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Mr. Moore : I am trying to finish, as the hon. Gentleman is aware. We have been able to protect the poorest against the impact of change without cash loss and we are using the improved system to direct still further help, flexibly and surely, to where it is most needed. We are doing all that on top of a massive commitment of resources to social security which is higher now, as all hon. Members have acknowledged, than ever before in our history. That is the surest testament to our economic success, based on capitalist principles of market enterprise. Economic success is at the heart of our more generous provision. It is a heart with the strength to care. I urge the House to support the Government's amendment.
Mr. Jack Ashley (Stoke-on-Trent, South) : The difference between the Secretary of State's speech and reality shows that he lives on a different planet. It was unbelievable to hear the right hon. Gentleman make such claims. First, he said that he was trying to be non-political and then he peppered his speech with a series of party political points, not many of which were valid. He also failed to respond to the challenges of my hon. Friend the Member for Livingston (Mr. Cook), in particular the challenge about the 88 per cent. of people who will be better off or no worse off. The Secretary of State fell at that fence. That was his Becher's Brook.
The Secretary of State also made the mistake of claiming that the Tory party will be re-elected because of its policies on social security. That is the last thing that the Tories would be re-elected for. Social security is one of the Government's many Achilles heels. They have failed abysmally.
The truth underlying this debate is that Ministers have deliberately tried to change people's perceptions of social security. To those in desperate need, social security used to be a reassurance that our civilised society would not desert them. That was very important for them. They thought that it would ease their poverty, edge them away from disaster and lend a friendly and dependable hand in times of need. That does not apply any more.
The Government have turned social security into dirty words. They have sullied compassion and scoffed at what they call the "dependency culture". If anything makes me sick, it is the sight of well-heeled politicians complaining
Column 767about the poor. The miserly uprating of a miserable system of benefits is one of the disgraceful aspects of that despicable attitude.
One would expect the Government's aggressive and parsimonious approach to be softened when they dealt with disabled people. However, that does not apply with this Government. Disabled people cannot stand on their own feet and their problems cannot be attributed to lack of will or enterprise. However, they have also become the targets of Government marksmen, the Ministers who are picking off the poor. Those same Ministers are boasting to the country that the Government have a £14 billion Budget surplus.
Disabled people were not included in the social security review. The Secretary of State promised them a review of their own when the Office of Population Censuses and Surveys studies are completed later this year. However, although they were not included in the review, they were greatly affected by the social security changes as no fewer than 75 per cent. of disabled people rely on social security. The Government have boasted of their generous increase in money for disabled people, but individual disabled people are little better off. The main change has been that more disabled people are claiming their benefits. When the Minister makes his grandiose claims, he is misleading the House because individual disabled people are not better off. More disabled people are applying for benefits which they badly need because of the squalor into which they have been plunged by the Government.
The Prime Minister and the Secretary of State claim that there have been significant increases in the mobility allowance. However, increases in petrol and other costs for cars have been even greater. Therefore, that is a bogus claim. The basic fact is that many disabled people have lost out as a direct consequence of Government policies.
When the Secretary of State talks about flexibility, he is talking nonsense. Disabled people have lost flexibility as a result of changes imposed by the Government. They have lost individual help. The most severely disabled people now have to turn to the independent Disabled Living Foundation, which provides handouts, not payments as of right. It is outside the state system. There is no right of appeal. People must accept the decisions that are made. Where else does one have such a system in a civilised society? Moreover, the system receives inadequate publicity.
My hon. Friend the Member for Livingston mentioned transitional payments in his eloquent and splendid speech, and he was right to do so. The Secretary of State was wrong to dismiss worries about transitional payments. Ministers made a clever move when they introduced transitional payments because they promised that there would be no immediate loss of benefit. Some innocent disabled people believed that assurance, which gagged the protests and held back an avalanche of complaints when the changes were first made. It is only now that transitional payments are being understood. Prices are soaring and those on transitional payments have no overall increase in income. There will not be any such increase until income falls to the level that the Government deem appropriate, when it will be much less than it was in the first place. That is the check of the transitional payments. My hon. Friend was right to attack
Column 768that. The scheme is a fundamental error. The real hurt will come later this year. Incomes will be frozen while inflation soars. What kind of Government can hit the disabled in that way while at the same time boasting of their great economic success? The Secretary of State referred to "economic success" at least four times. How can he boast about that and at the same time hit the severely disabled in this way? It is disgraceful.
