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House of Commons

Monday 1 May 1995

The House met at half-past Two o'clock


[ Madam Speaker-- in the Chair ]

Oral Answers to Questions


Social Security Card

1. Mr. Legg: To ask the Secretary of State for Social Security what plans he has to introduce a social security card for the payment of benefits.     [20116]

The Secretary of State for Social Security (Mr. Peter Lilley): Last year, I announced plans to automate the payment of benefits at post offices. Order books and girocheques will be phased out and replaced by a benefit payment card for all claimants who wish to be paid via a post office. That will help to eliminate fraud, reduce costs for taxpayers, be more secure for customers and support the future of the post office network.

Mr. Legg: Can my right hon. Friend confirm that, over the next three years, he will be spending £300 million to help to combat fraud? Can he also confirm that combating fraud effectively will help to ensure that benefits can continue to be paid through post offices?

Mr. Lilley: My hon. Friend is correct. I have obtained agreement from the Treasury to spend extra money on preventing fraud. We believe that that will save substantial amounts of money for the taxpayer and ensure that the money goes where it should--to those in genuine

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need. That is in addition to the investment that we hope for in the new payments system, which is of the order of £130 million. We hope to involve private finance in developing that operation.

Mr. Frank Field: What is the point of issuing the new cards when large numbers of people, often working in gangs, are wrongly claiming benefit? How many spare national insurance numbers are there? What action is the right hon. Gentleman going to take to prevent the use of any of the millions of spare national insurance numbers for fraudulent claims?

Mr. Lilley: The cards will, I hope, directly eliminate the sort of fraud that the hon. Gentleman mentions. He is correct to say that gangs of people steal order books and then impersonate their owners. Order books are one of the least secure means of payment. Once we have a payment card and post offices are directly linked to the central source of information, this form of fraud and abuse will be virtually eliminated, with a saving of about £150 million to the taxpayer. We are in the process of cleaning up the national insurance number system to make it more effective. It is true that a number of people who have emigrated or died still have their numbers on the system, but they are not, for that reason, available for anyone to use.

Dame Elaine Kellett-Bowman: Would my right hon. Friend care to commend my local office, which spotted a slight inconsistency about a gentleman who claimed to be incapacitated but who managed to drive up in a jazzy sports car to collect benefit? He was today convicted in Preston Crown court of defrauding the system of £60,000.

Mr. Lilley: I am sure that the whole House will welcome the detection of that abuse of the system. We are introducing a more objective system of evaluating whether people are fit to work. If they are fit to work, they will be helped back into work through back-to-work

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benefits; if they are unfit, they will receive the new incapacity benefit, which we want to go to those who are genuinely medically unable to work.

Mr. Bennett: Given the large number of people whose credit cards are stolen, what steps will the right hon. Gentleman take to enable people who lose their cards to get their payments quickly without having to go through a bureaucratic process that will cause them further distress?

Mr. Lilley: That is an important aspect. The consortia competing to bring in the system have been narrowed down to five. They are making their detailed proposals. One aspect for which they have to ensure that they have the best possible arrangements on offer is coping with people who lose their cards or who are unable to go to the post office and want to nominate a relative or friend to go in their place. All these things have to be done, and done securely.

Incapacity Benefit

2. Mr. Thurnham: To ask the Secretary of State for Social Security what representations he has received about the introduction of the new incapacity benefit; and if he will make a

statement.     [20117]

The Minister for Social Security and Disabled People (Mr. William Hague): I have received a number of letters about incapacity benefisince the changes were announced in December 1993. Those changes will target help through a fairer, more objective medical test and provide an affordable and sustainable system of incapacity provision for the future.

Mr. Thurnham: Does my hon. Friend agree that we are right to restructure the invalidity benefit system so that those who are genuine claimants will continue to receive benefit and others can be encouraged to return to work? Should that not help to control the ever-rising cost of benefit expenditure?

Mr. Hague: Yes, my hon. Friend is right. The old system was well intentioned but inconsistent and haphazard in its application. The new test will focus help on those who are entitled to it. That is what the welfare state is about and that is what the taxpayer is entitled to expect.

