House of Commons Hansard Debates for 11 Apr 1989

Column 780

The transitional additional allowance was not some act of great generosity but was a limitation of the loss of benefit as a result of the change in the system. We should watch out for the Orwellian double talk that the Government use when they talk about the transitional additional allowance as if it were a marvellous act of generosity when it was limiting the loss of benefit as a result of the so- called reform to a simpler system.

No one should have believed that a transitional addition equivalent to the entire increase in the pension should have been clawed back, as has happened. I hate to be in this position. I do not agree with the whole show and I do not agree with the system, but if we have to work the system and make a desperate plea on our hands and knees, I ask the Secretary of State now why he does not have an urgent rethink. He claims that he is monitoring, so here is the information he requires. Why does he not adjust the system at least by a much more gradual process by which the transitional additional allowance is clawed back? I hate the notion of presenting such a plea, but as the situation is desperate and the Government have a majority and can override our motion and continue to enforce the provisions, just as the Secretary of State had a rethink when he introduced the transitional allowances, will he not consider introducing in the next month or so some measure to provide a much slower and more gradual claw-back of the transitional addition? For example, he could say that no pensioner should lose more than one quarter of the increase in the next financial year.

If the Secretary of State is to introduce such a horrid system, let him at least do it with some amelioration, and introduce a scheme so that pensioners, such as the widow to whom I referred, do not have to soldier through the coming year and the year after without any increase in income. I hate the idea of having to ask the Secretary of State to do it, but will he reconsider urgently the concept of phasing out the transitional additional allowances over a much longer period? Instead of clawing back the entire £2.06 increase this year and virtually writing off next year's increase in the income of the average pensioner such as the one I described--and there are dozens of them in my constituency--if the Secretary of State were to ameliorate that situation it would be a modest crumb for us and we could tell our constituents that someone has listened, as my hon. Friend the Member for Newcastle-under-Lyme argued.

When the Minister replies, will he give his assessment of what it would cost not to claw back the full £2.06 from those in receipt of transitional addition in the next year if a pensioner were allowed to retain three quarters of the £2.06 increase? What will be the additional cost in a financial year to introduce a more gradual transition? Conservative Members repeatedly have defended the system by arguing that the Conservative party and not the Labour party has established a major economic success story which allows the Government to be generous to pensioners. But why can they not be generous to pensioners living on £47.90 a week? Why do they have to claw back the entire pension increase? We are not talking about millions of pounds. Perhaps we are talking about hundreds of thousands of pounds or whatever figure the Secretary of State or the Minister wishes to provide. If the Government's economic success story is so great, surely they can assist and support that group of pensioners.

I read with fascination the Secretary of State for Wales' speech last night to that tower of Tory power, the Tory

Column 781

Reform Group. He condemned the "simplistic economic dogma" which does not solve the nation's problems. Nor does the simplistic social policy dogma that has emanated from some quarters of the Government and the Conservative party. But the Secretary of State is a member of the Cabinet which endorsed all the changes. I look forward with great interest to his speech on social policy in the near future, on behalf of the pensioners whom I represent. But we have to depend upon urgent pleas to the Secretary of State.

In the past few weeks, I have done what I did last year. I have sent a whole batch of cases, such as the case I have described, to the Prime Minister in the hope that some message of assistance and support to the pensioners may come from on high. I noticed that the Chancellor of the Exchequer, in presenting the Budget, spoke about the £14 billion he had to pay off the national debt. But there is another debt to be paid to a whole generation of elderly people who sacrificed their efforts, their health and their lives, and who are entitled not to request, to beg or to whine but to demand the right to a fair and just pension system.

Several Hon. Members rose--

Mr. Deputy Speaker : Order. There is very little time and I hope that hon. Members will make brief speeches.

