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Elimination of Poverty in Retirement

3.40 pm

Mr. Jeremy Corbyn (Islington, North) : I beg to move,

That leave be given to bring in a Bill to require local authorities and health authorities to monitor the condition of their retired population ; to eliminate standing charges on gas, electricity and water ; to exempt pensioners from licence charges and telephone rental ; to extend pensioners' concessionary fare schemes ; to make provision for the calculation of old age pensions by reference to average earnings ; and to appoint a Minister with responsibility for retired people.

This is the eighth time that I have tried to introduce the Bill. On every occasion, I have been given permission to bring in the Bill, but it has been subsequently blocked by a Tory Whip muttering, "Object," in a guilty whisper, because the Government are not prepared to debate the issue.

The Bill would make life far better for the 10 million people in this country who are retired, who have made a great contribution to our society and who have given us the standard of living that we currently enjoy. We should treat them with dignity and respect in retirement, instead of the poverty in which so many of them must live.

The old-age pension was first introduced not by the munificence of the then Liberal Government but by the demands of trade unions and ordinary people that the state should provide a decent old-age pension for people who had given a lifetime of work, whether at home, in a factory or wherever else. Now, after 12 years of this Government, from 1 April the old-age pension will be £54.80 per week. It should be £71.80 per week. For a married couple, the pension will be £86.70 per week. It should be £114.70 a week. In other words, pensioners have had £17.65 a week stolen by the break of the link with earnings in 1980 and the substitution of the link with prices. Likewise, the married couple's pension has been reduced by £28 per week. The Government claim that there has been a 36 per cent. increase in the incomes of pensioner families during their term of office. That is simply and absolutely untrue for the majority of pensioners. In 1979, only 14 per cent. of households were below 50 per cent. of average national income. By 1988, that figure had more than doubled, to 38 per cent. It is a measure of the Government's record that pensioners are getting historically low pensions, historically living in greater poverty and historically having greater difficulties surviving because the Government's strategy is continually to reduce the level of state benefit and state old-age pension in favour of private pension schemes and private insurance schemes.

From investigations into the scandal of the Maxwell and Mirror pension funds, one can see the security and safety of investing money in a casino economy when pensioners should be guaranteed a decent state pension in retirement and not have to rely on the vagaries of the stock market.

The link with retail prices introduced by the Government in 1980 is a double con. It is a con because retail prices have risen less quickly than earnings, but it is a double con because research shows that the index for pensioners is considerably different from the price index for the rest of the population. For example, in the third quarter of 1991 the Government told us that retail prices for all items increased by 4.8 per cent. However, the

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increase in prices paid by pensioner households, who tend to spend more on fuel and other such items, was 7.2 per cent. That is not reflected in the state old-age pension.

In other words, if we add up all the money that has been stolen from pensioners in the past 12 years, we find an annual theft of more than £5 billion from pensioner households. That has been handed out in tax relief to the very rich in our society. That is a measure of the contempt in which the Government hold those who served the community so well during their working life.

Likewise, the change in the system of the state earnings-related pension scheme has taken £2 billion from Government income. Again, that is money which has gone into the private sector. We want an understanding that people who have worked during their lives, be it in their home, their factory or wherever, deserve to be paid a decent state pension during retirement. [Interruption.] If that is more than Conservative Members can cope with, they are welcome to leave. My Bill makes eight proposals in all. They are straightforward and simple. The first is an immediate restoration of the link between the state old-age pension and average earnings, which was broken in 1980. That will restore the money that has been stolen from pensioners in the past 12 years. The second is that, during the lifetime of a Parliament, we should make the state old-age pension half average earnings for a couple and a third for a single pensioner. That would be a considerable increase and would bring us roughly in line with the average rate of old-age pension in comparable industrial economies around the world.

If other countries can pay such levels of pension, it can be done in Britain. [Interruption.] Conservative Members may call out, "Where will the money come from?" I can think of an awful lot of sources. First, we could restore a fair system of taxation to replace the unfair system from which the rich have gained more than £25 billion in tax handouts in the past 12 years. The £24 billion-a-year arms bill would also be a useful source of money to increase the standard of living of old-age pensioners.

