurance scheme in 1911. There were moves before that to introduce such a scheme. However, it determined how we would organise our welfare benefit throughout almost the entirety of the 20th century. The 19th century was marked by the poor law. It was thought that the way to distribute welfare was to give it to the poor, tapping them on their grey heads and saying, "There is a little handout for you."

It is extraordinary that we appear to be reverting to the principle of the poor law in Government policy. It has been said that there is a young person's view of these matters, and that may lie behind what is happening. When we were in opposition, and especially during the final years, we said that 1 million of the poorest pensioners would he our first priority. They were getting basic pensions and not what we call the minimum income guarantee.

There is nothing new about MIG. It was around 60 years ago, and it existed throughout the life of income support, supplementary benefit and national assistance. It has always been possible for those whose pensions were not at a level that was deemed reasonable to obtain extra money. It was the handout, the charity or the gift from Government. The number of our poorest pensioners has been reduced to 876,000, and we are now talking about 500,000. They are living below a level that the Government have described as the minimum income guarantee.

The Opposition spokesperson, the hon. Member for Beckenham (Mrs. Lait), talked about the take-up of the scheme, which arrived two years late—the Government had been begged to introduce it a long time before. Take-up is disappointing. At the most, it is about 5 per cent., but it is probably about 3 per cent., which is tiny. Why is that the position? I suggest to my right hon. Friend the Minister that he should talk to pensioners. Many pensioners worked throughout their working life, paid all their dues and never claimed any dole or any benefit. That is a matter of great pride for them. When they reach the age of retirement, they are told that if they are to get the amount of money that the Government regard as the minimum that they should receive, they will have to complete a very long and complex form and ask for a handout. That is the difference between what the Government Front-Bench spokesmen are saying and what 85 Labour Members have said and have not resiled from in early-day motion 1. They want the extra amount put on the basic pension, so that it is an entitlement that pensioners can accept with dignity and pride. They do not want it to be a demeaning amount that pensioners have to claim through the income support scheme. The difference is crucial. It is difficult to see why that is not understood by the Government. Investigations have been made throughout this long period into why people entitled to the minimum income guarantee are not receiving it. The evidence shows that pensioners find the scheme demeaning, although it has not been published in great detail.

The majority of pensioners, including those who will come to Parliament tomorrow, want a promise that no party is making to them, which is that in their retirement they will have an increase in their pensions equivalent to the real rate of inflation. That is not a great deal to ask. Is it affordable? I agree with the hon. Member for Bournemouth, West (Mr. Butterfill) about compulsory pension schemes.

It is not just today's pensioners who face these problems. People in their 40s and 50s who were mis-sold personal pensions will get a terrible shock when they reach retirement age and go into the world of annuities. Annuity rates dropped in value by 30 per cent. from the 1990–94 projections. That is a huge drop. Some of my constituents believed that their total fund was the annual amount that they would receive in their personal pensions, and they had organised their lives accordingly. People understand well their occupational pensions, but few understand the personal pensions that they were wickedly mis-sold.

Millions of young people will be in even greater trouble if we allow the basic pension to wither on the vine. Those not in work will be in terrible trouble, but so will those not paying into any occupational scheme. The hon. Member for Bournemouth, West spoke against the policy of his own party. The most dangerous thing about the Government's policy is that it attacks the principle of the basic pension. If on some dark day in the future there were a change of Government, they would have an open invitation to destroy the basic pension. The Opposition already have a policy of allowing young people to pull out of it.

We all know the attitude of staff to pensions. They have almost to be nailed to the desk to get them to contribute to pension schemes that are freely given, which require a contribution of 10 per cent. of their salaries. It is difficult to persuade them that they are not immortal and that one day they will grow old and need that pension. They do not want to contribute during the early, furniture-buying, child-rearing days of marriage. In their 40s and 50s, they will have to pay 15 or 20 per cent. of their income on a pension. If the state pension goes, they will receive a derisory pension. That is an important point.

I want to consider the intellectual poverty of the Government's position on pensions. Since June, there have been reports from three Select Committees, which are not manned or womanned by people who present a challenging view for the Government. I have just discussed that with my hon. Friend the Member for Islington, North (Mr. Corbyn). We have been told in clear terms that we will never be allowed to serve on a Select Committee, certainly not the Select Committee on Social Security. The Government trust members of Select Committees to be loyal to them. I would love to read the Government's response to the splendid report of the Social Security Committee on "The Contributory Principle", which says that the Government's preference for means-testing involves a rejection of the wider functions which the contributory system offers, of allowing individuals, whatever their means, to redistribute income over their lifetime. The whole point of national insurance is to provide help in certain periods of our lives: when we are very young, in the early days of marriage and when we are old. If we have paid into an insurance fund during that period when we can afford to do so, we can have money out at other times. Every party accepts that principle for child benefit, which enjoys almost 100 per cent. take-up. Why? Because there is no stigma attached to it, everyone can receive it and it is entirely untargeted. It is a very popular benefit.

The report from the Select Committee on Scottish Affairs on "Poverty in Scotland" said: fundamentally we believe that the basis for support in old age should be the universal state pension, payable at the age of retirement. The state pension should be linked to the increase in average earnings. The Social Security Committee report on "Pensioner Poverty" referred to the aims set out in the 1998 pensions Green Paper. It said that people who work all their lives should not have to rely on means-tested benefits when they retire. It went on to say that the Government's long-term aim of enabling working people to retire on incomes which will not require them to depend on a means-test, will be realised. All those reports are detailed and thorough. They were the result of months of work by the various Committee. Not one of them supports the stubborn, doctrinaire line taken by the Government, which is contrary to the opinion of the Labour party and is difficult to sell to pensioners.

We know that the Government intend to allocate a large amount of money to pensioners. However, after the Budget, the £150 allowance and the policy behind it met a growing feeling of rejection. I went to a meeting of a pensioners' group, and the morning papers were saying that the Chancellor would be popular with pensioners. He was not. Feelings about that larger lump sum were similar to those that people had in the early years of trade unions when rogue employers cheated their workers every week by paying them low wages and then tried to buy back their favour by giving them a turkey for Christmas. The effect of being given a turkey was much greater than being cheated out of £5 a week in their wages. It was a gimmick. When the 75p increase was announced, those pensioners were very angry about it.

Liberal Democrat and Labour Members have expended much energy trying to find out the amount of the national insurance fund. That information is crucial to debates on pensions. Last November, there was a surplus of £8.43 billion. That money belongs principally to pensioners. This and previous Governments have raided the national insurance fund to reduce contributions to employees. Employees have a claim on some of that money, but large sums have been used for that purpose.

The stable employment situation, with the lowest unemployment rate for 20 years, and the Government's other great achievements have ensured that the national insurance fund contains an even bigger sum. That £8.43 billion was not the balance of the fund: it was the unneeded surplus. There was already enough money in the fund for contingencies, as the law states that there should be. Increases in unemployment could have been dealt with using the contingency fund, and there would still have been £8.4 billion available. An increase in the basic pension of £1 a week would cost about £500 million. No one is asking for an unreasonable increase for pensioners to bring pensions up to what they would have been had those pensioners not been cheated by the Tory Government every year between 1980 and 1997. We know that that is not possible: it would be very difficult to achieve.

We argue, however, that increases are affordable. They are just, and they are the best way to reward pensioners for the contributions that they have made. The Treasury supplement was paid for years. Real money went into the scheme. Pensioners who have worked all their lives and have contributed through their insurance contributions and through the Treasury supplement now have to beg for charity and take handouts to get a pension. Increasing the MIG to £90 may provide extra money, but instead of the current one in five persons on means-tested benefits there will be more of them—if the present trend continues that number will increase to one in four by 2050. We cannot say to a whole generation that they must rely on means-tested benefits.