6.17 pm

Mr. John Butterfill (Bournemouth, West) :

"I wish to raise the subject of the uprating of retirement pensions, and especially the uprating that took place last November. I want to call upon my hon. Friend the Minister to consider paying a bonus of an extra week's pension for Britain's 8 million pensioners. I believe that this is urgently required to make up for what I consider to be a sleight of hand or conjuring trick which occurred last November. At that time pensioners received 1.8 per cent. less than the law required that they should receive. I do not think that Parliament should allow the pensioners to be double- crossed in the way that they have been over the latest pensions uprating the pensioners' own money was hi-jacked by the Government to pay their Christmas bonuses at Christmas many of us are seriously disturbed by the fact that a firm pledge, about which we have frequently publicly and proudly boasted, is apparently not to be honoured." [ Official Report, 12 March 1979 ; Vol. 964, c. 231-35.]

Those are harsh words, but they are not my words and they are not about this Government. Those are the words of the hon. Member for Birmingham, Perry Barr (Mr. Rooker) and the words of Mr. George Rodgers, the former Labour Member for Chorley, almost exactly 10 years ago, speaking about the last Labour Government. Whatever we may have heard from the Opposition about the good intentions of the Labour party, we can hear from their own lips what the performance was when they were last in power. For the hon. Member for Livingston (Mr. Cook) to say that had their formula remained in place there would have been an increase of £17-plus a week for pensioners is sheer deception, as is manifest in the words of his Back- Bench colleagues that I have just quoted. The difficulty about the speech of the hon. Member for Livingston was that it was almost entirely anecdotal.

Of course there are people who are suffering under the arrangements that have come into force recently. My hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) was right to point out that there are anomalies that need to be redressed. My right hon. Friend has said that he will look at these problems and keep the matter

Column 782

under continuous review. Where the hon. Member for Livingston was wrong was in not giving any account of the enormous improvements that have been made by this Government, or of the enormous improvement in the welfare of pensioners that has taken place over the past few years. We are not talking just about the basic pension ; the improvements in income support and in housing benefit have to be taken into account.

My hon. Friends have already spoken about the total proportion of GDP that we in this country, compared with other European countries, spend on benefits. We are third in the European league. It is right that that should be pointed out, but it is right also to point out that the changes that we have made have not been made without extra money. An extra £200 million is being spent on income support as from October. In particular, the older and disabled pensioners will benefit by an extra £2.50 a week.

Equally, the Opposition have taken no account of the exceptionally cold weather payments. Recently they criticised the basis on which those payments were made. But at least the payments were introduced by this Government ; they did not exist when the last Labour Government were in power. The Labour Government certainly did not think of such payments. Nor have the Opposition paid any tribute to the very generous improvements in the tax allowances for pensioners that were introduced in the last Budget. The age allowance was increased very substantially, the age threshold was reduced, and the earnings rule was abolished. All of those things are very good news for pensioners.

Instead, Opposition Members harp on about poverty. They produce statistics to show that an ever-increasing number of people in this country are living in poverty. It is worth looking at the basis of those claims. They tend to operate on one of two bases : either earnings related to average earnings, or earnings related to the thresholds for income support. Of course, the difficulty with that is that every time we improve the level of social security the number of people allegedly in poverty goes up. It is a no-win situation for the Government. But those are precisely the sort of statistics that the Opposition like to deal in.

We have to look at the fact that we are now spending £51 billion on the social security budget, which is a real increase of 33 per cent. since the last Labour Government were in power. We have to look also at the increases that we have made in income support and family credit. The amount being paid in income support is £421 million more than was paid in supplementary benefit ; and £400 million is being paid in family credit against £200 million under the old family income supplement. Those are real increases that are benefiting the majority of people.

The great problem in this country is that, despite all the money that is being spent, we still have people who are genuinely poor. We must ask ourselves why it should be so. When we are spending £51 billion-- nearly £1,000 a year for every man, woman and child in the country-- why are there still poor people? If the bottom 10 per cent. of the population were regarded as the really needy, that would give them £10,000 a year each. Why do we have poor people? It is because benefit is very poorly targeted. So long as we have universal benefits, such as child benefit--this was mentioned by my hon. Friend the Member for Chelmsford (Mr. Burns)--there will be a problem. Of course, child benefit did not benefit the genuinely poor

Column 783

because it was clawed back from their other benefits ; it benefited only the middle classes. So long as we continue with nonsenses like that we will never redress poverty in this country.