The third proposal is to ensure serious co-ordination of Government policy as it affects pensioners. There should be a Minister whose job is to co- ordinate that policy, because pensioners require not only a decent level of state old-age pension, but access to luncheon clubs and day centres. They require home carers, a decent health service, a decent transport service and access to facilities such as libraries and adult education. Retirement should not be the end of life. It should be a period of enjoyment and development, not the misery of worrying about how one is to make ends meet.

The fourth and fifth proposals of the Bill are that every health authority should be required to make a public annual report on what facilities it makes available to pensioner households within its district. I often feel that the health needs of pensioners, whether for chiropody services, stress clinics or other special services that pensioners might need, are often forgotten because pensioners are not so able and articulate a lobby as some of the more professional groups who represent the better-off in our community. Such a report would at least analyse what facilities were available. It would also analyse the causes of death and rates of death through hypothermia and all the other injustices that occur in our society.

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My fifth proposal is that local authorities should likewise be required to produce an annual report on the services they provide for the elderly. It would show that, increasingly in the past few years, local authorities have sought to charge for home carers who come into pensioners' homes. They have done so because they have had to make financial cuts.

Local authorities have had to restrict library opening hours, cut the numbers going to luncheon clubs and cut adult education and many social facilities, including such crucial things as holidays. An annual report would not solve all those problems, but at least it would force local authorities to recognise the importance of their services to pensioner households.

The sixth proposal will find general favour. It is generally recognised that a poll tax is an unfair form of taxation, and that is why the Government are abolishing it. The imposition of standing charges for gas, electricity, telephone, water, and television licences is unfair on pensioner households. I propose that they should be abolished so that such households would pay less for gas and electricity. There would be an absolute prohibition on the disconnection of services to those households. Last year, 370 deaths were recorded as a result of hypothermia. I think that that was an understatement of the case, because many coroners and doctors are reluctant to put hypothermia as the cause on death certificates. My hon. Friend the Member for Walsall, North (Mr. Winnick) tried to introduce the seventh proposal early in 1987, but it was tragically defeated when the Government brought in the payroll vote. Its aim was to provide free television licences for pensioners. Television is normal, and I do not understand why pensioners should be expected to pay for such licences.

The final proposal is on concessionary fares and free-fare schemes. London pensioners enjoy free fares because the Greater London council introduced that scheme, and even this Government have been forced to maintain the system. I propose that such a scheme should be introduced throughout the country.

The Bill will dramatically improve the lot of pensioners, and I look forward to the support of the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. Jeremy Corbyn, Mr. Dennis Skinner, Mr. Harry Barnes, Mr. David Winnick, Mr. Harry Cohen, Mr. Tony Benn, Mr. Dave Nellist, Mrs. Audrey Wise, Mrs. Alice Mahon, Ms. Dawn Primarolo, Mr. Tony Banks and Mr. Bernie Grant.

Elimination of Poverty in Retirement

Mr. Jeremy Corbyn accordingly presented a Bill to require local authorities and health authorities to monitor the condition of their retired population ; to eliminate standing charges on gas, electricity and water ; to exempt pensioners from licence charges and telephone rental ; to extend pensioners' concessionary fare schemes to make provision for the calculation of old age pensions by reference to average earnings ; and to appoint a Minister with responsibility for retired people : And the same was read the First time ; and ordered to be read a Second time upon Friday next and to be printed. [Bill 93].

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Mr. Speaker : I have selected the amendment in the name of the Leader of the Opposition. Although I do not propose to put a 10-minute limit on speeches, I hope that hon. Members who are called early in the debate will set a good example by speaking for not more than 10 minutes ; then all hon. Members who wish to participate will be called.

3.53 pm

The Chief Secretary to the Treasury (Mr. David Mellor) : I beg to move,

That this House congratulates the Government on its prudent economic policies, which have led to a substantial reduction in inflation ; notes that the level of inflation in the United Kingdom has been half that under the previous Government, is now below the average for the European Community and close to the level in Germany ; notes further that low inflation is essential to a sustained recovery in output and employment ; and draws attention to the policies of Her Majesty's Opposition, which would inevitably lead to higher inflation, higher interest rates and higher unemployment. If anyone wants to know what a Labour Government would be like, the last 10 minutes were an entertaining trailer. It should have come with a Government health warning.