I appeal to the Government to re-examine their policies. Those policies are deeply unfair, although the Government's heart is in the right place. Their spending is generous, but they are corrupting what has been one of the Labour party's great achievements over the past 100 years: supporting the principle of national insurance. Not only is a large increase fair, affordable and overdue; it should be possible to make that increase now, and it should be announced on Wednesday. There is no excuse for any other action.

6.20 pm

Mr. Patrick Nicholls (Teignbridge)

It is a pleasure to follow the hon. Member for Newport, West (Mr. Flynn), who speaks about these matters with great passion and knowledge. I thought I would be able to agree with him to an extent that would embarrass us both, but I am happy to say that in a moment I shall be able to resume normal hostilities.

The hon. Gentleman was right to talk about the restoration of the pensions link, a theme that has run through the debate. Certainly, out in the country there is a feeling that—if I may use the phrase employed by the hon. Gentleman a few moments ago—the Conservative Government cheated in 1980 by withdrawing the link with earnings, and that although the present Government would like to restore it now, they cannot for some reason. The Government seem to be trying to have it both ways: they are blaming us for taking away the earnings link, and are trying to achieve vicarious credit by saying that they would of course restore it, but cannot quite get around to doing so.

The history is instructive. Under the National Insurance Act 1974, Labour linked the retirement pension to the rise in earnings. I think that it was honouring an election pledge, and many people greeted the move with joy. The difficulty is that it is one thing to introduce legislation, and another to implement it. In 1976, pensions were raised by less than income or earnings. In that year, the Labour Government did not implement their own legislation. Then came the uprating for November 1977, when the link did not apply, because earnings had risen faster than prices, and earnings had risen faster in any event.

The real crunch for the Labour party came in the uprating statement of November 1978. Labour raised pensions by 11.4 per cent., but earnings had risen by 13.3 per cent. Labour then proposed an uprating that it was not in a position to implement, because it lost the election. That is nevertheless relevant to the point that I am about to make.

In March 1979, it was proposed that pensions should rise by 12.8 per cent. At the time, earnings were rising by something in excess of 15 per cent. That caused outrage among pensioners, many of whom had doubtless voted Labour and seen legislation passed, and now saw their own fluffy Labour Government and their own Secretary of State avoiding their own legislation.

Trying to square the circle and work out how such an extraordinary thing had happened—extraordinary, that is, to those who had not followed the track record of previous Labour Governments—Lord Ennals, then Secretary of State for Social Services, wrote in Pensioners Voice something that, even in a cynical profession, comes across as cringe-making. He wrote: There is a statutory obligation to take these figures (i.e., earnings) into account, which was done, but no statutory obligation to get it right— a Government who introduce legislation then cynically refuse to implement it.

The Conservative Government did not, in some cloak-and-dagger or hole-in-the-corner way, repeal the link; they said in their 1979 election campaign that they would remove the link, because at the time it was unsustainable. Lord Jenkin of Roding, as he then was not—he was then Secretary of State for Social Services—explained why it was unsustainable, given the state of the economy at the time. I shall say more about that shortly. He went on to say that the rise in pensions would be linked to the rise in prices instead, because that was a more realistic, a more honest and, above all, a more sustainable, prospectus.—[Official Report, 20 December 1979; Vol. 976, c. 903.] What has happened with the earnings link has passed into mythology. A Labour Government campaigned to introduce it, refused to implement their own legislation, and cynically sneered that all they were obliged to do was take the figures into account—they did not have to get it right. A Conservative Opposition and, in due course, a Conservative Government campaigned on the basis that those figures were simply unsustainable, and that it was better in the long run to promise something to pensioners that was sustainable.

Mr. Rooker

Will the hon. Gentleman give way?

Mr. Nicholls

I would adore to give way to the Minister, so that I can share his embarrassment.

Mr. Rooker

There is no embarrassment. The hon. Gentleman has gone over the history of what happened during those four years and I do not dissent from any of what he has said, but he has neglected to draw attention to something that was fundamentally wrong. I refer to the attempts to forecast earnings and prices six months in advance. Ministers were coming to the Dispatch Box in March announcing what they thought earnings and prices would be in November, and stating what the pension would be. The forecasts were wrong, and it was necessary to return to an historical system.

There were inbuilt errors in the design of the system. I complained at the time, as did others. There was no precision in the attempts to forecast what would happen in six months' time, which is why we have an historical system today.

Mr. Nicholls

There is something glorious about the Minister. I always enjoy my exchanges with him.

As the Minister well knows, under the Labour Government in those days it was impossible to forecast rises in prices or earnings in terms of more than a few weeks, because the economy was completely out of control. At that time—the last time that the Minister was involved in an alliance, a Lib-Lab pact—it was impossible to forecast what would happen from week to week. At that time, the country was so bankrupt that when Lord Healey was going overseas he had to turn his car around on the way to Heathrow, because the International Monetary Fund had said that it would withdraw the country's credit and make it bankrupt.

In 1979 our economy was a thoroughgoing basket case, and it was certainly true at the time that the earnings link was unsustainable. We are now in a vastly different world. We now have an excellent economy, bequeathed by a Conservative Government who had learned from the mistakes of their predecessors. Although the economy will slow down as stealth taxes begin to bite, the present Government have not yet wrecked the economy that they were bequeathed. As it is a strong economy, I think it fair to consider whether the earnings link could be restored in some shape or form.

I say that without for a moment making light of the figures that would be involved. I understand that if the earnings link were restored for this year, it would cost £1 billion, and that by 2010 it would amount to £8 billion. Those are substantial sums, even if we allow for the amount that the Government have stored up to give back to those from whom they took it forcibly in the first place to persuade them to vote Labour next May, and even judged by the sums that are in reserve.

But—it is an important but—this is a vastly different world from that of 1979. Although all three parties have, in a sense, followed the historic and traditional view that the earnings link is unsustainable, I think it fair to ask whether there is something in it that we should try to revive or retrieve.

I think it comes down to this. I think that Members on both sides of the House always see such action as a sticking plaster. One thing that unites the hon. Member for Newport, West and me is our wish to see something done for pensioners that is better than what has been done for them by either of the last two Administrations. That much is clear; but we must also ask what is the underlying, and overriding, consideration.

When we talk of the earnings link, we are not just trying to outbid each other. We are saying that we want the elderly, who have played their part in producing the economy we have today, to be able to benefit in the future. That is the core of what we are trying to achieve, and I should have thought it was possible. I do not know whether it will be necessary to define it in relation to gross domestic product, but it should be possible to state the aspiration in regard to an earnings link, while ensuring the existence of mechanisms to deal with any substantial downturn in the economy without the need to refuse to implement legislation that we have ourselves passed.

I think that a debate on that should take place in my party, and I think it would be healthy for it to take place in all three principal parties. I should like it to be acknowledged that, although such action was indeed unsustainable in the world of 1979, we should now ask—given the present state of the economy—how pensioners can have a stake in rising prosperity, while not ultimately saddling taxpayers with burdens that they cannot afford.

The hon. Member for Hastings and Rye (Mr. Foster) made an offer, but I do not know whether he is prepared to come down to my constituency on his holiday and keep his promise. He offered to give a cheque to anyone who, in a public meeting, could honestly say that, as a pensioner, he or she was worse off under the present Government. I hope that the hon. Gentleman has his cheque book ready, as the first person to whom he must send a cheque is Mr. Allen Bridges of Shaldon in Devon. Mr. Bridges wrote to the Prime Minister about the interesting matter of the financial burdens of partially sighted people and concluded his letter by saying: But no matter, I have my 75p increase plus my 75p "over 80" gift and to cap it all, £100 fuel allowance. Minus £97 tax credit loss, this then equals £3 for fuel plus increase plus age allowance. It makes the mafia appear as Fairy Godmothers. I am sure that a cheque should be made out to Mr. Bridges, which is spelt with one "d".

