HL Deb 10 May 1984 vol 451 cc1009-11

3.13 p.m.

Lord Stallard

My Lords I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows: To ask Her Majesty's Government at what level the retirement pension would have stood today if it had been up-rated in line with earnings or prices, whichever has been greater, since 1979.

Baroness Trumpington

My Lords, if the retirement pension had been increased in line with prices or average earnings, whichever was the greater, since November 1979, the rate as at November 1983 would be £35.90 for a single person and £57.45 for a married couple.

Lord Stallard

My Lords, I thank the noble Baroness for that reply. Does she recall that last week we were told that the death grant, if it were increased in line with inflation, would be £165 instead of £30? We know from a previous reply that the changes in the age allowance meant that a married couple lost £81 a year in income tax. From a reply given yesterday I learnt that the earnings limit, to keep in line with inflation, should now be £74 instead of £65. Now the noble Baroness tells me that the pension itself should be £57.45 instead of £54. Does it not almost amount to a vendetta against the elderly?

Baroness Trumpington

My Lords, I did not say that it "should be", I said that it "would be". The Government are pledged to maintain the value of retirement pensions and associated long-term benefits, and that has been achieved. Between November 1978 and November 1983, prices rose by 68–8 per cent. while pensions rose by 74–6 per cent.

Lord Hatch of Lusby

My Lords, will the noble Baroness tell the House what was the increase in the retirement pension at its last pegging last May or June, and at the same time what was the inflation rate during the comparable period?

Baroness Trumpington

My Lords, not without notice.

Baroness Gardner of Parkes

My Lords, can my noble friend confirm that she is speaking simply about the basic pension and that for those in need there are considerable additional supplementary benefits and also considerable assistance in the form, for example, of National Health treatment and so on?

Baroness Trumpington

My Lords, I am most grateful to my noble friend for her question. As my noble friend will know, there is help with heating costs, which in 1983–84 reached a record level. There is assistance as regards the insulation of hot water tanks. The full implementation of housing benefit from April 1983 benefited over 1 million pensioners with incomes marginally above supplementary pension levels. There are many other points that I could bring to the notice of your Lordships.

Lord Banks

My Lords, if pensions have increased by less than the increase in earnings, as the figures given by the noble Baroness have made clear, does it not mean that pensioners are now receiving a lower percentage of the total paid out in earnings and pensions than they were in 1979?

Baroness Trumpington

My Lords, the Government have maintained the purchasing power, which is the most important thing from the pensioner's point of view, and they have promised to do better as the economic situation improves.

Lord Hatch of Lusby

My Lords, would the noble Baroness accept from me that the increase in pensions over the past year from the last time that they were pegged was less than the increase in the inflation rate during that comparable period? If that is so, how does the noble Baroness justify her claim that the Government have maintained the purchasing power of the pension?

Baroness Trumpington

My Lords, I have just given the figure of 68.8 per cent. for price rises and 74.6 per cent. for pension increases. I should have thought that that was clear even to the noble Lord.

Baroness Jeger

My Lords, is the noble Minister aware that the linking of pensions to the retail price index rather distorts the budget of most old-age pensions because many of the items that come into the retail price index are not particularly relevant to elderly people? Can the noble Baroness say whether the Government are giving any consideration to this point? While old-age pensioners are linked to an index which includes gin and fur coats we shall not get a very realistic idea.

Baroness Trumpington

My Lords, the retail price index is used because it has been shown time after time to be the most reliable and comprehensive measure of price movements as they affect the generality of households. Other indices have been considered, but all have limitations. Of course, the major part of the retail price index concerns the price of food.

Lord Kaldor

My Lords, will the Government give any consideration to using the family earnings or salary to construct a special cost of living index applicable to pensioners? The answer may turn out to be to the Government's advantage.

Baroness Trumpington

My Lords, I hope that I have understood the noble Lord. The Government's commitment to the interests of pensioners has been demonstrated over and over again, and indeed a special inquiry into the provision for retirement has been set up and is being chaired by my right honourable friend the Secretary of State.

Lord Stallard

My Lords, does the noble Baroness accept the conclusions reached by both the Social Security Advisory Committee and the Government Actuary that, unless pensioners receive an increase above the rate of inflation, they will start to lag behind the rest of the population?

Baroness Trumpington

My Lords, as I have already said, the most important aspect for pensioners is that their pensions remain above the price of goods.

Lord Diamond

My Lords, does the noble Baroness share the view that the best definition of poverty is that as perceived by people on the lowest level of incomes; namely, that they should share proportionately in the same increase in the standard of living as the rest of the population, and if they fall behind that, then their sense of poverty is increased? Therefore, is it not the deliberate policy of the Government at the present time to increase the perception of poverty?

Baroness Trumpington

No, my Lords.

Lord Morris

My Lords, is my noble friend aware that that definition of poverty is quite the longest that I, at least, have ever heard in my life?