What hope do disabled people have for the future? They did have hope for the future, but they were told to wait for the completion of the OPCS survey when the Government would respond to their plight--and some plight it is. When people become disabled before retirement, they have a fearful time under the present Government, as Labour Members recognise. They have only a one-in-three chance of getting a job. On average, their income is only half that of an able-bodied person, and that was before the social security changes which the Disability Alliance, accurately quoted by my hon. Friend, estimates has made 1 million disabled people worse off. They are the people we are speaking about today.
When the Minister for Social Security replies, he should tell us what has happened to the long-awaited promised review for disabled people. It is a punctured balloon. In a letter to Ian Bruce, the director general of the Royal National Institute for the Blind, on 27 February 1989, the Minister said :
"However, it would be wrong to assume at this stage that we will proceed to a review on the same lines as the social security reviews in 1984-85 ; that might well delay things unnecessarily. For that reason, I don't see much purpose in our discussing the terms of reference and composition of a review team."
Some letter that.
We do not know what will happen. Disabled people have been waiting for the review, but it may not be a full one. I do not usually make forecasts in the House because they are difficult things to make, but I shall make a forecast now of what will happen. There will be a snappy Civil Service investigation, done by people who are not disabled and have no experience of disabled living. The Minister will make minimal and inexpensive changes. The long-awaited additional costs allowance will not be forthcoming even though the Social Security Advisory Committee, agreeing with all disability organisations, recommended that the first step should be help with additional costs. I am putting down these markers for the Minister to answer tonight. If the review does not confirm my forecast I shall stand up and withdraw it.
I forecast that Government energy will be devoted not to helping all disabled people but to encouraging occupational and private schemes for the better off and the privileged. Will the Minister intervene now and deny that? If he does not, he should do so when he replies.
Contrary to what was said a few moments ago, we shall have a two-tier Britain. That will be the Government's epitaph. They have already achieved that in many areas. The Health Service will be the next immediate target, and a quick Bill on disability will finish off the process before the next election. The message to the people of Britain is : "Do not be disabled if you are also poor, at least while the present Government are in office."
Column 769witnessed a sustained and substantial improvement in the living standards of most pensioners. Sound economic policies and a realistic social policy have been the key to that important change. The essential safeguard for pensioners' living standards will always be a growing economy, able to pay for the services and benefits that the elderly need, coupled with the firm control of inflation to protect pensioners' savings. The policies of the past 10 years have helped pensioners on both counts, spreading greater prosperity to more pensioners than ever before.
Opposition Members are eloquent in their commitment to pensioners but as the history of the Labour Government shows--and as was confirmed last night in the speech on economic policy by the right hon. Member for Islwyn (Mr. Kinnock)--their policies could never deliver the sustained and vigorous growth needed to fulfil all their grandiose pledges. In short, there was plenty of commitment, but no cash.
The present Government, by contrast, are determined to help pensioners and have the policies to do so. Today, Britain spends £23 billion on caring for our elderly people, which is more than is spent on either defence or education. The revival of the British economy has enabled the Government to raise spending on all forms of benefits for the elderly by almost one quarter in real terms since 1979. Despite all the nonsense that we hear from members of the Labour party about Britain lagging behind our European partners, it is instructive to note that the United Kingdom spends 9.6 per cent. of its gross domestic product on care for the elderly--a proportion exceeded in the European community only by France and Denmark. It is not sufficient to measure any Government's record on care for pensioners solely in terms of overall expenditure levels. The system of support for the elderly should also be fair, simple, and easy for claimants to understand. Above all, it should get the help to those who need it most. The social security system which we inherited from the Labour Government-- and which had developed piecemeal over almost half a century--failed on all those counts. The reforms that came into effect last year dramatically simplified and modernised the social security system. The service to the public has improved and both the time taken to process claims and the error rate in assessment of entitlement are down.
It was inevitable and necessary that the reforms would create some net losers. The alternative was to perpetuate many of the manifest weaknesses and inconsistencies of the old system, at huge cost to the taxpayer and to the most needy. No meaningful reform that is affordable, fair and brings extra help to those who need it can make all claimants better off. However, transitional payments ensure that no one loses out in cash terms.