I have dozens of such letters, which are completely unsolicited. If time allowed I would read them all, but I shall read out just one from Mr. Howell, again from Shaldon, who, I am sure, would also appreciate a cheque from the hon. Member for Hastings and Rye. Mr. Howell writes: Dear Mr. Nicholls, My wife is 77 years of age and is registered disabled; I submit her tax return to the Inland Revenue each year. I am enclosing photostat copies of statements for the tax years ending April 1999 and April 2000 which reveal a substantial drop in income due to the changes made by the Chancellor … respect of the taxation of dividends. Throughout her working life my wife endeavoured to save, out of taxed income, in order that she would not become a burden on the State. The Government boast that they have kept their promise not to increase basic rates of tax but are careful not to mention the many significant increases in indirect taxes. There are, most probably, large numbers of pensioners who have been affected similarly and I hope that protest continues to be voiced in … Parliament and the media. Mr. Howell then sets out figures that have been accepted by the Inland Revenue, so there is no doubt about them. Mr. Howell says that for the year 1996–97 his gross income was £5,220 and his tax refund was £601—I shall leave out the pence for the sake of brevity. In 1997–98, his gross income was £6,853 and his tax refund was £619. In 1998–99, his gross income was £5,345 and his tax refund was £588. In 1999–2000, his gross income was £5,062 and his tax refund was £10.66. Mr. Howell concludes in irony, I assume, rather than sorrow: I had thought that the Government were encouraging people to save for their later years!! We must be straight about the matter.

Mr. Rooker

Will the hon. Gentleman give way?

Mr. Nicholls

I shall give way to the Minister who is marvellous and reminds me of the late Brian London. Boxing fans will know that that was not meant to be a compliment.

Mr. Rooker

I would like more information, as the hon. Gentleman has just quoted the figures for a tax refund for a gross income of £5,000. The basic pension for a couple is £107 a week and the minimum income guarantee is £121 so, because of the tax allowances, other income must be involved. In that situation, there would not be a tax liability. The hon. Gentleman should not kid the House that the couple's gross income is their only income. He cannot be giving the House the full information.

Mr. Nicholls

I am giving the House the full information, and it says something about the right hon. Gentleman, whom I respect, that he is embarrassed by what he has heard. I will send the right hon. Gentleman the information, which is news to no one on this side of the House. I accept that the matter is not entirely within his brief, as it is more of a Treasury brief. However, if he understood the effect of advance corporation tax on pensioner income, he would not be in the least surprised by the outcome. I shall send him the papers without any difficulty at all.

Mr. Bercow

As my hon. Friend is helpfully providing the House with a list, perhaps he would be so kind and generous as to add to it one of my own constituents, Mrs. Jones-Williams of Seven Gables, Buckingham Road, Winslow, whose husband is registered blind and who is trying to maintain a car. Mrs. Jones-Williams has suffered from the Government's ACT policy and assures me that she has been impoverished by this benighted Administration and wants them out of office yesterday.

Mr. Nicholls

There are dozens of examples of the way in which ACT has worked. The two examples that I mentioned simply made the point that the hon. Member for Hastings and Rye was wrong.

A moment or two ago, I said that, to some extent, given the figures we were discussing, we were almost swapping offers. We need to go much further than that, and a different approach should be considered by all the main political parties.

There is now a third age, and people live immeasurably longer than ever before. In 1909, which, give or take, was the time when Lloyd George introduced the first state retirement pension, average life expectancy was 45 years for men and 49 years for women. In other words, the state pension was paid 15 years after the actuarial calculation of one's death. Give or take a few years for the time that I was born, the figures for 1951 show that men's life expectancy was 66 years and women's life expectancy was 71 years. For a male born today, life expectancy is 75 years and, for a woman, 80 years. I have checked with the Library the proposition that once one takes out of those figures the fact that mortality in the early years is still relatively high, it is true that someone born today has every expectation of living well into his or her nineties. When the state retirement pension was introduced, it came into effect 15 years after one was expected to die. With a bit of luck, one will now live for a good 25 years after first receiving one's pension.

Mr. Butterfill

Will my hon. Friend give way?

Mr. Nicholls

If my hon. Friend will allow me, I shall continue as time is short.

We must draw the conclusion that we have the opportunity of a third age. We need a bigger idea, and Her Majesty's Government—it does not matter of which political party—should accept that we have moved on so much that we need a Ministry of the third age. We need an overriding, all-embracing Ministry that considers pensions policy, employment policy and health policy. It should also think about recreation policy, taxation and health care. Old age need not be undignified.

The Secretary of State for Northern Ireland wants pensioners to be branded because he thinks that being old is uncool. The hon. Member for Ealing, Acton and Shepherd's Bush (Mr. Soley), who is chairman of the parliamentary Labour party, said that there is no point in trying to appeal to pensioners, as they are either racist or Conservative. The first notion is a slur and the second is not necessarily always true. However, we all aspire to a dignified old age and to have time during the third age for opportunities that people of our parents' and grandparents' generation would scarcely have believed. If there was a Secretary of State in the Cabinet who was charged with considering the entirety of what it is like in the third age, we really could make progress. Until then, progress must be relatively slight.

6.37 pm

Mr. Bill Rammell (Harlow)

In the three minutes available to me, I shall attempt to do justice to the proposition on the Order Paper. I shall make three short points, the first of which concerns the consistency of Liberal Democrat Members. If we go back to their 1997 manifesto, they were in favour of raising pensions only in line with prices. In the vote in the House in April, they committed themselves to restoring the link between pensions and earnings. Liberal Democrats campaigned on that issue in the local elections and, in my constituency of Harlow, put leaflets through the doors that made it clear that their policy was to restore the link between pensions and earnings. In the vote at the Liberal Democrat conference in September, the link between pensions and earnings was explicitly rejected.

That is a bewildering set of somersaults on policy, the end result of which, certainly in my constituency, is that Liberal Democrats refuse to admit that originally they were in favour of restoring the link between pensions and earnings. People expect from politicians a degree of consistency on the issue which, sadly, the Liberal Democrats lack.

I shall pick up on two other points made by Liberal Democrat Members this afternoon, the first of which concerns long-term care. I shall reiterate the fact that the Liberal Democrats' alternative set of proposals for the 2000 Budget did not include a costed commitment to paying for personal long-term care. Their explicit costed commitment was to pay for nursing care, not personal care. Frankly, that is symptomatic of what we often get from Liberal Democrat Members. They spray promises around like confetti and hope that, in the meantime, nobody will look at the detail or the fine print and find out that there is no costed commitment to implement their proposals. I am committed to progressive taxation to fund decent public services, but the case for that is not bolstered by not being straight with people about where the money will come from.

Finally, in the short time available, I shall refer to the specific pension proposals that the hon. Member for Northavon (Mr. Webb) spoke about this afternoon. If I heard him correctly, he said that he would fund those proposals by raising the top rate of taxation to 50p in the pound. Only six months ago, the Liberal Democrats' alternative Budget for 2000 proposed raising the top rate of taxation to pay for cutting the 10p starting rate to zero. Therefore, in six months, the specific proposal from the Liberal Democrats has been changed for a different purpose. There is no consistency whatever from them on those issues. That is why, in my constituency and elsewhere, no one will believe them.