The control of inflation is the cornerstone of Government economic policy. It is not some dogmatic genuflection to an empty shrine, but absolutely central to the prosperity of our country. What is at stake when one debates inflation is fundamental. I cannot improve on the formulation of Sir Brian Corby, the president of the Confederation of British Industry in a speech towards the end of last year. Speaking about what is at stake, he said :

"We have a genuine prospect of a stable economic climate based on low inflation in the 1990s. We should not be complacent about it. Our success will hinge on squeezing out the pervasive inflationary psychology at all levels of the economy and society."

In advocating the control of inflation, one is advocating a priority not for Government but for business, and a priority to which all business organisations subscribe. It is a sensible priority for the individual and for people on fixed incomes whose savings were ravaged by inflation in the 1970s. It is a priority for every family in the country, as one statistic drawn from the 1970s can prove. During the lifetime of the last Labour Government, money wages doubled, but the real take-home pay of the average family did not increase at all as a result of the pernicious combination of high inflation and high taxation. There is no reason to think that the combination would be any different under a future Labour Government.

Mr. Frank Haynes (Ashfield) : What about unemployment?

Mr. Speaker : Order. I am sure that the hon. Member for Ashfield (Mr. Haynes) will agree that Whips should give a lead in good behaviour.

Mr. Mellor : It is rather an honour to be barracked by the oldest hooligan in the business.

Mr. Dave Nellist (Coventry, South-East) : One of the classic definitions of the cause of inflation is that it occurs when too much money is chasing too few goods. Does the right hon. and learned Gentleman recognise that the danger for the 1990s is that the fall in production, especially in manufacturing, and the fall of almost 35 per

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cent. in two successive years in fixed capital formation, could mean that inflation could return, not because people are being paid too much but because his Government and their policies are destroying the productive side of the economy?

Mr. Mellor : Far from it. The very people who manufacture implore the Government and would implore a Labour Government, if there were to be one, to create a stable price environment in which they can compete. The record shows a 5 per cent. increase in exports to the European Community over the past 12 months. Even in 1991, a year of recession, our share of world trade in manufactures increased for the third year running. That shows what manufacturers can do in a stable environment.

I stress again that the argument for the control of inflation is fundamental to all that organised British business says when it speaks and makes representations to the Government. The cost to business of getting it wrong is enormous. In a speech a few months ago, Sir John Banham said :

"We must redouble our efforts to squeeze inflation out of our economy, which costs business some £5 billion for each percentage point every year."

That is the cost to business of getting the decisions wrong. It is a sign of success, a sign that we have the climate for recovery in this country, that inflation has fallen sharply to stand this month at 4.1 per cent., which is within a tenth of a percentage point of German rates. I am always keen to encourage the active participation of Opposition Members. Can any of them say at what time during the term of the last Labour Government inflation was within a tenth of a percentage point of German rates?

There can be no answer, because, in 1975, inflation in Britain was 24.2 per cent. and in Germany it was 5.9 per cent. In 1976, inflation in Britain was 16.5 per cent. and in Germany it was 4.3 per cent. The figures for 1977 are 15.8 per cent. in Britain and 3.8 per cent. in Germany. Even after the beneficial impact of the International Monetary Fund, the figures in 1978 were 8.3 per cent. in Britain and 2.6 per cent. in Germany.

Today this country has a competitive climate that did not exist and never looked like existing when Labour was in office. Our inflation rate is now almost 1 per cent. below the European Community average. Producer prices on the best measure--that is, manufacturing output excluding food, drink and tobacco--are 3.1 per cent., the lowest for a quarter of a century. Indeed, the three-month on three-month rate of producer prices is down to an annual rate of 2.2 per cent. In other words, an era of stable prices against which British industry can perform and out-perform the best in Europe and in the world is available to us. We have a low-strike economy in which people can have sensible wage increases and which can deliver low inflation and a real increase in living standards--rather than funny money chasing massively inflated prices, as happened in the 1970s. That is the difference between the record of this Government and the alternative offered by the Labour party.

