Pension Addition for Over-80s (Hansard, 27 April 1995)

§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)
My Lords, we have no plans to up-rate the 25 pence age addition which is paid to all pensioners from the age of 80. We believe that help should be targeted at pensioners on low incomes, and we have concentrated resources on the higher pensioner premium in income support for those aged 80 or over.

§ Baroness Jeger
My Lords, perhaps I may declare a personal interest because recently I received a letter from the department concerned which gave me the splendid news that on my impending 80th birthday, my retirement pension would increase by 2 pence, which is taxable. In fact, it actually said that it would increase by 25 pence but, having done some research, I found that the value of 25 pence in 1971 is now 2 pence.
Does the noble Lord recall a Written Question which I asked on 13th March? He replied: If the age addition to retirement pension had been increased in line with prices … since its introduction in September 1971 it would currently be payable at a weekly rate … increasing to £1.60".— [Official Report, 13/3/95; col. WA 34.] Surely the Government must agree that that would be an improvement on the present situation. There is a question of principle in this regard. I want the Minister to make clear whether the Government believe that there should be an age differential as regards pension payments. If they believe that that should be abandoned in favour of "targeting", as they call it, perhaps they should tell everybody over the age of 80 that they must manage in future without the 2 pence or on 2 pence, if it stays at that.

§ Lord Mackay of Ardbrecknish
My Lords, I understand that when the noble Baroness reaches the age of 80, which I believe is in November, she will not be able to stand us all a drink in the Bishop's Bar on the basis of the 25 pence per week increase which she will receive. The main point is that we believe—and quite clearly, since 1971, governments of both parties have believed—that it is wiser to target extra resources on those elderly people who actually need them. For that reason, there is the higher pensioner premium for those pensioners who require income support. That is £25.15 per week for a single pensioner and £35.95 per week for couples.

§ Lord Clark of Kempston
My Lords, does my noble friend agree that for tax purposes, the allowance for the 1022 over-80s has been increased time and time again by this Government? In that way, they are helping the lower paid who are aged over 80.

§ Lord Mackay of Ardbrecknish
My Lords, my noble friend is quite right to draw attention to the fact that there are special tax allowances for those aged over 80 who pay tax. Therefore, anybody aged over 80 who pays tax receives a higher personal allowance than someone aged under 80.

§ Lord Stoddart of Swindon
My Lords, does the noble Lord recall that the addition for the over-80s was introduced after an effective campaign led by the late and very much respected Airey Neave? In this 50th anniversary of the end of the last war, in which Mr. Airey Neave played such a significant part, would it not be fitting to honour his part in the war and his life by carrying on his work and increasing that supplement at this time?

§ Lord Mackay of Ardbrecknish
My Lords, I am sure that noble Lords on all sides of the House who remember Airey Neave do so with a great deal of affection, especially those who were his colleagues in the other place. We have had the war argument before and I have already had to give away £40 million on that one.
I return to the point which I made that if one is to use properly the resources which the taxpayer provides, it is fair and proper that they are used in a targeted way. That is why we have decided—and quite clearly the party opposite did so when it was in government—that the best way to do that is through pensioner premiums for those pensioners who receive income support.

§ Lord Marsh
My Lords, I am sure that most people will agree with the policy of targeting those benefits. But the inescapable logic is to stop paying those sums of money which are of no value to anybody. It is far better that those sums should be directed towards the targeting.

§ Lord Mackay of Ardbrecknish
My Lords, as the total sum of money is £30 million, the noble Lord makes a valid point. However, I should say to him that it is a brave man or woman who would suggest to the House that the 25 pence should be removed, even though the noble Baroness, Lady Jeger, does not think that it is worth very much.

§ Lord Boardman
My Lords, does my noble friend recall that it was the Labour Party, whose members wish to increase those payments, which abolished the Christmas bonus when in government?

§ Lord Mackay of Ardbrecknish
My Lords, my noble friend makes a good point; indeed, the Labour Party's record on the matter is not all that terrific. Of course, anyone who listened carefully to my answer, in which I said that the 25 pence was from 1971 onwards, will realise that when the party opposite was in government, it came to the same sort of decisions to which we have come since 1979.

§ Lord Monkswell
My Lords, can the Minister advise the House of the administrative costs incurred in making such payments—in other words, of effectively notifying people that the payments will be coming and making the administrative changes as regards the payment itself? It 1023 does not seem to be a terribly sensible way of going about it to spend so much on administration for such a very small benefit.

§ Lord Mackay of Ardbrecknish
My Lords, I am happy to say that we do not spend very much on the administration of the benefit because it is simply added automatically to the computer-assisted automatic payouts of the total pension to which the pensioner is entitled.

§ Lord Skelmersdale
My Lords, is it not a fact that economic circumstances change over time and that, while the 25 pence, as it now is—or 2 pence in its devalued amount—was a worthwhile payment in 1971, governments over the years have done so much both as regards tax allowances for pensioners and also with the value of the pension itself that it is now no longer worth continuing with the supplement? Therefore, would it not be far better spent, as the noble Lord, Lord Marsh, suggested, on such things as extra disability allowances for pensioners; or, indeed, on any other social security purpose?

§ Lord Mackay of Ardbrecknish
My Lords, I agree with my noble friend. As I mentioned, the cost is £30 million a year. Moreover, to up-rate it to today's value would cost another £160 million a year. If I had £160 million a year extra to spend in the social security field, I might think that there were other priorities. The real increase in the income-related benefits to all pensioners since 1989 is now worth something like £1.2 billion.