6.40 pm

Mr. Matthew Taylor (Truro and St. Austell)

The hon. Member for Harlow (Mr. Rammell) talks about consistency and about Liberal Democrat policy changing. I suspect that, on Wednesday, we shall see one of the Government's biggest U-turns. They have spent some three years arguing against the principle of above-inflation pension increases. I believe that, because of a campaign by the Liberal Democrats—with the support of many Labour Back Benchers—but, above all, by pensioners, despite having no support from Ministers or from the Conservative party, which did not accept the argument, the case for above-inflation increases, resulting in a substantial pension increase, will prove to have been won.

That is a measure of the mistake that the Chancellor made at the start of the Parliament in taking pensioners for granted and in forcing them into increased means-testing. It is a measure of the effectiveness of a public revolt that has had nothing like the attention of the fuel tax protests, but will prove to have been more effective.

In constituency after constituency throughout the country, pensioners have taken up the case for a decent income, on which they can survive, as of right. That was the basis of the speech by my hon. Friend the Member for Northavon (Mr. Webb), probably the most expert person in the House on the issue; he is certainly one of the most expert.

In those terms, I regret the tone of the Minister's response. Many years ago, I served with him on the Committee that dealt with the poll tax. He did an effective job; I think that we did quite an effective opposition job between us. The poll tax certainly did not last long. I have always had great admiration for him, but he misjudged his response and he was wrong in his criticisms.

The figures that the Minister gave were, to say the least, misleading. He did not let me intervene at the time. Had he done so, I could have put him right, so it is sad that he did not. The fact is that the Government will call a general election—we will see whether they get back—and leave office spending less on pensions as a proportion of national wealth than when they came in. They will be doing worse on the state pension than the Conservatives.

The figures that the Minister sought to give related to overall expenditure on pensioners. That is a different issue, but, even there, the Government's record is nothing to be proud of because the simple fact is that, at this moment, they are still spending less than the Conservatives.

We know that the Government have jacked up spending for the general election and that they will just, in the Minister's terms—not by much—reach the level that the Conservatives were at when they left office. In the meantime, however, pensioners will have lost out on money that they will never get back.

The Conservative official spokesperson, the hon. Member for Beckenham (Mrs. Lait), made up a series of figures. The hon. Member for Bournemouth, West (Mr. Butterfill) resorted to saying that he preferred those to ours. She simply got her figures wrong. Perhaps she should call the House of Commons Library. It is very good and it will sort her out on that. She failed to take account of the fact that the costs of our policy are net, not gross. She also underestimated the gross costs of the policy, but her maths are clearly not too good. Broadly speaking, the net costs are equivalent to the income that we raise from the 50 per cent. rate of tax on earnings over £100,000 a year. Some years will bring in more income than we need and others fractionally less, but the figures are almost identical. There is a tie-up there.

We are clear about why it is necessary to put that tax on: we want to guarantee pensioners our big increases. We could simply hope that the economy delivers continued growth. The evidence is that the Chancellor has more than a big enough pot into which he can dip to make substantial pension increases. I hope that he will take a step towards that on Wednesday, but to guarantee, after a general election, to deliver substantial pension increases, we have to say that that might mean an increase in tax. We believe that it would be right to have a 50 per cent. tax rate on earnings over £100,000 a year, if necessary.

There are several reasons for that. First, we believe that it is important that pensioners should receive the benefit of the pension increases. Secondly, our tax system is regressive. People on high incomes pay less tax overall as a proportion of their income than those on low incomes. We do not believe that that is right. In tackling what was a real problem—taxation of very high incomes under Labour prior to 1979—previous Conservative Chancellors went too far. That is why very wealthy people now pay less, as a proportion of income, than people on very low incomes—the pensioners on whom we are concentrating. We believe that, if we have to make a tax increase, that is where it should be made. It will still leave this country's high-rate tax one of the lowest in Europe and lower than for most of the period that Margaret Thatcher was Prime Minister.

Mr. Bercow

Obviously, if the top tax rate is cut, those who pay that rate thenceforward will pay a lower proportion of their income to the Exchequer, but does the hon. Gentleman not accept that, as a consequence of the Lawson tax changes, the proportion of the overall tax-take contributed by the highest earners was higher? I hope that even a Liberal Democrat would acknowledge that point.

Mr. Taylor

The hon. Gentleman is trying to argue that, if we tax very high earners a little more, we will get less income. I challenge him to find an academic report that backs him. Even the last Conservative Administration—let alone any academic group—undertook their own report on that and failed to find the evidence.

The hon. Member for Knowsley, South (Mr. O'Hara) made a far more measured speech than the Minister. Not only Liberal Democrat Members, but other Members on both sides of the House would agree with much of what he said. He sought to reflect some of the general concerns, which were echoed by the hon. Member for Newport, West (Mr. Flynn), who has an exceptional record on this issue. He highlighted something that the Minister sought to deny: the Government are holding back key information on their ability to afford increases prior to their announcement.

The Minister says that we will be given the information after the announcement. That will help us to look at what the Government have done, but it does not help anyone to argue, before the announcement, for a better, more generous decision. Once that announcement has been made, there is no chance of any of us—whether the hon. Member for Newport, West or Liberal Democrat Members—winning the argument this year that the Government have the funds to do more. The decision will already have been made.

My hon. Friend the Member for Sutton and Cheam (Mr. Burstow) addressed the issue of long-term care. It was not the centre of attention in the debate, but it is an important matter. I have already touched on the accusation of inconsistency by the hon. Member for Harlow. It will be interesting to see whether he says the same of his Chancellor. In both cases, I hope that he will do more than he has previously argued for.

Let us be clear about long-term care. We made an absolute guarantee to fund nursing care, which the Government would not guarantee. We committed ourselves to work towards funding long-term care, too. That is a difference between Labour and us: it is not that the proposal is not budgeted; it is that Ministers oppose it and we shall work for it. People who are concerned about their elderly relatives selling their houses and having to pay for care should understand where the Liberal Democrats stand and where the Labour party stands.

Mr. Lembit Öpik (Montgomeryshire)

Does my hon. Friend agree that there should also be a rurality consideration? Provision for the elderly sometimes costs more in rural areas, such as mid-Wales, and the Government should take that into consideration in their planning.

Mr. Taylor

My hon. Friend tempts me, as the hon. Member for Truro and St. Austell, down the route of special offers for rural constituents. There are key issues for rural constituencies, and I hope that Ministers will address them soon in the long-promised but still-not-delivered review of local government expenditure. I have made that argument directly to Ministers.

Today's debate has very clearly set out three options available to pensioners. Conservative Members are so embarrassed by their true position on pensions that they dare not spell it out. The truth, of course, is that they are committed to the continued whittling away of the state pension as the basis for people's long-term support. The hon. Member for Teignbridge (Mr. Nicholls), to be fair to him, countered by calling for restoration of the earnings link, which he believes would cost £8 billion. I notice that that is the very same sum that Conservative Members have committed themselves not to adding, but to cutting.

The hon. Member for Bournemouth, West spoke rather more in favour of the position advocated by Conservative Front Benchers—although they will not spell out their position. The truth is that, on the pensions issue, Conservative Members want to have their cake and to eat it. They want to talk about tax cuts, but not about the fact that those can be delivered only by cutting expenditure on pensions and forcing more people into private pension schemes. Nevertheless, they pretend to pensioners that they want a real increase in the state pension.

One Conservative leaflet after another promises that pensioners would receive a pension increase of more than £5. One has to read the fine-print—as many pensioners do—to discover that the Conservatives would take away pensioners' Christmas bonus, heating allowance and even the 25p age addition that people start receiving at 80. The promise is an insult.

Mr. Butterfill

Will the hon. Gentleman give way?

Mr. Taylor

I cannot give way to the hon. Gentleman; I have to get on. People will be able to read his comments for themselves.