Mr. David Winnick (Walsall, North) : If we are in the competitive state that the right hon. and learned Gentleman claims, why is it that Britain is now in the second major recession since the Government took office in 1979? Why have tens of thousands of small businesses in the west midlands and elsewhere collapsed in recent

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times? Why is there such an economic climate that the Government, understandably, have been reluctant to go to the country? When will the Government tell us when unemployment will fall--or will we have to wait until 9 April to elect a Government who will be determined to restore full employment?

Mr. Mellor : In what appears to be the hon. Gentleman's new conversion to the market economy, he must know that there are cycles. He also knows that the key question is who best provides the right climate for recovery. He knows that there are now many more businesses in Britain than there were in 1979. Before the hon. Gentleman, in his inimitable way, reduces this to the lowest common denominator of debate, can he tell us what he would be saying if he were a member of Congress?

Mr. Giles Radice (Durham, North) rose--

Mr. Mellor : I note that the hon. Gentleman has been joined by the public school tendency. It is a pernicious combination that is beginning to make me fearful. What would an economic debate be without an intervention from the hon. Gentleman? It is Don Quixote without Sancho Panza.

Mr. Radice : If the battle against inflation is so important, why have we had to win it twice?

Mr. Mellor : If I were the hon. Gentleman's parent, I would be terribly worried about having spent all that money on his education simply to have him raise points like that. I never had that much spent on my education, but I can answer the hon. Gentleman.

Mr. Radice : Answer, then.

Mr. Mellor : I am about to do so.

The average level of inflation in Britain in the 1980s was 6.5 per cent., and in the 1970s it was 13.7 per cent. The increase in inflation to a peak of 10 per cent. two years ago was nothing compared with the record of 25 per cent. under the previous Labour Government, when the hon. Gentleman complacently sat on his bottom and supported them through thick and thin. If he wants to know about records, I am happy to compare them. To quote the 1970s actually flatters the Labour party, because its record of 13.7 per cent. degrades to 15.5 per cent. if only the Labour years are counted. Let us return to the example of Germany--traditionally the strongest economy in Europe. In the 1970s, the average differential between our inflation rate and Germany's was 8.6 per cent. Under this Government, that has been cut to within one tenth of a percentage point. In the 1970s, our inflation rate was more than 4 percentage points worse that that of France, 3 percentage points worse than the European Community average and only 0.3 percentage points better than that of Italy. In the 1980s, we were 0.2 percentage points better than France, 0.3 percentage points better than the European average and 3.3 percentage points better than Italy.

If we are an exporting nation--surely we can agree with Opposition Members on that at least--it must be acknowledged that the climate for exports is enormously improved as a result of that reduction in inflation. The buoyancy of British exports to the European Community, which have increased sharply in volume and value even in the last three years, is a classic example of the improvements that have occurred.

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Mr. A. J. Beith (Berwick-upon-Tweed) : Does not the Chief Secretary acknowledge that the greatest reduction in inflation has taken place at a time of deep recession? If recovery arrives, how does he expect that inflation will be controlled? Does the right hon. and learned Gentleman hope that, by that time, the United Kingdom will be a member of a single currency union--recovery may well take that long--and that it will then be controlled by an independent European central bank?

Mr. Mellor : There is no reason to believe that the policies that have brought a reduction in inflation to levels that could not have been countenanced in the 1970s will not continue to provide a stable basis for prices ahead. That is not just the Government's case but what others say. Professor MacWilliams of the Confederation of British Industry said in his new year message :

"An end to uncertainty about economic policy would come if the election gives a mandate for a free-market, low-inflation economy, which would help boost business and financial confidence and unblock delayed investment decisions in the second half of 1992. Clearly, though, a change in Government would prolong the uncertainty." Professor MacWilliams said also :

"Perhaps the best news for 1992 is the prospect of low inflation, which may hit 3 per cent. and stay close to that level. Pay settlements down to half the level of a year ago and productivity growth rising to 6 per cent. make this sustainable."