Dr. Reid: In the representations that the Minister has received, has anyone remarked on the amazing foresight--indeed, the prophetic nature--of the Department? Even before questionnaires have been completed and medical examinations undertaken, the Department suggests that there will be savings of £3.3 billion over three years. How is it that it can make that prediction before medicals have taken place? Is that not illustrative of the fact that the exercise has been led by the Treasury as a cost-cutting measure and is not a system of fair payments for disabilities?

Mr. Hague: No. The test is about focusing help on those who need it most and are entitled to it. Of course there are estimates of savings. We believe that there will be savings because we know that the old system was inconsistent and haphazard in its application. Everyone knows that except those in the Labour party.

Mr. Alan Howarth: I note the Government's intention next year to refer to placing, assessment and counselling

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teams the 29,000 people who, it is anticipated, will fail to qualify for incapacity benefit and will therefore sign on and claim the jobseeker's allowance. What plans do the Government have to provide advice and help to another 120,000, on the Government's estimate, who have degrees of disability, will not be eligible for incapacity benefit and will be required to seek work actively if they are to be able to claim benefit?

Mr. Hague: I can assure my hon. Friend that the Employment Service will be ready to provide the full range of its usual help to anyone who has been receiving invalidity benefit but is not eligible for incapacity benefit. I draw his attention to the improvements that we are making in the disability working allowance system for the many disabled people who want to work and are able to do so. The improvement will bring considerable benefits to many people.

Ms Lynne: I have no doubt that the Minister has received representations from citizens advice bureaux throughout the country, along with the National Association of Citizens Advice Bureaux. Where will the Government find extra funding for citizens advice bureaux so that they can cope with the increased work load due to the devastating effect that the introduction of incapacity benefit has had on many people?

Mr. Hague: Incapacity benefit will not have a devastating effect. It is about focusing entitlement on those who are medically incapable of work. The Government have a most constructive relationship with citizens advice bureaux, and I am confident that that will continue.


3. Mr. Jacques Arnold: To ask the Secretary of State for Social Security what progress he is currently making in combating fraudulent claims.     [20119]

The Parliamentary Under-Secretary of State for Social Security (Mr. James Arbuthnot): The fight against fraud remains a top priority. Some £645 million was saved in 1993-94 due to direct action by fraud staff. This was an increase of 17 per cent. on both the previous year's figures, and the target set for the year.

Mr. Arnold: My hon. Friend will know that there are few things that anger the British people more than the activities of rip-off merchants who fraudulently take the money of the British taxpayer. [Hon. Members:-- "Oh!"] It seems that that does not worry Opposition Members, but my constituents consider such rip-off activities a disgrace. That is why my constituents, along with people throughout the country, congratulate the Government on the work that has already been done to reduce fraud. What work is being done to harness computer technology and modern payment systems to ensure that fraud is further driven back?

Mr. Arbuthnot: My hon. Friend is right. It is of great concern throughout the country that some people defraud the social security system. That is why we are determined to squeeze fraud out of the system altogether so that it is not there for us to catch. We shall be concentrating on the electronic stop-notice system, which is already doing valuable work in London. We shall be increasing the use of data matching. As my right hon. Friend the Secretary

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of State has said, we shall be introducing benefit payment cards as well as increasing the number of highly targeted visits. These measures will be effective in reducing and eliminating fraud.

Mr. Mike O'Brien: Given the Secretary of State's miserable failure to answer the question asked by the Chairman of the Social Security Select Committee, will the Minister now confirm that there are about 15 million spare national insurance numbers, and give an undertaking that the availability of those numbers for fraud will be dealt with by the Government, because his right hon. Friend does not seem to be able to give an answer?

Mr. Arbuthnot: I am not entirely sure that the hon. Gentleman understands the question that he has just asked. A large number of national insurance numbers are in existence, partly because when somebody dies it may well be necessary to keep a number in existence to allow a pension that is payable as a result of it to continue to be payable. Perhaps he does not understand his question.

Family Credit

4. Mr. John Marshall: To ask the Secretary of State for Social Security what is the latest estimate of the number of families receiving family credit.     [20120]

The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt): In July 1994, 572,000 families were receiving familcredit. Figures for October 1994 will be published later this week.

Mr. Marshall: Will my hon. Friend draw a contrast between the policy of the Government, who are helping 572,000 families with low incomes, and the policy of another party, which is determined to create mass unemployment among the low-paid by introducing a national minimum wage? Does he expect it to recant on that policy on the road to Sedgefield?

