Pensioners: Income Sources (Hansard, 28 June 1989)

§ Lord Skelmersdale
My Lords, in 1986, just over 80 per cent. of pensioner tax units were in receipt of income from some source other than state benefits.

§ Baroness Blatch
My Lords, I thank my noble friend for that reply. The percentage was rather higher than I expected. Can my noble friend tell me, given the popular view mainly held by the Benches opposite that the rich are getting richer and the poor are getting poorer, whether the pensioners share in this new-found wealth?

§ Lord Skelmersdale
Yes, my Lords, they share in the new-found wealth. No, it is not true to say of pensioners that they are getting poorer if they happen to be in the lowest quintile. The average equalised net income of pensioners in the lowest fifth of the income distribution increased by 17 per cent. in real terms between 1979 and 1986. In addition, the percentage of pensioners in that lowest quintile fell from 38 per cent. in 1979 to only 24 per cent. in 1986.

§ Baroness Jeger
My Lords, that leaves 20 per cent. of pensioners who do not receive additional payments. As the Conservative manifesto promised to maintain the value of the state retirement pension, are the Government not failing in that promise when the up-rating in April this year was only 5.9 per cent. whereas inflation increased by over 8 per cent.?

§ Lord Skelmersdale
No, my Lords. From November 1978—the occasion of the last Labour 737 Government up-rating—to April 1989 the value of the single pension has increased by 0.4 per cent. in real terms.

§ Lord Stoddart of Swindon
My Lords, will the noble Lord confirm that, had this Government maintained the system used by the previous government of up-rating pensions in line not only with the cost of living but also with the standard of living, the single pensioner would now be receiving a state benefit £8 higher than it is, and that a married couple would receive £12 more?

§ Lord Skelmersdale
My Lords, I know that this matter is of particular interest to the noble Lord, and in this connection I have many times quoted the famous phrase of the noble Lord, Lord Wilson, concerning "the pound in your pocket". It is the number of pounds in your pocket and their purchasing power that matters, not where they come from. Our policy of increasing the basic pension in line with prices and creating a stable economic environment where pensioners' income from other sources can grow to keep their value, resulted in a 23 per cent. real terms increase in pensioners' average total net income between 1979 and 1986. This compares somewhat favourably with the 3 per cent. real terms increase achieved by the last Labour Government.

§ Lord Stoddart of Swindon
My Lords, forgive me for again rising to my feet, but that does not answer my question. Would the single pensioner be £8 per week better off and a married couple £12 per week better off if the Government had not changed the system of up-rating which they inherited from the last Labour Government?

§ Lord Skelmersdale
My Lords, in terms of basic state pension, yes, but in terms of total income to pensioners almost certainly not.

§ Lord Molloy
My Lords, can the noble Lord say whether or not a reply will be sent shortly to the Royal British Legion which has submitted a note to his right honourable friend concerning the pensions of those who were wounded in the last war and which the Legion believes should now be increased?

§ Lord Skelmersdale
My Lords, as the Minister with special responsibility for war pensions—a post of which I am extremely proud—I know that there have been many representations on this matter in the past two years during which I have held this office. I have no doubt that if the representation from the Royal British Legion has not yet been answered it will be very quickly.

§ Baroness Turner of Camden
My Lords, is not the Minister aware that less than half of occupational pensions are up-rated with the cost of living index and that, to the best of my knowledge, none are up-rated in line with the wages index? It could be argued that even occupational pensioners have not shared in the general prosperity as evisaged in the Question put by the noble Baroness.

§ Lord Skelmersdale
My Lords, I do not think that that can be argued, because both the lowest and the highest quintiles have increased over the period I mentioned earlier. Of course, the noble Baroness is right in that different occupational pension schemes use different methods for up-rating their pensions.

§ Lord McCarthy
My Lords, I apologise if I misunderstood the noble Lord. Did he mention an increase of 0.04 per cent. over a 10-year period? That would be an annual increase of 0.004 per cent. Can that be right?

§ Lord Skelmersdale
My Lords, I was defending the Government against the proposition that they had failed to honour their manifesto pledges of maintaining the pension in real terms. Over the past 10 years, the basic state pension has risen in real terms by 0.4 per cent. not by 0.04 per cent.