If one accepts the logic of the 1986 reforms, one must also acknowledge that as benefit levels rise transitional relief should disappear. Only a tiny proportion of pensioners--about one in 50--will see no increase in income support levels after yesterday's upratings, due to withdrawal of transitional support. Similarly, more than one in nine claimants in the other groups targeted for extra help by the 1986 reforms--the sick and disabled, lone parents, and couples with children--will receive increases. The vast majority will receive the full uprating. Following last year's reforms, the social security system is providing more help to those who need it most more quickly than ever before. Crucially, it is doing that far more efficiently
Column 770and with far fewer damaging consequences for the rest of the economy now that we have done away with benefit withdrawal rates of more than 100 per cent.
Current preoccupations with the first anniversary of implementation of the reforms should not obscure a remarkable development in the last few years-- the way in which a growing number of pensioners rely only to a limited extent on the state for their pensions and benefits. Thanks to the spread of personal and occupational pensions, savings and home ownership, eight out of 10 pensioners receive income from savings or from their own pensions. Thanks to the revitalisation of the economy and to policies which have reduced inflation to less than one third of the peak that it reached under the Labour Government, pensioners' private incomes have risen well ahead of the growth in earnings. In the seven years to 1986, for example, pensioners' real incomes from savings and occupational pensions rose by a massive 60 per cent. Opposition Members find it difficult to grasp that what matters to pensioners is the growth of their total incomes, as was mentioned by my right hon. Friend the Secretary of State, not merely benefits and the state pension but earnings and income from savings and private pensions. Typically, Labour Members think that all pensioners are totally dependent on the state. In reality, the majority have savings and private pensions, and most pensioners' standard of living is higher than ever.
Mrs. Beckett : Perhaps the hon. Lady did not entirely follow the point made by my hon. Friend the Member for Livingston (Mr. Cook), when he pointed out that Labour, far from being unaware of the increased prosperity of many pensioners as a consequence of occupational schemes and of the state earnings-related pension scheme, actually brought those advantages into being. Under the present Government, they are being cut back so that in a few years pensioners' income growth will be substantially reduced.
Since 1979 pensioners' total incomes have grown twice as fast as those of everyone else and five times faster than under the Labour Government. The modernised and reformed social security system brings more help to pensioners in greatest need. Last November's announcement of an extra £200 million income support will be particularly welcome to those elderly pensioners who never had a chance to participate in personal or occupational schemes or in SERPS.
The Labour party's extravagant and voluble compassion is nothing without policies to deliver sustained economic growth. The Government's record shows that a strong economy benefits everyone. The Labour party would be well advised to take that lesson to heart. 5.27 pm
Mrs. Llin Golding (Newcastle-under-Lyme) : I bring to the attention of the House, and to the Secretary of State especially, the case of a 79- year-old woman who came to my advice bureau the other week. She entered the room very breathless and obviously upset, but with a determined expression on her face. She is one of the many working
Column 771women of north Staffordshire whose lungs have been damaged from breathing the industrial pollution which previously existed in the Potteries.
That lady, who had known her fair share of low pay and hardship, said to me in a quiet, firm voice, "I have come to tell you of the plight of many of the pensioners where I live. They will not come to see you because they no longer believe that the Government will listen to what they have to say, so I have come for them. Many of us received little or no increase in our pension this time. I myself received nothing. Because of my health, I cannot do much housework or my laundry--I have to pay someone to do that, and all the heavy work. Every week I carefully portion out my money into separate piles so that I do not get behind with any of my payments, and so that I do not owe anyone anything, which would be a dreadful thing to do, but I have been finding it very hard to manage and I cannot go on any longer. I used to have four pints of milk a week--now I have two. I used to have two loaves of bread a week--now I have one. For many months I have been unable to afford fresh fruit. Occasionally I buy a tin of fruit, such as apricots, which lasts me a number of days. I was looking forward to an increase in my pension, but I have had no additional money. Please could you go down there and tell them what it is like for many of the pensioners?"
I wrote to the manager of the local Department of Social Security office--a caring man who would help if he could--and received the following reply :
"This lady was in receipt of Supplementary Pension prior to April 1988 and was receiving extra payment for her additional requirements in respect of heating and laundering costs. The Income Support scheme introduced in April 1988 made no provision for payments in respect of additional requirements and to prevent her becoming financially worse off under the new scheme a transitional addition payment was awarded to maintain the weekly allowance at the pre-April 1988 level. The effect of this is that benefit will remain at this level until the transitional payment has been eroded by subsequent increases in benefit rates."