Mr. Robin Cook : Perhaps the hon. Gentleman could clarify a point. He has just said that so long as we continue with nonsenses like universal benefits we will never resolve the problem of poverty. Is he including in "universal benefits" the state pension?

Mr. Butterfill : I include all benefits in my assessment of the way in which we should treat people. I am not suggesting, for example, that we should get rid of the state pension, but I am saying that we need very much more accurate targeting of benefits if we are to eliminate poverty.

6.26 pm

Mrs. Rosie Barnes (Greenwich) : The Government have a very shabby record in their treatement of the poor, the disabled and the under- privileged, particularly those who are dependent on benefits, and even more particularly the elderly. It is clear that the Government believe that by reducing the value of benefits, by failing to uprate benefits in line with inflation, they will produce a net result of a reduction in the dependency culture and will compel people back into productive economic employment. This is just not the case. People are not dependent on benefit of their own wish ; the vast majority wish to be employed, and wish to have a dignified standard of living that they have earned and provided for themselves. If they are in need of a pension, if they are in need of benefit, it is not something that they have willed upon themselves.

It is a disgrace that, at a time when inflation is running at nearly 8 per cent, we see increases in benefit of only 5.9 per cent. There is nothing complicated about the net effect of that : the poor will become poorer-- straight, unavoidable fact. There is no whining about it, no harping on about it ; I am simply reporting what many of my constituents have told me, and what the constituents of all hon. Members will be telling them over the coming weeks. Whatever extravagant claims the Government may make, nothing can explain the policy of lowering the income of those people who are dependent on benefits.

That is particularly exacerbated by the combined system of taxation and benefit--or rather the fact that those are not combined. The two have to be looked at together because, together, they exacerbate the poverty trap. They frequently and continually inhibit people from taking low-paid or part -time work because, by doing so, those people would be worse off than they are when on benefit. Most people do not have a fair choice--the combined effect of the tax and social security system ensures that they stay at the bottom of the pile.

My greatest criticism of the Government is of their meanness of spirit. Yes, the system is simpler than it was before--and that is to be welcomed-- but it is also totally inadequate. The Government had an invaluable opportunity to revise the system, to simplify it, and to make sure that no one was worse off. Such opportunities come very rarely. There was an opportunity last year, and the

Column 784

Government passed it over. Yes, many people are worse off. We are talking about a minority, but it is a minority of people who are suffering through no fault of their own.

We are looking not at a decision that was made against the backcloth of a shortage of revenue, but at one that was made against the backcloth of a surplus of £15 billion. Despite the growing shadow of inflation, which endangers our economic recovery, we have seen consistently strong economic growth. One of the advantages of a strong, successful economy is that it enables a caring, socially responsible Government to share the fruits of success with those members of society who have not been able to benefit directly--those who are not earning high wages, those who are not getting increased revenue from shareholdings. If the Government seriously want to encourage everyone to participate in our economic success, they should understand that they must give everyone, including the needy and the poor, a share of that success. They should never have considered cutting the real value of social security benefits. The uprating of pensions and other benefits, including child benefit, should be automatic. The Government have shunted child benefit to one side and it has been gradually eroded, presumably in order to dismantle the universality of that benefit.

The Government should go further and examine ways to make benefits more buoyant. They should ensure that the poor benefit from our economic success by giving an additional increase in benefits which is related to the success of the economy. It is a measure of the Government that, today, we are debating real cuts in benefit. We are witnessing the poor becoming poorer when the Chancellor does not know how to spend the reserves that he has.

Pensioners have a particular right to be angry. The Government happily preside over a system of supposedly contributory benefits. The system educates people to believe that they are paying into a fund on which they will be able to draw, by right and with dignity, in later life. In reality, however, the Government treat pensions as though they were a handout rather than money which is given back to those who have paid in over the years. Pensioners are only asking for what is theirs by right and for what they have paid. They are right to argue that the Government are wrong to cut the value of their pensions. This is an argument of principle that goes far beyond the fact that many pensioners are living in great poverty today. If the Government have decided that they do not accept the contributory principle, they should have the courage to say so rather than to act as the arbiters and controllers of what is given back to those who have paid over the years.

