HL Deb 12 December 1989 vol 513 cc1207-8

2.39 p.m.

Lord Rodney asked Her Majesty's Government:

How many pensioners they expect to benefit in the first year from the abolition of the pensioners' earnings rule.

The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)

My Lords, approximately 400,000 existing pensioners immediately stood to benefit when the retirement pension earnings related rule was abolished on 1st October. This includes pensioners who had deferred their entitlement and continued working; those whose entitlement was reduced by earnings over £75 per week and those with earnings of less than £75 per week.

Lord Rodney

My Lords, I thank the Minister for that reply. Can he tell the House what steps the Government are taking to make old age pensioners and people who could benefit from those changes aware of the new conditions?

Lord Henley

My Lords, since 25th April all prospective pensioners have been advised of the intended abolition of the earnings rule. In addition, in June we wrote to some 400,000 people whom we believed might be affected. Of those, 275,000 responded and were sent claim packs. Since then 100,000 claims have been received and we expect further claims to come in.

Lord Carter

My Lords, while I congratulate the Government on the abolition of the earnings rule—something which we warmly welcome from this side of the House—the pensioners who benefit will be liable to tax. Can the Minister tell the House whether the Government propose any action to correct the situation whereby pensioners who pay tax are worse off compared to other taxpayers since 1984? Will the Government restore the situation which existed before 1984 so that pensioners who pay tax have the same relationship to other taxpayers which existed at that time?

Lord Henley

My Lords, I thank the noble Lord for his welcome of the abolition of the earnings rule. My understanding is that, as before, pensions would continue to be taxable. The noble Lord will have to wait for the Budget for any changes to the position of taxation of pensioners.

Lord Carter

My Lords, I do not believe that the noble Lord understands my question. The differential in favour of the tax paying pensioner was of the order of 34 per cent. compared to other pensioners, and is now only 24 per cent. It has gone down by a third in the past five years.

Lord Henley

My Lords, I fail to see what is the differential between the pensioner and non-pensioner.

Lord Carter

My Lords, perhaps the noble Lord will write to me, as I do not think he has understood my question.

The Viscount of Oxfuird

My Lords, can my noble friend tell us how much this will cost the Government in its first year of operation?

Lord Henley

My Lords, the estimated total public expenditure for 1989–90 will be £205 million, and for 1990–91 it will be £375 million.