The letter continued that the lady was
"receiving her full legal entitlement by way of benefit" and
"will qualify for the higher rate of pensioner premium when she attains age 80 in August 1989 which will further erode the transitional addition."
That lady will not receive any additional pension or any extra money until her pension reaches £51, but she will continue to have to pay for laundry, cleaning and for people to help her with all the heavy work that she is incapable of doing for herself. She asked me to put her case to Ministers in the belief that they would do what they could to help elderly people like her who suffer from ill health and those who are poor and unable to help themselves. I ask them--please do not fail this lady.
Mr. Robert McCrindle (Brentwood and Ongar) : The first half of the Opposition motion is a red herring. I shall turn my attention to that in an attempt to persuade the House that it is better to judge by actions rather than rhetoric.
However, although I cannot agree with the extravagant language of the second half of the Opposition motion, I shall show more sympathy with the underlying point that the Opposition seek to make. In the process I hope to take
Column 772up the challenge of the hon. Member for Livingston (Mr. Cook) and prove that at least one Conservative Member is influenced considerably more by the plight of pensioner constituents than the threat of Government Whips. I say that with great respect for my hon. Friend the Member for Staffordshire, South-East (Mr. Lightbown). I always look to what a Government have actually done rather than paying undue attention to either the promises that they make for the future or criticising them for their present actions. Although it is correct that, during the last Labour Government, pensions were linked to earnings rather than prices, the hon. Member for Livingston conspicuously overlooked, when addressing this point--which he has addressed many times in this House and outside--the fact that the Labour Government were unable to deliver that promise for three out of the five years during which they were in office. On some occasions that was for reasons outside their control.
Before the Labour party lectures the Government for failing to continue the link with earnings, it should recognise that those of us who listen to what it plans to do--should it ever again be given responsibility for the government of the country--are inclined to reflect that the Labour Government were unable to keep their promise because of their own poor economic stewardship of the country. Rather than concentrate, as some Labour Members seem to do, on the past and what they would do in the future, they should recognise that, since 1979, the Government--who have made no secret of their wish to link pension increases to the level of prices--have carried out that undertaking to the letter.
I freely concede that some Conservative Members would have infinitely preferred it if, during this year when we have a substantial Budget surplus --and recognising that pensioner expenditure tends to be far less inflationary than the expenditure of younger earners, and less is spent on imported goods--we had safely increased the standards of living of pensioners and other beneficiaries. I am disappointed that the Government did not consider that to be an appropriate move.
Let us examine the system which is at the heart of today's debate. It would be extremely difficult for any hon. Member to say that we did not need the reforms represented in the 1988 legislation. It cannot have escaped the attention of hon. Members that, at that time, there were 30 different benefits, myriad conflicting rules and a complex administration which was vastly overdue for reform. I have been at the forefront of those who have welcomed this endeavour to improve the simplicity of the social security scheme and, in the process, to improve targeting so that those in greatest need receive most help.
I warmly welcomed the Government's aim to remove the poverty trap and encourage savings--to which Opposition Members have not paid enough attention--to foster positive attitudes towards employment and--I make no apology for this--to seek to move away from what has come to be known as the dependency culture. We should recognise that we should not continue to expect the state alone to prop us those who are able to earn additional incomes. At one time it may have been accepted as the norm, but that is clearly not so now.
The Government's aims are laudable. I regret that the results do not seem to have equalled the aspirations. I have already endorsed the welcome attempt to streamline the
Column 773benefit structure, and remove the pages of regulations, so that it is more easily understood. I have no hesitation in once again endorsing that attempt.
The Opposition spoil their case by exaggeration. However, it is true that a minority of pensioners who--being no longer entitled to the various additions on matters such as fuel, diet and incontinence, which they had and which no doubt contributed to the complication of the scheme--will find one year later, as the transitional period moves on, that they are in a worse position. That seems to be buying the simplification of the system which I support at too high a cost. Targeting has undoubtedly benefited millions of people. Again, the Opposition spoilt their case by failing to concede that many gained as a result of last year's changes. It is a pity that a much-improved system for many people is reduced in the eyes of the population because there is a minority for whom it is not so.