The growing number of dependent elderly poses a challenge to and a great problem for the future reduced working-age population. To try to wriggle out of social obligations, to try to reduce the cost of supporting the elderly by cutting pensions and by trying to push the elderly into the private health sector by subsidising private health insurance amounts to a cowardly approach to a problem that must be faced honestly and openly.

It is right to continue the tax relief on personal private pensions to enable many people to enjoy a better standard of living in later life. Ultimately, if the majority of our elderly are covered by such schemes, it may be right to reduce the extra tax relief given to pensioners through the age allowance. For the majority of today's pensioners, however, the state pension is their basic income. It is clear to anyone who meets and talks to pensioners regularly that

Column 785

their basic pension is not high enough. Those with small occupational pensions often suffer even more deprivation because they are denied access to the benefits that may be claimed by those with no additional pension.

We must consider seriously the provision for poor pensioners. To achieve a better allocation of resources is not just a question of giving more money. We must change the structure to make claiming a more straightforward and simplified matter, with less stigma attached to it. The answer must lie in the integration of the tax and benefit systems. Only by aggregating everyone's earnings and benefit entitlement can a sensitive assessment of net tax burden or net benefit entitlement be made. An integrated system is perfectly feasible within a computerised Inland Revenue. That would eliminate the "churning" of revenue that results in the Government giving with one hand and taking back with the other. For the population as a whole it would ensure that people did not become worse off by taking on work and subsequently losing benefit. Within such a system provision for poor pensioners should be a priority.

Mr. Butterfill : The system that the hon. Lady has adumbrated has some merit. Would it involve withdrawing universal benefit such as child benefit?

Mrs. Barnes : No. My party strongly defends child benefit. It was, in part, a tax concession that was taken away from the main earner in the family and given to the caring parent, usually the mother. Time does not permit me to take that argument further this evening. Other measures that we advocate, particularly for the elderly, include the miserly £10 bonus at Christmas. We believe that a double pension should be given the week before Christmas. We should also seriously consider abolishing the standing charges on gas, electricity and telephones, which hit the elderly particularly hard. The issue today is not how much the system costs but how effective it is. Does it fairly do the job it was set up to do? No one believes that any increase below the level of inflation will do anything other than make people poorer. There has been some indictment today of the use of anecdotes, but those who have made such criticisms should remember that anecdotes represent people who are suffering and that they are symptomatic of some of the failings of the system. They highlight the gaps which we must plug.

On Friday night, a constituent, a single parent with three children, came to me. She is a diabetic and, because her eldest child has just turned 16, her income has fallen from £72.96 a week to £46.31. Her 16-year- old son has not yet got a job. Her doctor sent a letter to tell me that she may be hospitalised because her diabetes is getting out of control as she is eating badly. How can I explain to my constituent just how fair and compassionate the Government are? Such anecdotes represent people. They may represent the minority, but they are suffering, and they deserve the attention and a share of the resources of this country.

6.36 pm

Mr. Tony Favell (Stockport) : I shall confine my remarks to a few basic truths about the basic pension. A country is judged on the way in which it treats its pensioners and that is right, because a decent society should be judged on how it treats its elderly citizens.

Column 786

There are widely held misconceptions about the basic pension. There is a belief held by the young, including the hon. Member for Greenwich (Mrs. Barnes), that most pensioners have to live on the basic pension. But they do not. Opposition parties complain about the rate of increase in the basic pension and ask whether it is reasonable to expect couples to live on £65.80 a week. The answer is that none do because the basic income support level is above the basic pension. Therefore, any couple on basic pension are entitled to income support and if they are householders they are also entitled to housing benefit.

Opposition Members have complained that one fifth of our elderly population are on income support or receive housing benefit, but that means that four fifths of our pensioners also have occupational pensions or savings, or both. What on earth is the point of raising the basic pension to the level advocated by the Opposition parties? As I said earlier in an intervention, what is the point of spreading the jam so thinly that no one benefits? There are many pensioners who are very rich and what is the point of giving extra help to them? As I said earlier, what is the point of benefiting Lord Forte or the Prime Minister? It is much more sensible to target extra help to those in real need.