Mr. Burt: I do not see why my hon. Friend should be shy about it. I think that he should name the Labour party as the party determined to bring in a minimum wage, which would destroy jobs. The great difference between us is that, while the Labour party remains obsessed with the level of benefits, we are equally concerned about the level of benefit dependency. Whereas our policies take people off benefits, the Labour party's policies would return people to them.

Mr. Corbyn: Would the Minister care to tell us what studies have been done by his Department on how much family credit could be saved by the introduction of a national minimum wage of £4.10 per hour and what the effect would be on the poverty levels of a large number of people who have to rely not just on family credit but on other benefits, because the wages paid--often by multinational corporations--are so disgracefully low? Indeed, in some cases they are actually falling.

Mr. Burt: The average payment for family credit at the moment is some £48 a week, which, as I said earlier, goes to some half a million families. As to studies, I am surprised that the hon. Gentleman would not rather rely on the judgment of the deputy leader of the Labour party, who said straightforwardly that a minimum wage policy would cost jobs. That seems to me a good enough study.

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Mr. Peter Bottomley: Does my hon. Friend agree that the time in people's lives when they are most likely to be poor is when they have their first child and move, normally from two incomes, two mouths to feed, to one income, three mouths to feed? Will he commit the Government to continue to pay child benefit as a way of ensuring that only one household in 12 needs family income support?

Mr. Burt: Child benefit remains a cornerstone of our support for families. The commitment was in the manifesto. The policy of the Government since that time has shown that we care very much about ensuring that the poorest families have the greatest support, which is why the 1988 reforms have produced £1 billion-worth of benefits, which are going to the poorest families in the country. That is £1 billion more than there would have been but for those reforms.

Invalidity Benefit

5. Mr. Campbell-Savours: To ask the Secretary of State for Social Security what are his estimates of the impact of changes in invalidity benefit payment arrangements on individual areas of the United Kingdom.     [20121]

Mr. Hague: Estimates about the effects of the introduction of incapacity benefit are derived from national data and therefore cannot be broken down regionally with reliable accuracy.

Mr. Campbell-Savours: The operative word being "reliable", of course. The data can be broken down if the Government want to. Notwithstanding the considerable distress that is felt by individuals who are being switched from invalidity benefit to incapacity benefit, why did the Government not measure--in areas such as my own in west Cumbria--the economic impact in terms of job losses and business closures as a result of the introduction of incapacity benefit? Has it not yet dawned on Ministers that a very large amount of money is being paid in invalidity benefit in areas of declining industry, where health is poor, and that the removal of much of that money from the local economy will have a major economic impact on areas such as mine?

Mr. Hague: The hon. Gentleman should bear in mind two points. First, the forecast national savings are savings in relation to what would have been spent, rather than in relation to the current spending level. Secondly, the hon. Gentleman, and all Labour Members, should remember that increases in spending mean increases in taxation, which also takes money out of the local economy and the economy across the nation. Labour Members never seem to think about the number of businesses that that closes, and the number of job losses that it causes.

Jobseekers Bill

6. Mr. Spring: To ask the Secretary of State for Social Security what are the projected savings from the passing of the Jobseekers Bill; and if he will make a statement.     [20122]

The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans): The direct benefi

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savings are projected to be around £270 million in a full year. However, that figure takes no account of success in getting people back to work earlier.

Mr. Spring: Does my hon. Friend agree that, apart from the financial considerations, there is also a moral aspect? Does not the taxpayer need to be protected from those who are not genuinely seeking work, and is that not precisely what the Bill will achieve?

Mr. Evans: Yes. The provisions for a jobseeker's agreement and direction are focused on that specific problem.

Habitual Residence Test

7. Mr. Timms: To ask the Secretary of State for Social Security how many appeals there have been against refusal of benefit under the habitual residence test; and how many appeals have resulted in an award of benefit.     [20123]

Mr. Lilley: The independent tribunal service records appeals according to the relevant benefit, not according to the reason for refusal. How many income support appeals refer to habitual residence is therefore not known.

Mr. Timms: The Secretary of State will be aware that, in an Adjournment debate on 21 March, the Under-Secretary, the hon. Member for Monmouth (Mr. Evans), told the House that the information was available. I do not blame him for that error, which exemplifies the enormous amount of confusion that there has been in both his Department and the Benefits Agency over the test since its introduction.