As my hon. Friend the Member for Northavon said, Labour Members are all over the place on the pensions issue. Year after year in this Parliament, Liberal Democrat Members have campaigned for real increases in the state pension. Ministers, however, have said that they cannot agree to those increases, but must target assistance more accurately on those who need it, yet the Government have chosen to provide the heating allowance, which is not only indiscriminate, but not taxed. Pensioners who perhaps could have afforded to do without the allowance are beneficiaries of it. Therefore, Ministers' comments on targeting are absolute nonsense.

The Government do not want to increase the basic state pension, but are willing to allow it to wither away in the long run. Their long-term plan is to ensure ever more means-tested support and to withdraw support from those who they think can afford to be without it. Although that is a distinct policy, which is not dissimilar from that of the Conservatives, they do not want to talk about it.

The Government also believe that the arrival, just before Christmas, of a £150 cheque for the heating allowance is more effective politically than adding a few pounds a week to the basic state pension. The 75p increase, however, proved that they misunderstood the situation and got the spin wrong. It led to a revolt, and proved that pensioners care most about being able to feed themselves and to live in dignity week by week.

Tomorrow, there will be a pensioners' rally at Westminster, attended by pensioners who have supported all of the political parties. They are rising in protest at the way in which the Government have treated them in this Parliament. The Chancellor's attempt on Wednesday to retrieve the situation will be seen for what it is: a response to that campaign as the general election approaches, rather than a genuine commitment to long-term improvement in the basic state pension.

The Liberal Democrat proposals would ensure substantial increases in the state pension, targeted on those who most need it. If we were making Wednesday's announcement, single pensioners would receive an additional £7.25. Older pensioners and pensioner couples would receive even more, so that pensioner couples over 80 would receive an increase of more than £30 a week. However, we go even further than that.

Labour Members have asked about our long-term policy. Because we have underwritten our pensions policy with a tax policy to fund it, we can guarantee that we will be able to deliver those increases in addition to those made in the Chancellor's announcement on Wednesday. The difference is that our policies are underwritten and funded by a tax policy that is more progressive than that which the Government are willing to offer. We can fund a pension increase that will take pensioners out of means-testing, rather than forcing them into it, as the Chancellor will do on Wednesday.

Our policies give pensioners independence and dignity, rather than force them to ask for hand-outs from the state. They also guarantee that pensioners receive the increase, regardless of whether they can find their way through the means-testing jungle that the Government have imposed.

6.56 pm

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle)

The hon. Member for Truro and St. Austell (Mr. Taylor) was complaining that Conservative and Labour Members had been caught electioneering—as if that were a crime—but then went on to do a little electioneering of his own. Much to my surprise, however, he produced figures different from those given earlier by the hon. Member for Northavon (Mr. Webb).

Undoubtedly, both hon. Members' expenditure will be financed by the same 10p increase in the top tax rate that they announced, and which my hon. Friend the Member for Hastings and Rye (Mr. Foster) pointed out has already been committed elsewhere. Liberal Democrat Members really have to learn that they cannot keep spending the same tax increase over and over again. One may not be able to perceive that fact when in opposition, but one perceives it rather quickly when one gets into government.

We have had an interesting debate. All the major parties—I include the Liberal Democrats—fought the previous general election on the same basis: that there would be a link between pensions and prices, and that other action would be taken subsequently. I should quote the Liberal Democrats' 1997 manifesto, on which the hon. Member for Northavon was elected to the House. It stated: The basic state pension will remain indexed to prices. It went on to say a little more about what they might have managed to do had they entered government in 1997. It stated: We will create an additional top-up pension for pensioners with incomes below the income support level. This will be indexed to earnings and tapered as outside income increases. Does not such provision indexed to earnings describe the minimum income guarantee that the Government have introduced? I am not very sophisticated, but is not tapering that provision as outside income rises another way of describing a means test? I might have it wrong, but I think that that is how the Liberal Democrats' manifesto—on which every Liberal Democrat Member stood—would have been interpreted by those who read the manifestos in the previous general election.

Mr. Webb

The hon. Lady is obviously easily confused. The inflation figure for next April is £2.25 and I pledged £5 on top of inflation, making the £7.25 mentioned by my hon. Friend the Member for Truro and St. Austell (Mr. Taylor). The taper mentioned in the manifesto would mean a rate of less than the 100 per cent. tax that she applies to pensioners' savings. That would be better than what she has delivered.

Angela Eagle

I notice that the hon. Gentleman did not address the point about the manifesto, which is on the record. All the Liberal Democrats promised to do is what we have done in government.

The Conservatives recently produced their pensions policy and, clearly, they also agree only with an increase in terms of prices. However, they would abolish winter fuel payments. They would abolish the Christmas bonus and the free television licences for the over-75s—even though those are arriving as we speak. They would abolish the age addition for the over-80s and, interestingly, the winter fuel payments to men over 60.

In her speech—which I enjoyed—the hon. Member for Beckenham (Mrs. Lait) asked me why 1 million men aged between 60 and 65 were still waiting for their winter fuel payments. What a cheek to ask me that, when the Conservatives have announced that they would abolish the payment.

Mrs. Lait

Does the Minister agree that the philosophical point is that people want to have their money in their own pockets to spend as they wish, rather than the gimmicks that the Government deliver? They want the dignity and self-respect of spending their own money.

Angela Eagle

The practical point is that, according to the Saga poll, 75 per cent. of pensioners do not want their winter fuel payments abolished.

The Tories' "Common Sense for Pensioners" policy would effectively give 42p extra to some people in certain circumstances. That is enough to buy a tin of Campbell's soup—very generous. The Tory document contains some questions and answers. For example: What about a man aged 60 to 64 losing his winter fuel payment? The answer is: We faced a tough choice here … We decided it was more important to increase the state pension. The savings on benefits for this group help to finance better pensions which will, of course, benefit these men within a few years. The reality is that men aged between 60 and 65 will not get winter fuel payments when they retire under the Tories.

Spending as a percentage of gross domestic product has increased and will be greater by April 2001 than when we came to power, as my right hon. Friend the Minister of State made clear. We must remember also that that is a higher percentage of a growing GDP because we have had a successful economy under the Labour Government. The cake is getting bigger and the percentage given to pensioners is also getting bigger. That is before whatever might happen on Wednesday, so part of the Liberal Democrat motion is inaccurate.

I have had some fun listening to the debate today. The hon. Member for Teignbridge (Mr. Nicholls), who is a doughty fighter—a shock trooper for Thatcherism in his time—gave us a history of the link. He said that it would be a good time to consider restoring the earnings link and that, because the Tories' economic legacy was so good, we could now afford it. What a cheek from the party that abolished the link in the first place. That was opportunism from the hon. Gentleman.

The hon. Gentleman did not mention the £8 billion cost of restoring the earnings link and said nothing about how his sums would add up—particularly when the shadow Chancellor has already announced £8 billion in tax cuts. We know that the Tories plan £16 billion worth of cuts from our spending plans, yet the hon. Gentleman proposes to spend another £8 billion. I am not sure how much will end up in the national insurance fund when the Tories are through with it. However, there seems to be a lot of billions floating around for people to spend as they think fit.

This debate has come far too early this week for it to be meaningful. The Government have spent £6.5 billion more on pensioners over this Parliament than would have been spent under Tory spending plans. The key point is that half of that has gone to the poorer pensioners who were in poverty as a result of the Tory legacy. In those 18 years, pensioners' income distribution was stretched. Many pensioners did far better in that period because of occupational pensions and the original SERPS. There was a 64 per cent. increase in real terms in pensioners' incomes but, when we look at the details, we see that the income distribution stretched and that there was a huge increase in pensioner inequality. Given the structure of pensioner incomes that we inherited as a result of the Tories' ideology, we had to address pensioner poverty and the bottom end of income distribution first. This is what we have done with the minimum income guarantee.