Mr. Allen McKay (Barnsley, West and Penistone) rose

Mr. Favell : No, I shall not give way. With a falling working population and the elderly thankfully living longer, to increase the basic pension would have no purpose and would simply be a waste of money.

6.40 pm

Mrs. Margaret Beckett (Derby, South) : Our motion refers to the fall in income that has been experienced under the Conservatives by vulnerable groups, including many pensioners, and I remind the hon. Member for Stockport (Mr. Favell) that many pensioners do not claim the means-tested benefits to which they might be entitled because they are proud and resent the fact that those benefits are means tested. They are among the most vulnerable and needy and they most lose out and resent being deprived of that basic pension increase which is still the most important part of the income of the vast majority of pensioners.

My hon. Friend the Member for Livingston (Mr. Cook) admirably exposed the Government's lamentable record on pensions, and it was plain again, as in the past, that neither the Secretary of State nor his Back Benchers had much in the way of any accurate response to make to refute the points that my hon. Friend made. They had even less to say about the case made on behalf of those whose standard of living not only dropped last year but will drop again this year--those for whom the Prime Minister's recent sweeping assertion that everyone is better off under Conservative rule rang hollow.

My hon. Friend the Member for Livingston pointed out that every one of those individuals benefiting from or receiving transitional protection, whose difficulties we are highlighting in this debate, and many of whose case histories have been given by my hon. Friends and others, are the people who were untruthfully described by the Prime Minister and other Ministers last year as being no worse off after last year's benefit cuts-- some of the 88 per cent. about whom that outrageous claim was made.

Column 787

Indeed, Ministers defended the claim that they were no worse off by saying that they were no worse off because they faced no cash losses. By definition, the Secretary of State either chose not to, or could not, answer the question posed by my hon. Friend the Member for Livingston. By definition, every one of those vulnerable individuals whose cases have been highlighted in this debate were among those whom the Prime Minister said were no worse off, though their income rose at most by £1.30 and their bills alone, including in most cases their rate and water rate bills, rose by far more. They have since faced the rise in gas and electricity prices without a penny more. That was last year. This year, 600,000 of them again get not a penny more, while another 500,000 or so will get some increase, but not the full increase needed to meet price rises in November and which are already out of date.

The Government's response to the plight of those people is to talk about something else. The Government are hoping that if they shut their eyes tightly enough and for long enough they will all go away, and that if the Government shout loudly enough and long enough, mouthing one set of meaningless or manipulated figures after another, either those people will not be heard or they will not be believed. But Opposition Members are determined that they will be heard because they have a right to be heard.

It is bad enough that we have a Government who are so uncaring and deceitful that they are prepared to cut the standard of living of the most vulnerable people in the country and call it targeting on those in the greatest need. They do not even have the guts to admit that that is what they have done. To the injury of increased struggle they add the insult of pretending that it is not happening.

The Conservative case is that they are doing more than any previous Government. It is certainly true that the Conservatives have had the opportunity. No Government in history have had a windfall gain such as that of North sea oil--revenues secured for them by the Labour Government whom they succeeded, who did not believe in throwing away the nation's assets-- [Interruption.] It is all very well for Conservative Members to laugh. If the policies of the right hon. Member for Old Bexley and Sidcup (Mr. Heath) had been pursued by the last Labour Government there would have been no North sea oil revenues for them to throw away. But that opportunity, like those assets, has been squandered.

Indeed, almost every penny of the increased expenditure of which the Secretary of State spoke--spending in real terms of which the Government boast--is due not to more generous benefits but to increased numbers forced to draw them. As my right hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) pointed out, there are more people unemployed, more people reaching retirement, more living longer in retirement and showing increased frailty and more with some disability who can no longer find work under Conservative rule. Only three times in 10 years have the Conservatives given a real increase in benefits over and above that required by inflation -proofing, and even those amounts were usually tiny.

If the Conservatives have been so generous, how did it happen that 600,000 people did not get a penny more this year for the second year running, with no cost of living

Column 788

increase? Whose fault was it that there was no increase in child benefit for 12 million children and no increase of any kind for the upkeep of nearly 8 million of them? What wicked fairy brought about the reduction in case load that meant that 1 million people lost all help with their rent and rates?

