HL Deb 16 May 2000 vol 613 cc174-6

2.57 p.m.

Lord Islwyn asked Her Majesty's Government:

Whether they propose to review the level of state pensions.

The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham)

My Lords, we shall next be reviewing the level of benefits, including the state retirement pension, in the autumn to take effect from April 2001. Based on the forecast rate of inflation the basic pension will rise by about £2 a week for a single pensioner and by at least £3 a week for a pensioner couple.

Lord Islwyn

My Lords, I remind the Minister that in 1980 the then Conservative government did away with the earnings rule as a method of assessing increases in state pensions. That proved a severe blow to pensioners. For instance, up to the year 1999–2000 a single pensioner would have lost £28.30 on the basic pension and a married couple £42.60. Is it not time that we gave back a bit of dignity to our pensioners? Does my noble friend appreciate that that will not be achieved by means-tested benefits or a measly 75p?

Baroness Hollis of Heigham

My Lords, as my noble friend and noble Lords will know well, the difficulty with the earnings link is that the provision would go to everyone. The Government face the following choice: were the earnings link to be restored, a pensioner couple over 75 would receive about £5 extra a week; if, however, we targeted help through the minimum income guarantee—which is what we are doing—a poorer pensioner couple over 75 would receive £18 a week. That is the choice: £5 for all couples over 75 or £18 for the poorest. Given my beliefs and commitments, I know which measure is most necessary to address the poverty of our older people.

Lord Marsh

My Lords, does the Minister agree that we are dodging the issue? If one wants to consider the poorest people, the interesting figure is the cost of providing state pensions for the higher rate taxpayers—the better off in this country—which is something in the region of £7 billion per year. Meanwhile, we have a situation where the state pension for non-taxpayers is clearly inadequate on any basis. Is it not time that we looked at this fundamental problem, which has existed under both parties for a long time?

Baroness Hollis of Heigham

My Lords, I believe that the implication of the noble Lord's question is that state pensions should be means tested along with MIG. That is not the position of the Government. We are very clear that the state pension should remain a universal pension and a building block for the prosperity of our older people.

Lord Goodhart

My Lords, with the benefit of hindsight, does the noble Baroness agree that, rather than providing a £50 addition to the fuel allowance for all pensioners, it would have been wiser to increase the basic pension by, let us say, £1.25 a week beyond the £75 provided last October?

Baroness Hollis of Heigham

My Lords, it is certainly the case that the winter fuel payment goes to all pensioner households. This autumn it will average £150 year; £3 a week. I am sure your Lordships will accept that the reason the Chancellor went for, so to speak, a hypothecated sum associated with winter fuel is that we know that pensioners need more heat; we know that they spend more time in their homes; we know that their homes are more poorly insulated; and the noble Lord will know from the questions put to me by his noble friend Lord Russell that there are some 30,000 additional winter deaths of pensioners due to hypothermia over the course of the winter. For those under 65, there are 8,000 additional deaths. So pensioners need extra help with their heating. It seems appropriate to target the money in this way, given what we know about pensioner hypothermia.

Baroness Castle of Blackburn

Will the Government give an undertaking that there will be no further cuts in the employers' contribution to the National Insurance Fund until the basic state pension has been brought up to at least the level of the minimum income guarantee?

Baroness Hollis of Heigham

No, my Lords.

Lord Morris of Manchester

My Lords, is my noble friend aware that many of us much appreciate her constant efforts to explain the Government's social policy and to keep us fully informed of its cost and other implications? But, looking beyond Parliament to the reactions of pensioners outside, will she, as opportunity arises, remind her colleagues more directly responsible for deciding the Government's priorities of the instructive subtlety of Oscar Wilde's self-mockery after the first night of one of his plays when he said: My play was a great success but the audience a failure"?

Baroness Hollis of Heigham

My Lords, I accept the reproach of my noble friend that the Government so far have not been able successfully to persuade pensioners of the purpose and effectiveness of the Government's strategy. We know that, as a result of the increase in winter fuel allowance, pensioner families will be receiving an extra £3 a week for those over 75 and an extra £2 a week for their television licences. That £5 is equivalent to the earnings link rise. In addition, the poorest pensioners will receive another £10 to £20 on top. We have not only a good story to tell but a decent and honourable one, which mixes universal and targeted benefits in ways that address real need. I accept the reproach of my noble friend that, if we fail to persuade pensioners of that. we must make sure that our story is communicated more accurately and effectively.

Lord Mackay of Ardbrecknish

My Lords, further to the question of the noble Lord, Lord Goodhart, is there any truth in the rumours being spun in the newspapers recently that Gordon Brown now believes that it was a mistake to increase the winter payment and to introduce free television licences and so on, and that it would have been far better to increase the weekly pension? Is he going to change his mind? Is he going to go for an increase in the weekly pension and abolish these one off payments?

Baroness Hollis of Heigham

My Lords, obviously the noble Lord knows more about the Chancellor's state of mind than I do. Certainly I have no reason either to challenge or accept his assertions today. The Chancellor will determine what he proposes to do in the pre-Budget statement in the autumn.

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