There are those who may quibble with the minimum income guarantee, such as my hon. Friend the Member for Newport, West (Mr. Flynn). But I say to them, "Please help pensioners who are eligible for the guarantee to claim it. You can have your own opinion of it but, on average, those who claim successfully are £20 a week better off. Your constituents who are eligible but not claiming will thank you for helping them to make a claim, rather than for rubbishing the system."

Mr. Simon Hughes

Will the Minister give way?

Angela Eagle

No, I do not have long enough. I hope that the hon. Gentleman is helping his pensioners to claim the guarantee.

The key thing this week is the Chancellor's statement on Wednesday. To those who have been making pleas and looking at the structure of expenditure and the Government's record, all I will say is, "Wait for Wednesday to see how we will fulfil our promises to Britain's pensioners."

Question put, That the original words stand part of the Question:—

The House divided: Ayes 38, Noes 280.

Division No. 317]	[7.7 pm
AYES
Allan, Richard	Kennedy, Rt Hon Charles (Ross Skye & Inverness W)
Ballard, Jackie
Beith, Rt Hon A J	Livsey, Richard
Bell, Martin (Tatton)	Llwyd, Elfyn
Brand, Dr Peter	Maclennan, Rt Hon Robert
Breed, Colin	Michie, Mrs Ray (Argyll & Bute)
Burstow, Paul	Moore, Michael
Campbell, Rt Hon Menzies (NE Fife)	Morgan, Alasdair (Galloway)
	Oaten, Mark
Chidgey, David	Öpik, Lembit
Cotter, Brian	Rendel, David
Davey, Edward (Kingston)	Sanders, Adrian
Foster, Don (Bath)	Stunell, Andrew
George, Andrew (St Ives)	Taylor, Matthew (Truro)
Hancock, Mike	Thomas, Simon (Ceredigion)
Harris, Dr Evan	Tonge, Dr Jenny
Harvey, Nick	Tyler, Paul
Heath, David (Somerton & Frome)	Webb, Steve
	Willis, Phil
Hughes, Simon (Southwark N)	Tellers for the Ayes:
Jones, Nigel (Cheltenham)	Mr. Tom Brake and
Keetch, Paul	Sir Robert Smith.

NOES
Adams, Mrs Irene (Paisley N)	Ashton, Joe
Ainger, Nick	Atherton, Ms Candy
Ainsworth, Robert (Cov'try NF)	Atkins, Charlotte
Alexander, Douglas	Austin, John
Allen, Graham	Banks, Tony
Anderson, Donald (Swansea E)	Barnes, Harry
Anderson, Janet (Rossendale)	Barron, Kevin
Armstrong, Rt Hon Ms Hilary	Battle, John

Beard, Nigel	Field, Rt Hon Frank
Beckett, Rt Hon Mrs Margaret	Fisher, Mark
Begg, Miss Anne	Fitzpatrick, Jim
Bell, Stuart (Middlesbrough)	Fitzsimons, Mrs Lorna
Benn, Hilary (Leeds C)	Flint, Caroline
Benton, Joe	Flynn, Paul
Bermingham, Gerald	Follett, Barbara
Berry, Roger	Foster, Michael Jabez (Hastings)
Best, Harold	Foulkes, George
Betts, Clive	Fyfe, Maria
Blackman, Liz	Gapes, Mike
Blizzard, Bob	George, Bruce (Walsall S)
Boateng, Rt Hon Paul	Gerrard, Neil
Bradley, Keith (Withington)	Gibson, Dr Ian
Bradley, Peter (The Wrekin)	Godsiff, Roger
Bradshaw, Ben	Goggins, Paul
Brinton, Mrs Helen	Golding, Mrs Llin
Browne, Desmond	Gordon, Mrs Eileen
Burden, Richard	Griffiths, Jane (Reading E)
Burgon, Colin	Griffiths, Win (Bridgend)
Butler, Mrs Christine	Grocott, Bruce
Butterfill, John	Grogan, John
Campbell, Alan (Tynemouth)	Hain, Peter
Campbell, Mrs Anne (C'bridge)	Hall, Mike (Weaver Vale)
Campbell, Ronnie (Blyth V)	Hall, Patrick (Bedford)
Campbell-Savours, Dale	Hanson, David
Casale, Roger	Healey, John
Caton, Martin	Henderson, Doug (Newcastle N)
Cawsey, Ian	Henderson, Ivan (Harwich)
Chaytor, David	Heppell, John
Clapham, Michael	Hill, Keith
Clark, Rt Hon Dr David (S Shields)	Hodge, Ms Margaret
Clark, Paul (Gillingham)	Hope, Phil
Clarke, Eric (Midlothian)	Hopkins, Kelvin
Clarke, Rt Hon Tom (Coatbridge)	Howarth, George(Knowsley N)
Clarke, Tony (Northampton S)	Howells, Dr Kim
Clwyd, Ann	Hoyle, Lindsay
Coffey, Ms Ann	Hughes, Ms Beverley (Stretford)
Coleman, Iain	Hughes, Kevin (Doncaster N)
Connarty, Michael	Humble, Mrs Joan
Cook, Frank (Stockton N)	Hurst, Alan
Cook, Rt Hon Robin (Livingston)	Hutton, John
Cooper, Yvette	Iddon, Dr Brian
Corbett, Robin	Illsley, Eric
Corbyn, Jeremy	Jackson, Ms Glenda (Hampstead)
Corston, Jean	Jackson, Helen (Hillsborough)
Cousins, Jim	Jenkins, Brian
Cranston, Ross	Johnson, Alan (Hull W & Hessle)
Cryer, Mrs Ann (Keighley)	Jones, Rt Hon Barry (Alyn)
Cryer, John (Hornchurch)	Jones, Mrs Fiona (Newark)
Cummings, John	Jones, Helen (Warrington N)
Cunningham, Rt Hon Dr Jack (Copeland)	Jones, Dr Lynne (Selly Oak)
	Jones, Martyn (Clwyd S)
Cunningham, Jim (Cov'try S)	Kaufman, Rt Hon Gerald
Dalyell, Tam	Keeble, Ms Sally
Darling, Rt Hon Alistair	Keen, Alan (Feltham & Heston)
Davey, Valerie (Bristol W)	Keen, Ann (Brentford & Isleworth)
Davidson, Ian	Kemp, Fraser
Davies, Rt Hon Denzil (Llanelli)	Khabra, Piara S
Davies, Geraint (Croydon C)	King, Ms Oona (Bethnal Green)
Davis, Rt Hon Terry (B'ham Hodge H)	Kingham, Ms Tess
	Ladyman, Dr Stephen
Dean, Mrs Janet	Lammy, David
Denham, John	Lawrence, Mrs Jackie
Dobson, Rt Hon Frank	Laxton, Bob
Doran, Frank	Lepper, David
Dowd, Jim	Leslie, Christopher
Drew, David	Levitt, Tom
Dunwoody, Mrs Gwyneth	Liddell, Rt Hon Mrs Helen
Eagle, Angela (Wallasey)	Linton, Martin
Eagle, Maria (L'pool Garston)	Lloyd, Tony(Manchester C)
Edwards, Huw	Love, Andrew
Efford, Clive	McAvoy, Thomas
Ellman, Mrs Louise	McCabe, Steve
Ennis, Jeff	McCafferty, Ms Chris
Etherington, Bill	McDonagh, Siobhain