Is the Secretary of State aware of anecdotal evidence that at least half, and possibly two thirds, of appeals against refusal of benefit under the habitual residence test are successful? Does that not confirm that there are severe problems with the test, and does the right hon. Gentleman accept that the information for which I have asked is basic data that the House needs to make a proper evaluation of this deeply flawed legislation?

Mr. Lilley: I know that the hon. Gentleman has taken a sincere and continuing interest in the subject, and I respect him for that, but I do not necessarily accept all his analyses. Adjudication officers' decisions are not themselves law-making; only when they reach the commissioners do they determine the position, and become precedents elsewhere. We shall have to wait a while before any of them do that. The courts have, however, upheld the validity of the test as a whole. I think that the House will welcome the fact that we have acted to prevent benefit tourism, thereby saving the taxpayer considerable sums. Opposition Members always resist any changes that we introduce to prevent abuse of this kind: they are out of touch with the British people in that regard, as in so many others.

Mrs. Roe: I welcome the habitual residence test. May I urge my right hon. Friend to clamp down on bogus asylum seekers? Is he aware of the recent case of the Algerian asylum seeker, Mr. Abeey Dikes, who, on the tube, kicked and head-butted a young doctor? Does he agree that people like Mr. Dikes should not be able to stay in this country at the taxpayer's expense?

Mr. Lilley: It is not for me to comment on individual cases, but I am aware of the outrage that is caused when

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people abuse this country's hospitality, either by committing crimes when they are being supported here or by obtaining support to which they are not entitled. We shall do all in our power to prevent both abuses.

Mr. Bradley: I thank the Under-Secretary for correcting his statement in the Adjournment debate that he had supplied me with figures showing the number of people who had won appeals. In a written answer, he confirmed that he had not made that information available. That is not good enough, however: we need to know how many British citizens have been denied their entitlement to income support through the habitual residence test.

As the Secretary of State is able to provide me with figures for every office in the country showing the number of people who have been denied benefit through the test, will he now supply me with the number of people whose benefits have been started again because they have won their appeals against the test?

Mr. Lilley: I shall certainly see whether such information is available, but I fear that it may not be. Obviously, information that comes directly from the independent tribunal service is normally provided by the service, and I do not think that it would be cost-effective to try to produce the records that the hon. Gentleman proposes.

There will be a number of appeals. Some will be successful; some will fail. An appeal mechanism is an essential part of our system--a proper safety net whose existence we should welcome, rather than counting it as a failure when an appeal succeeds.

Pensioner Households (Consumer Goods)

8. Mr. Brazier: To ask the Secretary of State for Social Security how many pensioner households had (a) a fridge, (b) a car, (c) a freezer, (d) a telephone and (e) a television in 1979; and how many do today.     [20125]

Mr. Burt: In 1979, some 88 per cent. of pensioners had access to a fridge; by 1991-92, the latest year for which information is available, that figure had climbed to 99 per cent. In 1979, 34 per cent. had access to a car; 49 per cent. now have access to one. In 1979, some 32 per cent. had access to a freezer or fridge-freezer; 75 per cent. now have access to one. In 1979, some 57 per cent. had access to a telephone; 92 per cent. now have access to one. In 1979, some 96 per cent. had access to a television; 99 per cent now have access to one.

Mr. Brazier: Do not those practical examples illustrate how wealth has trickled up from the general economy to retired people? Is it not easy to forget the plight of so many retired people in earlier generations, including those who lived under the previous Government, who saw the retirement living standards, which they had worked so hard to save for and hoped for, destroyed by the scourge of inflation, which this Government have overcome?

Mr. Burt: The most significant finding from studies on low income shows how the income of pensioners as a group has come out of the bottom decile of income in a manner unprecedented before the Government came into office. Pensioners are increasing their income through occupational pensions and the like, but, as my hon. Friend

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said, they remain vulnerable to policies that would produce inflation--policies advocated by Opposition Members. I see no answer in new Labour to old inflation.

Mr. Wicks: Lest this question is designed to produce complacency, will the Minister tell the House how many pensioners paid VAT on fuel in 1979 and how many do so today? Will he explain why more old people die in the winter in this country than in any European country for which figures are available?