We have had a further indication today of the generosity of the Government. I refer to a report in today's Glasgow Times about the handling of deductions from the income support of people who are refusing to pay the poll tax deductions to which the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) referred. A memo sent to all DSS offices in Scotland has been leaked to the Glasgow Times. It states :

"In deciding whether a deduction can be made"--

for the poll tax--

"the adjudication officer will ensure that there is sufficient Income Support to allow for the deduction to be made in full whilst leaving 10p in payment to the claimant."

That is 10p a week, and of course it must be left in payment to the claimant because that is the law. That is the generosity of the Government.

I understand that over the weekend the Minister of State was reported as saying that when a new system of benefits such as this was introduced it was inevitable that there would be losers. That was obviously in the Whips' Office briefing because several Conservative Members have referred to it.

The Minister was talking nonsense. We know how the Prime Minister fancies that she is the Queen. Is it now the Prime Minister or the Secretary of State who considers herself or himself to be Moses? Was it divine revelation written on tablets of stone that there were bound to be losers, or were those just the instructions handed down by No. 10 and the Treasury?

There are bound to be losers because that has been decided by the Government. They chose it. It is not the product of some natural or divine law. It is certainly not divine law that the losers should be found among the elderly, the poor, the halt and the lame. That sounds much more like the woman who thought that the only thing that mattered about the Good Samaritan was that he had money in his pocket, not that he was prepared to spend it on the unfortunate. The victim was lucky that the Prime Minister did not pass by, or he would have got a brisk lecture on the value of standing on his own two feet. As my hon. Friend the Member for Livingston pointed out, the Department has been throwing away sources of income that could have been used to make sure that there did not have to be losers. He referred to the supplement that every Government have made for 40 years, the supplement from tax revenues to make sure that decent pensions could be paid to the elderly and the disabled.

In 1980-81, £4.5 billion came from tax revenues for that purpose, but this coming year there will not be a penny, not because it is divine or natural or any kind of law other than that made by the Government, but because this Administration decided that it was money that the pensioners and the disabled did not need. In their view, they were already too well off.

The Government's attitude to the erosion of transitional protection is, in some ways, the most puzzling of all. Why are the Government prepared to defend a cut in the standard of living of the elderly, the sick and the

Column 789

least well-off families, a standard of living that even the hon. Member for Brentwood and Ongar (Mr. McCrindle) described as buying simplification at too great a cost?

A parliamentary answer that I received suggested that the full uprating of income support for which the motion calls could have been provided for about £70 million. In October, as the Government amendment to the motion records, they are spending three times as much to save the Chancellor's face and divert attention away from his long-term plans to means-test benefits such as child benefit, the Christmas bonus and--as the hon. Member for Bournemouth, West (Mr. Butterfill) was good enough to confirm--even the basic state pension. If the Government can find £200 million to help out the Chancellor, the money could have been found to uprate those benefits where transitional protection was being paid when the overall uprating was calculated.

The Government amendment proudly asserts the huge success of their economic policies. In other words, the Government are not saying that they could not have found the extra money. Why is it so important for them to push through these cuts, comparatively minor by the Government's standards and doubly difficult to defend? What principle is at stake?

Since the changes of April last year the Government have tried to insist that they have made no real or significant cuts. Every example to the contrary has been decried and denied. In particular, they have insisted that if any problems were inadvertently created, it was all in the cause of targeting the help still given on those in the greatest need.

What could more surely reveal the phoneyness and dishonesty of that case than the existence alongside a growing band of new claimants of a group, however small or fast diminishing, of people whose problems, sickness or distress were identical in all major respects but who got much more money because their benefit level under the old system was permanently protected?

When the woeful inadequacy of many new benefit levels becomes apparent by comparing people's needs with their resources, what will more dramatically blow the gaff on the Government's case than a simple straightforward comparison between what is paid now and what used to be paid? We can all write the script. Mrs A gets the old level of benefit but under the new scheme Mrs. B, if she becomes ill or is injured, will receive less money every week. What could more starkly prove what we know to be the truth, which is that the Government believe that 1 million of our most vulnerable people were too well off last April? Although the Government were prepared to see the standard of living of those people fall, they are a bit squeamish about admitting it. People might even have remembered that two weeks earlier the same Government had lavished tax cuts on the wealthy.