Macdonald, Calum	Salter, Martin
McDonnell, John	Sarwar, Mohammad
McIsaac, Shona	Savidge, Malcolm
MacShane, Denis	Sawford, Phil
McWalter, Tony	Sedgemore, Brian
McWilliam, John	Shaw, Jonathan
Mahon, Mrs Alice	Sheerman, Barry
Mallaber, Judy	Sheldon, Rt Hon Robert
Marsden, Gordon (Blackpool S)	Short, Rt Hon Clare
Marshall, David (Shettleston)	Skinner, Dennis
Marshall, Jim (Leicester S)	Smith, Rt Hon Andrew (Oxford E)
Marshall-Andrews, Robert	Smith, Angela (Basildon)
Maxton, John	Smith, Jacqui (Redditch)
Meale, Alan	Smith, John (Glamorgan)
Michael, Rt Hon Alun	Smith, Llew (Blaenau Gwent)
Michie, Bill (Shef'ld Heeley)	Soley, Clive
Mitchell, Austin	Southworth, Ms Helen
Moffatt, Laura	Squire, Ms Rachel
Moonie, Dr Lewis	Starkey, Dr Phyllis
Moran, Ms Margaret	Steinberg, Gerry
Morgan, Ms Julie	Stevenson, George
Morley, Elliot	Stewart, David (Inverness E)
Morris, Rt Hon Sir John (Aberavon)	Stewart, Ian (Eccles)
	Strang, Rt Hon Dr Gavin
Mountford, Kali	Straw, Rt Hon Jack
Mullin, Chris	Stuart, Ms Gisela
Murphy, Denis (Wansbeck)	Sutcliffe, Gerry
Murphy, Jim (Eastwood)	Taylor, Rt Hon Mrs Ann (Dewsbury)
Naysmith, Dr Doug
Norris, Dan	Temple-Morris, Peter
O'Brien, Bill (Normanton)	Thomas, Gareth R (Harrow W)
O'Brien, Mike (N Warks)	Timms, Stephen
O'Hara, Eddie	Tipping, Paddy
Olner, Bill	Trickett, Jon
O'Neill, Martin	Truswell, Paul
Organ, Mrs Diana	Turner, Dr Desmond
Osborne, Ms Sandra	Twigg, Derek (Halton)
Palmer, Dr Nick	Twigg, Stephen (Enfield)
Pearson, Ian	Tynan, Bill
Pendry, Tom	Vis, Dr Rudi
Pickthall, Colin	Ward, Ms Claire
Pike, Peter L	Wareing, Robert N
Plaskitt, James	White, Brian
Pollard, Kerry	Whitehead, Dr Alan
Pound, Stephen	Wicks, Malcolm
Powell, Sir Raymond	Williams, Rt Hon Alan (Swansea W)
Prentice, Ms Bridget (Lewisham E)
Prosser, Gwyn	Williams, Alan W (E Carmarthen)
Quin, Rt Hon Ms Joyce	Williams, Mrs Betty (Conwy)
Rammell, Bill	Winnick, David
Rapson, Syd	Winterton, Ms Rosie (Doncaster C)
Robinson, Geoffrey (Cov'try NW)	Wood, Mike
Roche, Mrs Barbara	Woodward, Shaun
Rogers, Allan	Worthington, Tony
Rooker, Rt Hon Jeff	Wright, Anthony D (Gt Yarmouth)
Rooney, Terry	Wright, Tony (Cannock)
Ross, Ernie (Dundee W)	Wyatt, Derek
Rowlands, Ted
Ruane, Chris	Tellers for the Noes:
Ruddock, Joan	Mr. Don Touhig and
Russell, Ms Christine (Chester)	Mr. David Jamieson.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—

The House divided: Ayes 266, Noes 81.

Division No. 318]	[7.22 pm
AYES
Adams, Mrs Irene (Paisley N)	Allen, Graham
Ainger, Nick	Anderson, Donald (Swansea E)
Ainsworth, Robert (Cov'try NE)	Anderson, Janet (Rossendale)
Alexander, Douglas	Armstrong, Rt Hon Ms Hilary

Ashton, Joe	Fitzpatrick, Jim
Atherton, Ms Candy	Fitzsimons, Mrs Lorna
Atkins, Charlotte	Flint, Caroline
Austin, John	Flynn, Paul
Banks, Tony	Follett, Barbara
Barnes, Harry	Foster, Michael Jabez (Hastings)
Barron, Kevin	Foulkes, George
Battle, John	Fyfe, Maria
Beard, Nigel	Gapes, Mike
Beckett, Rt Hon Mrs Margaret	George, Bruce (Walsall S)
Begg, Miss Anne	Gerrard, Neil
Bell, Stuart (Middlesbrough)	Gibson, Dr Ian
Benn, Hilary (Leeds C)	Goggins, Paul
Benton, Joe	Golding, Mrs Llin
Bermingham, Gerald	Gordon, Mrs Eileen
Berry, Roger	Griffiths, Jane (Reading E)
Best, Harold	Griffiths, Win (Bridgend)
Betts, Clive	Grocott, Bruce
Blizzard, Bob	Grogan, John
Bradley, Keith (Withington)	Hain, Peter
Bradley, Peter (The Wrekin)	Hall, Mike (Weaver Vale)
Bradshaw, Ben	Hall, Patrick (Bedford)
Brinton, Mrs Helen	Hanson, David
Browne, Desmond	Healey, John
Burden, Richard	Henderson, Doug (Newcastle N)
Burgon, Colin	Henderson, Ivan (Harwich)
Butler, Mrs Christine	Heppell, John
Campbell, Alan (Tynemouth)	Hill, Keith
Campbell, Mrs Anne (C'bridge)	Hodge, Ms Margaret
Campbell, Ronnie (Blyth V)	Hope, Phil
Campbell-Savours, Dale	Hopkins, Kelvin
Casale, Roger	Howarth, George (Knowsley N)
Caton, Martin	Howells, Dr Kim
Cawsey, Ian	Hoyle, Lindsay
Chaytor, David	Hughes, Ms Beverley (Stretford)
Clapham, Michael	Hughes, Kevin (Doncaster N)
Clark, Rt Hon Dr David (S Shields)	Hurst, Alan
Clark, Paul (Gillingham)	Hutton, John
Clarke, Eric (Midlothian)	Iddon, Dr Brian
Clarke, Rt Hon Tom (Coatbridge)	Illsley, Eric
Clarke, Tony (Northampton S)	Jackson, Helen (Hillsborough)
Clwyd, Ann	Jenkins, Brian
Coleman, Iain	Johnson, Alan (Hull W & Hessle)
Connarty, Michael	Jones, Rt Hon Barry (Alyn)
Cook, Frank (Stockton N)	Jones, Mrs Fiona (Newark)
Cook, Rt Hon Robin (Livingston)	Jones, Helen (Warrington N)
Cooper, Yvette	Jones, Martyn (Clwyd S)
Corbett, Robin	Kaufman, Rt Hon Gerald
Corbyn, Jeremy	Keeble, Ms Sally
Corston, Jean	Keen, Alan (Feltham & Heston)
Cranston, Ross	Keen, Ann (Brentford & Isleworth)
Cryer, Mrs Ann (Keighley)	Kemp, Fraser
Cryer, John (Hornchurch)	Khabra, Piara S
Cummings, John	King, Ms Oona (Bethnal Green)
Cunningham, Jim (Cov'try S)	Kingham, Ms Tess
Dalyell, Tam	Ladyman, Dr Stephen
Davey, Valerie (Bristol W)	Lammy, David
Davidson, Ian	Lawrence, Mrs Jackie
Davies, Rt Hon Denzil (Llanelli)	Laxton, Bob
Davies, Geraint (Croydon C)	Lepper, David
Davis, Rt Hon Terry (B'ham Hodge H)	Leslie, Christopher
	Levitt, Tom
Dean, Mrs Janet	Lewis, Terry (Worsley)
Denham, John	Liddell, Rt Hon Mrs Helen
Dobson, Rt Hon Frank	Linton, Martin
Doran, Frank	Lloyd, Tony (Manchester C)
Dowd, Jim	Love, Andrew
Drew, David	McAvoy, Thomas
Eagle, Angela (Wallasey)	McCabe, Steve
Eagle, Maria (L'pool Garston)	McCafferty, Ms Chris
Edwards, Huw	McDonagh, Siobhain
Efford, Clive	Macdonald, Calum
Ellman, Mrs Louise	McDonnell, John
Ennis, Jeff	McIsaac, Shona
Etherington, Bill	MacShane, Denis
Fisher, Mark	McWalter, Tony