That is the climate for recovery and low inflation. I do not know that that is on offer from either of the main Opposition parties.

Mr. Tim Smith (Beaconsfield) : Will my right hon. and learned Friend confirm that we must go back to the Macmillan Government of the 1950s to find a full year in which Britain last had stable prices? Given the good news about inflation that my right hon. and learned Friend gave the House this afternoon, does he agree that, if we stick within the disciplines of the exchange rate mechanism, stable prices could once again be within sight?

Mr. Mellor : I am sure that stable prices are more in sight now than they have been for a long time--and they will remain so, if there is adherence to the policies that brought them about.

The reaction of Labour Members has been to snipe and to sneer or to hold conversations among themselves when inflation is debated. For instance, I could not help tuning in the other evening, on 13 February, to "The World Tonight", on which it was put to the hon. Member for Dunfermline, East (Mr. Brown) that inflation had sharply improved. He replied :

"That's not true. Inflation has risen in the last two months, and it is something that this Government has failed to deal with adequately."

The following day, inflation fell from 4.5 per cent. to 4.1 per cent.

It is astonishing that the hon. Member for Dunfermline, East and Labour as a whole believe that there is a point to be made about marginal variations in inflation of well under one percentage point, against Labour's record. That is a desperate attempt to discredit our achievements. They will be telling us next that low inflation poses a wicked and evil threat to those on index-linked pensions.

Mr. Paul Flynn (Newport, West) : We are always keen to give the Government credit for what they have done. Did the Chief Secretary see Sir Alan Walters's appearance

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on television about the same time? He was asked to give his reasons for the recession and to apportion blame. He said that it was due 30 per cent. to the world recession and 70 per cent. to the Government's irresponsible mismanagement of the economy. Does the right hon. and learned Gentleman agree?

Mr. Mellor : Is Professor Walters now an adviser to the Labour party? To what other views of his does Labour adhere? I will not join the ancient arguments between Professor Walters and one or two others with whom he disagrees. Chancellor Kohl, after three sucessive quarters in which Germany's gross domestic product has fallen, does not think that the recession was made in Downing street--and it was not much use to President Bush to suggest such a thing in the New Hampshire primary. We ought to be having a sensible debate about how Britain should move towards recovery.

It will not have escaped the hon. Gentleman's notice that the London business school recently forecast a growth of nearly 2 per cent. in the British economy this year, and I suspect that other forecasts will point clearly to a recovery this year. The question that Labour must answer, rather than making silly debating points, is what Labour policy would do to inhibit such a recovery from taking place.

Mr. Jimmy Wray (Glasgow, Provan) : Will the Chief Secretary give way?

Mr. Mellor : No, I am going to push on.

I am glad that the Leader of the Opposition is with us. Although I do not suppose that a greater torrent of words has ever been unleashed in the history of human civilisation than by the right hon. Gentleman, it is not easy to find much that he has had to say on the subject of inflation. I have had his conference speeches from 1983 analysed--I could not bear to read them all myself. Is it not interesting that, while everyone agrees that the fundamental issue for the British economy is inflation-- [Interruption.] Labour Members become worried as soon as the Leader of the Opposition is mentioned.

Mr. Bruce Grocott (The Wrekin) : On a point of order, Mr. Speaker. I am sure that you agree that it would be a gross constitutional impropriety if the researches mentioned by the Chief Secretary were carried out by civil servants and paid for by the taxpayer. Will the Chief Secretary take this opportunity of confirming that all the studies were carried out by Conservative central office--paid for, presumably, by business men overseas, and not by the taxpayer?

Mr. Speaker : It is not a matter for me, but I did not hear the Chief Secretary say that.

Mr. Mellor : I assure the hon. Gentleman that that is the case. I trust that the use of photocopying facilities in the House by the Labour party is equally subject to his scrutiny, given that he is so censorious.