Targeting is a splendid aim, which I continue to endorse, but it does not appear to be working. The people for whom it is not working are not those who, by most definitions, do not need it to work because they are among the less well off, no matter how that definition is stretched. The fact that there will be no increases or will be net reductions for some and modified increases for others because they are not entitled to the additions that they were able to expect before, or because of the end of the transition period, or because of both, shows that there is a corner of a broadly extremely successful review of social security to which the Government must turn their attention.
I concede that in most cases improvements have been made. I concede the point made by the Secretary of State that in the autumn there will be further advances for those whom I and other hon. Members have represented in previous debates, but there is no question but that a tiny element have not benefited from targeting, which was one of the principal objectives of the reforms. If people who are by no means well off are losing further benefit, targeting is not working across the board in the way that it is to a considerable extent for millions of beneficiaries, on whose behalf we understandably receive few representations.
There is no virtue in being consistent, but I hope that hon. Members will concede that, whatever else, I am at least consistent about the introduction of the requirement to pay 20 per cent. of the community charge. It may be desirable according to the views expressed by some of my hon. Friends, who say that it will involve the community and lead to understanding of what local government costs, but the other side of the ledger is that many who would have benefited as a result of the social security reforms will be tipped back on to the other side of the register. It may be too late to redress that merely by saying that we shall discontinue the 20 per cent. contribution, but this aspect must be taken into account by Ministers as they try to plug gaps.
I am reassured when Ministers remind me that they continue to monitor the position. To their eternal credit, they have monitored the system since 1 April 1988, and as a result of pressures brought by a number of hon. Members they have moved. The capital limit of £6, 000 was increased to £8,000, and an announcement was made recently regarding 16 and 17-year -olds. I hope that the Minister will take this as a sincere representation on behalf of the people whom I represent, but the same could be said of people who live in Labour constituencies. When they
Column 774ask me, "Could you live on this net amount?" the only answer that I can give in all conscience is no. When they ask, "Am I one of the better off, because that would seem to be the reason for my not receiving as much as I did before?", again, I must answer no. The position of beneficiaries has undoubtedly improved as a result of last year's changes, but thousands of people have been adversely affected. As I and other hon. Members were able to persuade the Minister to move on previous anomalies, I hope that we will persuade him that fresh thinking is required. It reflects no credit on an otherwise excellent range of social security reforms if, with inflation rising, people tell me "I am about to receive less in 1989 than I did in 1988." That cannot be right.
Mr. Archy Kirkwood (Roxburgh and Berwickshire) : It is always a pleasure to follow the hon. Member for Brentwood and Ongar (Mr. McCrindle), who has a reputation for independence and thinking out his own thoughts. His speech would repay careful study by Ministers, and I hope that he will receive answers to the questions that he posed.
It will come as no surprise to hon. Members who served on the Committee considering the Social Security Act 1986 that we are in this position today. I welcome the motion, which was ably presented by the hon. Member for Livingston (Mr. Cook), and will recommend that my colleagues vote for it.
The Fowler reviews set themselves an impossible task. It was impossible to simplify matters, which was laudable, and increase targeting, which was also an honourable objective, without incurring any additional cost. It is the main reason for the difficulties being experienced now by hon. Members' constituents.
The Secretary of State for Social Security and the Minister for Social Security are picking up the consequences of the fact that no detailed research was done prior to the Fowler reviews. We regularly have these debates, in which Conservative Members trade statistics and Opposition Members confront them with individual cases. It is a hopeless and frustrating process which gets us nowhere.
Some of the points made by the hon. Member for Brentwood and Ongar were right. Perhaps Opposition Members do exaggerate the number of people experiencing financial difficulty, but that does not detract from the fact that some are indeed suffering very real difficulties. The debate should not proceed further without our placing on record the fact that the basic level of premiums and allowances under the new income support, family credit and housing benefit rules are far too low to allow a normal person a normal standard of living and to play his or her part in the community. It is substantiated by figures produced by the Policy Studies Institute, which show that 2 million pensioners are on income support, 2 million additional pensioners are on housing benefit and 1 million are estimated to be claiming benefits to which they are entitled. That clearly shows that the basic state pension cannot provide for basic needs, and that state of affairs must be addressed. Almost half of the 10 million pensioners are caught in the poverty trap, and the Government have an obligation to do something urgently about that.
