HC Deb 10 May 2001 vol 368 cc252-4
5. Mr. John Bercow (Buckingham)

What plans he has to review the taxation of pensioners. [159878]

The Chief Secretary to the Treasury (Mr. Andrew Smith)

As a result of our policies, seven out of 10 pensioners pay no tax or pay tax only at the l0p rate. As my right hon. Friend the Chancellor said, following our personal tax and benefit changes, pensioner households will be £600 a year better off on average since 1997.

Mr. Bercow

Given that the savings ratio has fallen to its lowest level since 1963, that millions of pensioners face billions of pounds worth of extra taxes, and that half of all pensioners are get to be on means-tested benefits by 2003, why does the right hon. Gentleman not increase the age-related personal allowance by £2,000 and take 1 million pensioners out of tax altogether? Those are Conservative policies to help people who work hard, who save hard, who try to be independent of the state and who believe in this country.

Mr. Smith

We are helping all pensioners with the increase in the basic state pension and the introduction of the minimum income guarantee, giving greatest help to the poorest pensioners. We introduced the winter allowance, which Conservative Members opposed and would abolish. We will not adopt their proposals because they would do nothing to help the majority of pensioners. The distribution effects show that more than 90 per cent. of the benefit goes to the richest third of pensioners in the country, confirming 3et again that the Conservatives stand for the few whereas we stand for the many.

Mr. Tony Worthington (Clydebank and Milngavie)

The pensioners in my constituency who face the greatest difficulties are those who were badly affected by the scandalous collapse of Chester Street Holdings and who suffer from asbestos. related diseases. As this is the last Treasury Question Time before the election, does my right hon. Friend have any news for those people?

Mr. Smith

I shall be setting out details in a written answer shortly, but I am delighted to confirm to my hon. Friend that we have reached agreement with the insurance industry that the claims of Chester Street victims will be met by the industry using appropriate policyholder protection schemes. I am grateful for the flexibility shown by the insurance industry in helping to cut through what was an extremely complex legal situation. I congratulate my hon. Friend and other hon. Friends on their campaign, which has ended the uncertainty that was hanging over the victims and their families.

Mr. Nicholas Winterton (Macclesfield)

May I do something that is extremely relevant at Question Time? On this occasion, I thank the Minister for that reply to the question from his hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington). I, too, have campaigned with Members on both sides of the House to obtain justice for those who are dying from asbestos-related diseases—in particular, my constituent, Mr. Donald McCreery, who has only a few months to live. The announcement, in the dying hours of this Parliament, will bring great happiness to him and his family. I thank the Minister and the Government for the work that they and Back Benchers have done to bring about justice. Surely, that is what the House is about.

Mr. Smith

I thank the hon. Gentleman for his generous remarks. As he says, there was an all-party commitment to resolve the matter. I am only too pleased that, as he says, in the dying hours of this Parliament we have been able to achieve that security and justice for people suffering from terrible diseases, who, with their families, would otherwise have been left in unendurable anxiety. I am pleased that they can look forward to the compensation to which they are entitled.

Mrs. Anne Campbell (Cambridge)

The 13,240 pensioners in my constituency are extremely grateful for the extra income that they have received under the Labour Government after 18 very hard Tory years. Will my right hon. Friend give wide publicity to his plans for the pensioners tax credit, which will reward those pensioners who have been thrifty and saved hard all their lives?

Mr. Smith

Yes, my hon. Friend can look forward to extensive publicity promoting the benefits of the pensioners tax credit during the coming weeks and, thereafter, along with the other extra help that we have given pensioners, which is ensuring real increases in their living standards and real investment in the services on which they depend.

Mr. Richard Ottaway (Croydon, South)

Does the Minister recognise that pensioners Feel worse off under Labour? They resent the indignities of the means test, and they want to decide for themselves how their pension is invested. In the circumstances, will he support our policy of cutting tax on pensioners, of cutting tax on hard-earned savings and of reforming the annuities rule? In short, is not the best advice that he could give pensioners for the next election: vote Conservative?

Mr. Smith

The hon. Gentleman was cranking up the spending commitments like nothing on earth. However, the truth is that the Conservatives cannot pay for their proposals because they cannot identify the savings on which they claim those proposals depend. Their proposals would leave a black hole in the national insurance fund. As my right hon. Friend the Chancellor pointed out, the shadow Chancellor—when challenged this morning about where he would find the money—could say only that he would talk to financiers, that it might be bonds or that it might be any other system. What it certainly would be is borrowing, which would destabilise the economy, push up interest rates, cut real living standards for everybody and hit pensioners worst of all.

Mr. David Winnick (Walsall, North)

Will my right hon. Friend give a commitment today that the winter fuel allowance and free television licence for those aged 75 and over will remain tax-free? Can he explain why, before the Government took office, not a single penny was given to pensioners for heating, whereas under the present Government such assistance was given from the beginning?

Mr. Smith

I congratulate my hon. Friend and thank him for the work that he did on the campaign on television licences. The answer to his question is yes, we can guarantee that those will be free of tax and, yes, it is true that when the Conservative party was in government it did nothing to help pensioners in those ways. That summarises clearly the difference between the parties and the choice facing the people in the general election. We are standing up for pensioners' interests, keeping our promises and delivering rising living standards and better services, but all that would be at risk under the Conservatives.