HC Deb 13 January 2003 vol 397 cc400-2
10. Andrew Selous (South-West Bedfordshire)

What level of savings fund is necessary for a person not to qualify for the minimum income guarantee. [89709]

The Minister for Pensions (Mr. Ian McCartney)

The level of pension savings needed for a person not to qualify for the minimum income guarantee will depend on the level of entitlement to state pension benefits that has been built up over individuals' working lives. The introduction of the pension credit ends the unfair, absolute penalty on savings, thus encouraging people to provide for their own retirement. The existing capital cliff edge will disappear, so those with savings of more than £12,000 will no longer be automatically excluded from help.

Andrew Selous

Is the Minister aware that a pensioner couple in receipt of both housing benefit and council tax benefit need a fund of £142,000 in order not to be subject to means-tested benefits? Does he not agree that letting pensioners keep 100 per cent. of their savings and giving them a higher basic state pension as of right would be the most effective ways to assist saving among the poorest of the population?

Mr. McCartney

I wonder how the hon. Gentleman squares that view with the intention, expressed by Opposition Front Benchers, of cutting public expenditure by 20 per cent., some of which would fall on the poorest pensioners. His party is against the minimum income guarantee, the pension credit and winter fuel payments. The fact is that this is the first Government in history, through the pension credit, to give people the incentive to save—unlike the previous Conservative Government, who imposed a 100 per cent. marginal tax rate on savings, thus forcing many pensioners into poverty.

Mr. George Mudie (Leeds, East)

Can the Minister confirm that since 1997, the minimum income guarantee has led to a real-terms increase in the pensions of the poorest pensioners of 37 per cent., taken 1.1 million pensioners out of absolute poverty, and provided an average additional sum of £30 per week for the poorest pensioners? However, can he also confirm that this is the same MIG as the Leader of the Opposition described as having nothing to recommend it?

Mr. Speaker

Order. That was two questions: the Minister should answer the first one, not the second.

Mr. McCartney

That was always my intention, Mr. Speaker—although perhaps I should ask my hon. Friend to repeat it, as I cannot remember it.[Laughter.] He is absolutely right, and perhaps the most important point to make is that, hopefully, hon. Members on both sides of the House will come together from April of this year and adopt a bipartisan approach to securing the successful implementation of the pension credit. It will provide more than £2 billion in the way of additional income for the poorest pensioners and, for the first time, for those who suffered under the previous Conservative Government, when they saved a little and lost a lot.

Mr. Peter Lilley (Hitchin and Harpenden)

Can the Minister confirm that under the pension credit, which will affect the majority of pensioners, any pensioner will keep only 60p of every extra pound of pension income that they save?

Mr. McCartney

When the right hon. Gentleman was Secretary of State., pensioners got nothing: for every pound saved, they lost a pound. He gave with one hand, and took with the other.

Mr. Lilley

indicated dissent.

Mr. McCartney

Perhaps I should start again. The right hon. Gentleman owes this House and our country an apology for the way he managed this Department as Secretary of State. He introduced rules that meant that for every pound a pensioner saved, their entitlement was reduced by a further pound. The pension credit has at last put right the mistakes that he made.