Mr. Favell : The hon. Gentleman has put his finger on the dilemma that faces any Government responsible for looking after pensioners who cannot otherwise look after themselves. He said that the basic pension is not adequate for 2 million pensioners on income support. That being so, what is the point in increasing the basic pension for rich people such as Lord Forte or the Prime Minister? Why not concentrate benefit on income support for the poorest pensioners? What is the point of spreading the jam thinly?
Mr. Kirkwood : I do not think the hon. Member understands the difference between the needs of those on contributory state pensions and those who enjoy occupational pensions. I will try to deal with that point later in my speech.
It is incumbent on Opposition Members to resist the temptation to be extravagant about numbers. I want to limit my remarks to the generation of pensioners with us now. They will come to the end of their natural lives between now and the end of the century. There has been a significant change in the rules for providing most income from occupational personal pensions and after the year 2000 when these pensions are the norm we will not have this problem of inadequate pension provision, but the problem will get worse before it gets better. There is no point in going on in abstract terms about total incomes or even average incomes of pensioners ; we have to deal with the 2 million real people suffering real hardship now. That is the question the Government must address today.
As was said earlier, benefits have increased in real terms over the period of this Government by only something like 2 per cent., while earnings have increased by more than 20 per cent. I think that the figures used by the hon. Member for Livingston are right ; they are the ones the Library supplied to me. I am seeking to make a contrast between the increase in pensions and benefits and the increase in earnings, however measured, and the Government cannot deny, whichever figures are used, that there has been a substantial difference between them.
I do not think it is possible to rely only on price protection between now and the end of the century. I understand why the Government should make that pledge, and it is a pledge worth having, but if one applied price protection to the July 1948 pension figure of £1.30, which was the original level at which the pension was set, it would only be something like £18.70 at today's prices for a single person, and the figure of £2.10 in July 1948 would now only be £30.59 for a married couple. Nobody would seek to justify that miserly level of increase over that period of time. Also, the Social Security Advisory Committee says time and again in its reports that the Government cannot simply, between now and the end of the century, hide behind the screen of price protection, because the standard of living of pensioners will inexorably fall further and further behind. That is an absolutely certain consequence of the Government restricting their policy for uprating benefits like pensions merely to price protection.
Transitional protection is presented as an example of generosity by the Government. To me, it is a device to conceal the full extent of the original 1986 cuts. This debate will occur year after year, and it does this House no credit to keep running away from the fundamental problems causing the difficulties. I have warned in previous debates that this day would dawn, and constituents I meet are frequently distraught, furious and feel cheated. What distresses me more than anything else,
Column 776however, is that, after going through these three respective angry phases, they invariably adopt a resigned, subdued attitude, as they realise they must submit themselves to the Gradgrind of continuing poverty for yet another year or even longer.
The poll tax rebate scheme, from a Scottish point of view, is in a state of total chaos. Nobody seems to be able to get answers to questions and all sorts of anomalies are appearing. This is a totally iniquitous, unjustified, damaging and complex new tax, loved by nobody north of the border. If English Tory Members think they have problems with transitional protection, just wait until the poll tax comes into force in England. In future in these debates words of criticism such as those of the hon. Member for Brentwood and Ongar will seem like milk in balm compared with what they will then have to tell Ministers.
Problems are not only restricted to deprived urban areas, but occur in rural areas, too. A series of very disturbing representations was made to me this weekend in Hutton in Berwickshire, an otherwise idyllic part of the world. The hon. Member for East Lothian (Mr. Home Robertson) lives within a stone's throw of there. He will confirm what type of place it is. There were real problems there which caused me substantial concern. Another separate problem is the fact that there is a capital upper limit of £8,000 on the poll tax rebate, and not, as should be since it is a personal charge, a married couple's upper limit of £16,000. This is in my view an absolute disgrace. I anticipate I will have the sympathy and support of the hon. Member for Brentwood and Ongar for my final point. I am worried about the injustice experienced by those with small occupational pensions and other income. For reasons I have explained earlier, nearly half the 10 million pensioners in our country are potentially caught in a poverty trap. Any income over basic benefits is firstly taken into account in reducing their income support and then housing benefit. I have not done a calculation at the current rates, but under the benefit rates in place in November 1988 the first £30 of increased additional income could be reduced to £4 extra in certain circumstances, and I know of cases like that. It seems to me that, where the Inland Revenue has a special scheme enabling people to have the first £20 of income free from tax, it is quite wrong for the DSS to require it to be declared against income support and housing benefit. I put it to the Minister of State that the Department should do something urgently about that. Some earnings should be disregarded over and above those that already are. That would help remove some of the worst problems of the poverty trap faced by some of our worst- off pensioners.