McWilliam, John	Sawford, Phil
Mahon, Mrs Alice	Sedgemore, Brian
Mallaber, Judy	Shaw, Jonathan
Marsden, Gordon (Blackpool S)	Sheerman, Barry
Marshall, David (Shettleston)	Sheldon, Rt Hon Robert
Marshall, Jim (Leicester S)	Skinner, Dennis
Marshall-Andrews, Robert	Smith, Rt Hon Andrew (Oxford E)
Maxton, John
Meale, Alan	Smith, Angela (Basildon)
Michael, Rt Hon Alun	Smith, Jacqui (Redditch)
Michie, Bill (Shef'ld Heeley)	Smith, John (Glamorgan)
Moffatt, Laura	Smith, Llew (Blaenau Gwent)
Moonie, Dr Lewis	Soley, Clive
Moran, Ms Margaret	Southworth, Ms Helen
Morgan, Ms Julie (Cardiff N)	Squire, Ms Rachel
Morley, Elliot	Starkey, Dr Phyllis
Morris, Rt Hon Sir John (Aberavon)	Steinberg, Gerry
	Stevenson, George
Mountford, Kali	Stewart, David (Inverness E)
Mullin, Chris	Stewart, Ian (Eccles)
Murphy, Denis (Wansbeck)	Strang, Rt Hon Dr Gavin
Murphy, Jim (Eastwood)	Straw, Rt Hon Jack
Naysmith, Dr Doug Norris, Dan	Stuart, Ms Gisela Sutcliffe, Gerry
O'Brien, Bill (Normanton)	Taylor, Rt Hon Mrs Ann (Dewsbury)
O'Brien, Mike (N Warks)
O'Hara, Eddie	Temple-Morris, Peter
Olner Bill	Thomas, Gareth R (Harrow W)
Organ, Mrs Diana	Timms, Stephen
Osborne, Ms Sandra	Tipping, Paddy
Palmer Dr Nick	Trickett, Jon
Pearson, Ian	Turner, Dr Desmond (Kemptown)
Pendry, Tom	Twigg, Derek (Halton)
Pickthall, Colin	Twigg, Stephen (Enfield)
Pike, Peter L	Tynan, Bill
Plaskitt, James	Vis, Dr Rudi
Pollard, Kerry	Ward, Ms Claire
Pound, Stephen	Wareing, Robert N
Powell, Sir Raymond	White, Brian
Prentice, Ms Bridget (Lewisham E)	Whitehead, Dr Alan
Prosser, Gwyn	Wicks, Malcolm
Quin, Rt Hon Ms Joyce	Williams, Rt Hon Alan (Swansea W)
Radice, Rt Hon Giles
Rammell, Bill	Williams, Alan W (E Carmarthen)
Rapson, Syd	Williams, Mrs Betty (Conwy)
Robinson, Geoffrey (Cov'try NW)	Winnick, David
Roche, Mrs Barbara	Winterton, Ms Rosie (Doncaster C)
Rogers, Allan	Wood, Mike
Rooker, Rt Hon Jeff	Woodward, Shaun
Ross, Ernie (Dundee W)	Worthington, Tony
Rowlands, Ted	Wright, Anthony D (Gt Yarmouth)
Ruane, Chris	Wright, Tony (Cannock)
Ruddock, Joan	Wyatt, Derek
Russell, Ms Christine (Chester)
Salter, Martin	Tellers for the Ayes:
Sarwar, Mohammad	Mr. Don Touhig and
Savidge, Malcolm	Mr. David Jamieson.

NOES
Allan, Richard	Chapman, Sir Sydney (Chipping Barnet)
Amess, David
Arbuthnot, Rt Hon James	Chidgey, David
Ballard, Jackie	Chope, Christopher
Beith, Rt Hon A J	Clappison, James
Bell, Martin (Tatton)	Clarke, Rt Hon Kenneth (Rushcliffe)
Bercow, John
Brady, Graham	Clifton-Brown, Geoffrey
Brake, Tom	Collins, Tim
Brand, Dr Peter	Cotter, Brian
Breed, Colin	Cran, James
Browning, Mrs Angela	Davey, Edward (Kingston)
Burns, Simon	Davis, Rt Hon David (Haltemprice)
Butterfill, John	Day, Stephen
Campbell, Rt Hon Menzies (NE Fife)	Fabricant, Michael
	Foster, Don (Bath)

Fowler, Rt Hon Sir Norman	Morgan, Alasdair (Galloway)
Gale, Roger	Nicholls, Patrick
George, Andrew (St Ives)	Oaten, Mark
Gill, Christopher	Öpik, Lembit
Gray, James	Paice, James
Hancock, Mike	Rendel, David
Harris, Dr Evan	Robertson, Laurence
Harvey, Nick	St Aubyn, Nick
Heath, David (Somerton & Frome)	Sanders, Adrian
Howarth, Gerald (Aldershot)	Smith, Sir Robert (W Ab'd'ns)
Hughes, Simon (Southwark N)	Spicer, Sir Michael
Jones, Nigel (Cheltenham)	Stunell, Andrew
Keetch, Paul	Swayne, Desmond
Kennedy, Rt Hon Charles (Ross Skye & Inverness W)	Syms, Robert
	Taylor, John M (Solihull)
Laing, Mrs Eleanor	Taylor, Matthew (Truro)
Lait, Mrs Jacqui	Taylor, Sir Teddy
Lansley, Andrew	Thomas, Simon (Ceredigion)
Lewis, Dr Julian (New Forest E)	Tonge, Dr Jenny
Lidington, David	Tyler, Paul
Lilley, Rt Hon Peter	Webb, Steve
Livsey, Richard	Wells, Bowen
Llwyd, Elfyn	Whittingdale, John
McIntosh, Miss Anne	Willis, Phil
McLoughlin, Patrick	Winterton, Mrs Ann (Congleton)
Major, Rt Hon John	Tellers for the Noes:
Michie, Mrs Ray (Argyll & Bute)	Mr. Peter Atkinson and
Moore, Michael	Mr. John Randall.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Question accordingly agreed to.

Resolved, That this House endorses the Government's approach to pensions and other policies for pensioners; notes that the Government has already committed £6½ billion more to pensioner benefits during this Parliament than was planned by the Conservatives, while ensuring that this additional expenditure is funded prudently and consistently with the Government's fiscal rules; strongly agrees with the Government that the basic state pension should be retained as the foundation of pension provision, and that most should be done for those pensioners who need most help through the Minimum Income Guarantee; supports the additional help for pensioner households, including winter fuel payments, which now gives them the equivalent of a further £3 a week and free TV licences for the over 75s, which were introduced from 1st November 2000; also supports the wide range of other measures taken by the Government for pensioners, the record investment in the National Health Service, free eye tests, help with home insulation and concessionary public transport fares and reductions in income taxation; and further agrees with the Government that the next priority should be to help pensioners with moderate savings and small occupational pensions to ensure that their thrift is rewarded and that they are able to share in the rising prosperity of the nation.