Let us come to the point. It is beyond denial that the most fundamentally important factor for the success of British industry is low inflation ; yet, in his party conference speeches between 1983 and 1988, the Leader of the Opposition did not mention the word "inflation" once. Between 1989 and 1991, he mentioned it only in the context of cheap debating points about the Government's record. Nary a word-- [Interruption.] I am glad that the

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Leader of the Opposition is in such a good mood. Perhaps he is in a good enough mood to remember the occasion when, in answer to a question about how Labour would tackle inflation, he told The Evening Standard --it was published on 26 May 1989--

"To cut a long story short, we don't know."

I am sure that an offence against the Trade Descriptions Act has been committed here. When did the right hon. Gentleman ever cut a long story short?

The information that Labour has no policy on inflation, however, did not constitute a breach of the Official Secrets Act ; that has been well known for some time. Lest Labour Members consider this a subject for amusement, and merely a Tory point, let me add that Labour's supporters have been equally nervous about its inability to come up with a sensible and comprehensive policy on inflation. What about Mr. Ian Aitken, as Labour- inclined a journalist as can be found in this place? Everyone has heard of him. We usually hear hon. Members ask, "Who?" at this point, but no one has done so on this occasion, so I must be talking about someone who is well known to all Opposition Members. In December, Mr. Aitken referred to "a comprehensive economic policy, capable of answering one very simple question-- what would you do about inflation?' There is, in short, a void at the heart of Labour's economic policy".

What is the answer to that question--posed 15 months ago in The Guardian, which is read by most right hon. and hon. Members opposite?

When is the answer going to come? Does the Labour party seriously think that it will be able to get through the election without providing an answer? The Labour party has had years to think about it. There is going to be a frantic scramble to produce a document before the election. That is not in keeping with the Labour party's reputation as a solid group of citizens who are only too ready to show the public how much they have changed and how ready they are for the burdens of office.

It is perfectly obvious, when one looks at what Labour has said about inflation, that it does not understand it in the slightest degree. The Labour party thinks that the battle against inflation has been the cause of the nation's problems rather than the sine qua non of resolving them. It has opposed every measure that has brought inflation down, and it shows genuine resentment at the success of our policy to do so. It is apparent that the Leader of the Opposition was only too happy, in his days as a wild opponent of what the Government were doing, to stoke up rather than reverse the inflation of the 1970s. He was a particularly wild opponent of the International Monetary Fund and of the measures that were taken to bring control to the British economy.

Mr. Grocott : Will the Minister give way?

Mr. Mellor : No. The hon. Gentleman has blown it with a phoney point of order. I cannot believe that his IQ has increased markedly in the last 10 minutes.

Mr. Grocott : Will the right hon. and learned Member give way?

Mr. Mellor : No. I have already said that I do not intend to give way to the hon. Gentleman under any circumstances whatsoever. Mr. Grocott rose--

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Mr. Speaker : Order. Does the Minister intend to give way?

Mr. Mellor : No.

Mr. Speaker : If the Minister does not give way, the hon. Member for The Wrekin (Mr. Grocott) must resume his seat.

Mr. Mellor : The hon. Gentleman had his chance to exercise his larynx and he abused it, so as far as I am concerned that is it.

Mr. Haynes : Will the Minister give way?

Mr. Mellor : Very well.

Mr. Haynes : Will the Minister now compare the unemployment figures of the 1990s with those of the 1970s and 1980s? Will he also compare the crime figures of the 1990s with those of the 1970s and 1980s? He was in the Home Office when they were rocketing. The right hon. and learned Gentleman made particular reference to inflation and to the comparisons that could be drawn. How about unemployment and crime that I am now asking him to compare?

Mr. Mellor rose--

Mr. Haynes : Wait a minute ; I have not finished yet. The Minister will be aware that I shall be leaving this Chamber--[ Hon. Members :-- "Oh!"]--to go upstairs to a Committee to do some work there. I am glad that the Minister has given way to me, but instead of me walking out he will be kicked out.

Mr. Mellor : I do not sense that Opposition Front-Bench Members think that the Labour party is going to make a gain in Putney. It has not done very well there for 13 years.

Mr. Grocott rose--

Mr. Speaker : Order.

Mr. Grocott : The Minister is being selective in giving way.

Mr. Speaker : Order. The Minister may have been selective but he does not intend to give way. Let us get on quietly.

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