The Government do have a problem. Provision for pensioners between now and the end of the century is inadequate and a matter of real concern, and I hope the Government will take carefully into account what is said in debates like this and try to do something to alleviate problems caused by the whole transitional mechanism before it hits us again in the same disastrous way next year.
Mr. Simon Burns (Chelmsford) : I do not know how familiar you are with contemporary rock music, Mr. Deputy Speaker, but it may not have escaped your notice that a new rock song has been going around recently,
Column 777reviving a flagging theme, the red rose. Sadly, it will not get to No. 10. However, I have been struck by some of the lyrics in that song, saying
"To help each other every day,
Remove injustice on the way".
Perhaps those lyrics are somewhat trite but, taken in isolation, no reasonable person can dispute the basic sentiments expressed. However, if these lyrics are a declaration of intent of any Labour party which might seek office at some distant time, and if they are taken in the context of today's motion by the official Opposition and the past record of the Labour Government of 1974 to 1979, they are meaningless. Good intentions, glib promises and pious rhetoric are just not good enough. It is a cruel deception to raise expectations which cannot be realised.
Labour's October 1974 election manifesto proudly proclaimed "Britain will win with Labour".
It proclaimed that Labour's policies would
"protect the weak, the poor and the disabled, and to maintain and improve their living standards."
The subsequent performance of that Labour Government failed dismally to live up to those high-falutin' declarations. Labour might have been the winners, but the losers were the pensioners, the less well off and the disabled in our society.
The oft-repeated claim that pensions increased each year by the movement of prices or earnings, whichever was the greater, is not sustainable. It was not honoured in 1976 or in 1978. If Labour had won the 1979 general election, its proposed policies would have meant that it would not have been honoured in 1979, either. Mrs. Barbara Castle dispensed with the historic calculation of earnings and replaced it with a system of forecasting in 1976. That deprived pensioners at a stroke--if I dare use that expression--of £500 million. At today's prices that is over £1 billion.
To add insult to injury, the method of forecasting was wrong in five of the seven years in which it was used to calculate the increase in the state pension. Even the Christmas bonus did not escape unscathed. It was not paid in 1975 and 1976. If Lord Barnett's memoirs are to be believed, it was only a kicking and screaming Lord Ennals and the right hon. Member for Salford, East (Mr. Orme) who agreed to pay the Christmas bonus in 1977. Opposition Members should think twice before lecturing the Government on their uprating of benefits record. Their criticisms do not square with the facts. The Government have not simply paid lip service to the need to help pensioners, the less well off and the disabled. They have encouraged the creation of wealth, with the result that this year the Government have been able to spend a record £51 billion on benefits. Approximately half of it is paid to the elderly. Pensioners have shared in the nation's prosperity. Their total incomes have grown twice as fast as those of everyone else and five times as fast as they grew under the last Labour Government.
Much play has been made of the claim that Britain's pensioners lag behind those of our European competitors. Again that myth cannot be sustained, because 9.6 per cent. of Britain's gross domestic product is spent on all programmes for the elderly, excluding medical care. Britain is third on the EEC chart. We are marginally behind Denmark, at 10.4 per cent., and France at 9.8 per cent.
Column 778The most powerful argument for what the Government have done for pensioners comes not from me but from Mrs. Dorothy Rhodes, the president of the National Federation of Retirement Pensions Associations. Recently she said :
"I have spoken loudly in support of parity with Europe but during the past year having spoken at length to those who receive Europensions and discovered that in many cases the actual cash received in relation to the cost of living is often lower than in the United Kingdom, I am revising my opinion, for in no way can our Federation ask for an equality that would disadvantage our own people."
There is a gulf between Conservative Members and the Opposition over pensions. The gulf is not about whether we care, or about trying to find the best solution and the best policies for providing help to the less well off. That does not divide us ; everyone believes that the most effective help possible should be provided. What divides us is philosophy and the implementation of policy. Our policy during the last 10 years has benefited pensioners. We must create wealth so that the state can then spend the money that is generated on providing genuine help to the less well off and to pensioners whose only income is the state pension. It is crucial to target resources.