Mr. Butterfill : Will the hon. Lady give way?

Mrs. Beckett : No, I do not have time. I would have given way if the hon. Gentleman had asked me earlier.

The debate is taking place not because justice and fair treatment for the 1 million people who have not received a full uprating or any at all cannot be afforded, but because that would expose the sham and the meanness of Government policy. The hardship of those people is the price of concealment.

Column 790

6.50 pm

The Minister for Social Security (Mr. Nicholas Scott) : I am delighted to know that the hon. Member for Livingston (Mr. Cook) listens to my weekend broadcasts. I do not resile for a moment from saying that I approached the debate with some relish, although the relish is slightly diminished because in my winding-up speech I have to deal with the statistical argument between the hon. Gentleman and my right hon. Friend the Secretary of State. I utterly refute the Opposition accusation that my right hon. Friend intended to mislead the House. The statistics quoted by the hon. Member for Livingston and those quoted by my right hon. Friend are simply different statistics. Both sets of statistics are accurate and acceptable in their own way, and the House can judge which set is more relevant to the debate. Having looked at both sets of statistics, I have no doubt where the right answer lies.

The hon. Member for Livingston obtained his figures from the Library and they relate to the basic state pension calculated as a proportion of male earnings. My right hon. Friend's figures were from the 1986 family expenditure survey and compare total state benefits with average manual earnings. The difference in the two sets of figures is easily explained. It is not the basic state pension that matters to pensioners, but their total income--in this case from state benefits. Those may include a whole range of benefits apart from the basic state pension. The important point about the statistics is that they contain figures about actual people with actual incomes. The figures supplied by the Library and quoted by the hon. Gentleman describe the pensioner equivalent of that well-known figure the person with 2.3 children. Such figures are an abstraction rather than a representation of the reality of what is happening.

Now that the hon. Member for Livingston has listened to my explanation and has reconsidered the matter, I hope that he will share my preference for the figures quoted by my right hon. Friend the Secretary of State. [Interruption.] I hope that the hon. Gentleman will read what I have said. If he cares to write to me about the matter, I shall be perfectly happy to conduct the argument by correspondence. I am certain that we have the right answer. The right hon. Member for Stoke-on-Trent, South (Mr. Ashley) accused the Government of abysmal failure in running the social security system. Let us consider what has happened to total benefits under the Government. In 1988-89 the total benefit figure was calculated at £45.2 billion--a real increase of £10.9 billion since 1978-79. That increase was due to many factors, such as a real terms increase in the average amount paid accounting for about £3.9 billion, and increased numbers of beneficiaries accounting for about £7 billion, of which £2.2 billion was accounted for by extra unemployment. Over the same period, social security spending rose from 25.6 per cent. to 31 per cent. of public expenditure. That is what the right hon. Gentleman describes as abysmal failure. In fact, it shows a successful economy generating money for extra expenditure on people who need help.

The right hon. Member for Stoke-on-Trent, South takes a special interest in the disabled and their entitlement to benefit. He knows as well as I do that in the past 10 years there has been a 90 per cent. increase in benefits for disabled people, a real terms increase of no less than £3.5 billion. The right hon. Gentleman was right to say that £3

Column 791

billion of that was due to increased take-up and that about £500 million was due to the increased level of benefits. The numbers of disabled people did not suddenly multiply when we came to office. Those people were there when the Labour Government were in office but they were not getting benefits then. They are getting benefits now, and that must surely be right.

Mr. Ashley : The Minister now admits that the Government are wrong to claim that all the money has gone to increase the individual incomes of disabled people because the larger numbers of disabled people mean that it is a small increase for individual disabled people.

Mr. Scott : The Government have never made any such

assertion--certainly not while I have been in my present post, and none of my predecessors has done so. We have never said that the figures were anything other than those that I have just given--and those figures can not only be defended but applauded.

With his tongue firmly in his cheek the right hon. Member for Stoke-on- Trent, South asked me to prophesy our reaction to the Office of Population Censuses and Surveys reports and the nature of the review that we intend to conduct when we finally receive those reports. I urge the right hon. Gentleman to be patient and to await the arrival of the remaining four reports. I do not think that he could expect any other answer.

Without unduly delaying any action that might flow from our consideration of those reports, we shall want to find some way in which disabled organisations and perhaps hon. Members can make their views known as to the most appropriate way forward. We shall then take those views into account before making up our mind.

The hon. Member for Newcastle-under-Lyme (Mrs. Golding) raised a specific case, and was not the only hon. Member to do so. I make it a general rule not to reply to questions about individual cases across the Floor of the House because it is difficult to establish the basic facts, but I will look at the case that the hon. Lady put forward. I can tell her that the package for poorer pensioners introduced by my right hon. Friend the Chancellor will provide a second uprating this year for poorer pensioners and that the October uprating will not erode transitional protection. We have made special arrangements to make sure of that. I hope that the hon. Lady will draw that to the attention of her constituent.

My hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) endorsed the simplicity of the new system but seemed to argue that we should return to the complexities of the additional requirements which existed under the supplementary benefits system. I remind him and the House that the additional requirements were complex and needed a great deal of intrusive questioning to ascertain the amount to which people were entitled. We got rid of those complexities and replaced them with a severe disablement premium. With Government money we established the independent living fund so that the needs of people with exceptional requirements could be met, thus preventing such people from being institutionalised rather than supported in the community. Those people were helped in a compassionate and flexible manner and the independent living fund has turned out to be a considerable success.

Column 792

Rev. Martin Smyth (Belfast, South) : Will the Minister give way?

Mr. Scott : I have much regard for the hon. Gentleman but I have two minutes in which to complete the winding-up speech. I hope that he will forgive me if I do not give way.

When I saw the Opposition motion, I could hardly believe my eyes. It is now 12 months since the introduction of the reforms--

Mr. Rowlands : Will the Minister give way?

Mr. Scott : No. I shall read carefully what the hon. Gentleman has said and I shall write to him because the argument is complex. When I first saw the Opposition motion, I could hardly believe my eyes. Twelve months after the introduction of the reforms and all the predictions of dire consequences flowing from them, the Opposition have laboured mightily and brought forth a mouse. At the weekend I heard a commentator say that in preparing to mount their attack on the Government the Labour Opposition had decided to concentrate their forces on a broad front--not a military tactic with which I am familiar--but it may be that they have had second thoughts on that and decided to concentrate on a much narrower target today. Perhaps this is because, as successive commentators have recognised and as most hon. Members recognise, they know that when we get away from the minority of individual hard cases--I accept that hard cases exist--the overwhelming success of our reforms is manifest.

The motion concentrates on two points--the way in which pensions are calculated, and the transitional protection. With regard to the first, the Opposition make two points--first, about the date of the calculation and, secondly, about whether it should be linked to earnings and prices. We have given a commitment to link it to prices and we have fulfilled that obligation. The Labour party had a variety of devices linking it to earnings or moving to the forecasting method.

My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) very effectively explained in his opening remarks the criticisms that were levelled against the Labour Government at the time. Further on in that debate the hon. Member then for Coventry, South-West--now the hon. Member for Preston (Mrs. Wise)--made it clear why that change had been made when she said :

"In April 1976, when the changed basis of calculation was announced, it was clear that the change was brought into being because it was advantageous to the Government at that stage and saved £500 million compared with what would have been required for that pension uprating to keep in line with the historic costs of inflation."--[ Official Report, 12 March 1979 ; vol. 964, c. 236.]

That was the record of the Labour Government.

We have given pledges and we have honoured them, and we shall continue to do so. We have honoured our commitment to monitor these reforms and to make changes where necessary in housing benefit and with regard to poorer pensioners, widows, 16 and 17-year-olds and hostels, and we shall continue to do so. The fundamental structure, however, is right and I commend the Government amendment to the House.

Question put, That the original words stand part of the Question :--

The House divided : Ayes 220, Noes 308.

Next Section

Home Page