I return to child benefit which, deliberately, has not been increased but frozen. My right hon. Friend's decision was absolutely correct. My wife and I have a young daughter. It is nonsense for my wife to receive a tax-free sum of money each week towards the upkeep of our child. I much prefer that money, or the money that my wife would have received as an increase in child benefit, to be targeted on genuinely less well-off families through the income support system and the family credit system.
The less well off rightly deserve help and they are getting it from the Government. The vast majority of people do not whine and complain. They accept the Government's philosophy. They accept also that the money is going to those who are in genuine need and who need to be helped.
Mr. Ted Rowlands (Merthyr Tydfil and Rhymney) : The hon. Member for Chelmsford (Mr. Burns) asked you, Mr. Deputy Speaker, whether you enjoyed pop music. My eldest son writes pop music, although I brought him up on Bach and Beethoven. I much prefer Bach and Beethoven. The majority of my pensioners preferred the Labour Government to the present Conservative Government when it came to pensions. The hon. Gentleman used the word "whine." That was obnoxious. The pensioners that I shall be speaking about are not whining. They are demanding a right that they worked for all their lives. In the community that I represent, many husbands have died and their widows have been left on their own. Their husbands earned poor money and died young as a result of the work that they did. Their widows have been left totally dependent on the state.
We have been challenged and asked to look at total incomes and targeting. I accept both challenges. I expect the hon. Member for Chelmsford to accept the challenge that I intend to put to him, based on the cases to which I shall refer and also on the cases mentioned by my hon. Friends the Members for Livingston (Mr. Cook) and for Newcastle-under-Lyme (Mrs. Golding). I refer to a widow whose husband died younger than he ought to have done, because of the work in which he was engaged. I wrote to
Column 779the local Department of Social Security office. I do that as a matter of course until I find that DSS employees are victims of Government policy. I complained that that widow would not receive a penny increase in the financial year 1989-90. I received a letter from the DSS, together with the calculation. I ask the Secretary of State to listen to the simple terms of the calculation, which are that the total income on 11 April 1988 was £47.90 and that the total income on 10 April 1989 was £47.90.
Does the Secretary of State believe that a pensioner whose total income is £47.90 should be targeted? That pensioner, on £47.90, will have to soldier through the whole of the next financial year without a single penny increase in her pension. The whole of her pension increase has been clawed back because of the loss of the transitional addition. It is a pity that the hon. Member for Brentwood and Onger (Mr. McCrindle) did not say that he supported the cases that we are bringing to the Secretary of State's attention. This pensioner has lost the whole of the increase for 1989-90. Moreover, because she was in receipt of transitional addition amounting to £3.80 instead of just £2, she will lose the whole of her increase for 1990-91 as well.
With the odd exception, Conservative Members are endorsing a system under which a pensioner with a total income of £47.90 will spend this year and next year without a single increase in her pension to cover increases in the cost of living. If we do not include the mortgage interest rate and take inflation as 5.5 per cent., we still know that water charges are to increase by 10 per cent., and that, despite low inflation, the cost of living and the prices of essential goods still change. We know that rents will go up, and only a percentage of those rent increases will be covered by increases in housing benefit. The pensioner I mentioned--I hope that the hon. Member for Chelmsford agrees that she should be targeted--is one of the 20 or 25 per cent. of pensioners who will have to depend on a static income to cover essential costs for the next two years. She is one of dozens of such pensioners in my constituency. Does the hon. Gentleman think that that is fair? Does he believe that the policy of targeting benefits should include that pensioner? In an intervention I asked the Secretary of State whether he thought that a pensioner on £47.90 a week should be targeted for support or whether that pensioner should go through the next two years without any increase in income to handle the additional costs of living. The Secretary of State did not reply.
I understand that by their very nature transitional additions must be phased out, but we should remember that the transitional additional allowances were dragged out of the Government as a result of pressure from both sides of the House more than 12 months ago when the impact of the new scheme was fully understood. I understand that among others the Prime Minister at her Finchley surgery suddenly realised the consequences of introducing the new system. Why is there not the same reaction this year? The same thing is happening. The same dozens of people who knocked on our surgery doors last year--I hope that they are knocking on the surgery door of the hon. Member for Chelmsford--are now saying that they did not realise that when they received the transitional addition the entire increase in their pensions would be clawed back in a single year and within a year.