Mr. Burt: Labour Members persist in presenting the image of the pensioner as a dependent person. When will they appreciate that pensioners are fitter than they were before, live longer than they did before, have more varied interests in their leisure time, and are making a substantial contribution to the voluntary sector and society? The Government cater for the poorer pensioner by reforms introduced in 1988. We have been able to put in £1 billion in extra support to the poorest. I should remind the hon. Gentleman that the VAT compensation package was higher than that suggested even by his Front-Bench team.

Mr. Congdon: Does my hon. Friend agree that his figures demonstrate the success of occupational pensions in enhancing living standards for the elderly, and that we need to do even more to encourage more people to put money into occupational pensions for their retirement?

Mr. Burt: My hon. Friend is right. The picture continues in the United Kingdom of pensioners being much more reflective of society as a whole, with a variety of different incomes and statuses. The Government seek to encourage those aspirations. We recognise that, when people retire, they still retain aspirations in life. We want to fuel those aspirations; we do not want pensioners to be bracketed as a group that is continually dependent on the rest of society. Pensioners are not, and they do not deserve to be because they have worked for us.

Mr. Winnick: Is the Minister aware that some 25 per cent. of all single pensioners have an income of less than £70 a week, and that is before housing cost? Does not that information, which was given to me in a parliamentary reply, illustrate the scale of pensioner poverty? Despite all that the Minister has said, the fact that so many pensioners are living on such low incomes should embarrass the Government. It is undoubtedly a factor in why so many people conclude that the only group that the Government are really concerned about is the rich and the prosperous. They could not give a damn about the millions of pensioners who live in poverty.

Mr. Burt: I do not know why the hon. Gentleman ignores the information that, since 1979, the total average income of pensioners has increased by 50 per cent., which is faster than the rate of growth in the population as a whole. He must have his own motives. In seeking to protect the poorer pensioner, the Government are ensuring that, through our reforms in social security, we put money where it is most needed. At the same time, we have encouraged the pensioners to make contributions for themselves, and that is reflected in the growth in income over the years.

The hon. Gentleman never apologises for the damage done by the Labour Government to the pensioners during 1974 to 1979, when not only was their income robbed by inflation, but his Government presided over a one-third

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cut in capital spending on the national health service--a service that we have built up to support all pensioners. Instead of displaying incredulity and arrogance in the way that he puts his questions, when will the hon. Gentleman apologise for what his Government did to pensioners?

Mr. Nigel Evans: Does my hon. Friend agree that central to our belief that the quality of life of our pensioners must improve is our intention that their real spending power should also improve? Does he agree that, between 1974 and 1979, one of the tragedies to befall our pensioners was that those who had put income to one side for their future saw the real value of that money halved by inflation? Will my hon. Friend give a commitment today that the Government will ensure that inflation is kept to a minimum to preserve the real value of pensioners' money?

Mr. Burt: Yes. The House and the country know that the Government have pledged to keep inflation low. We have pledged to follow policies that will keep down inflation. If the country thinks that a return to the inflation policies of the Labour party will benefit anyone, it is sadly mistaken. I do not believe that the country will make such an error of judgment.

Social Fund Funeral Payments

9. Mr. Kevin Hughes: To ask the Secretary of State for Social Security when he intends to publish the report by the Social Security Advisory Committee on the proposed limit to social fund funeral payments and the Government's response to that report.     [20126]

Mr. Lilley: I am considering the Social Security Advisory Committee's report and I will lay the report, and my response to it, before the House shortly.

Mr. Hughes: Is the right hon. Gentleman aware of the huge regional variations in the cost of a funeral? Today, I telephoned round my constituency and the cheapest funeral I could find cost in excess of £1,000. Will the right hon. Gentleman now consider scrapping the national limit of £875? Has he no sympathy for the bereaved families on low incomes, or is it just another cynical attempt to raise funds so that the Government can cut taxes before the next election?

Mr. Lilley: I am aware of the differences across the country in the fees for cremation and, in particular, burial and I want to take that into account in the examination that I am currently conducting. The hon. Gentleman should recognise that the number of claims for social fund funeral payments has doubled over the past six years and the amount spent has trebled. Therefore, it is only right that we should take action to prevent abuse. Indeed, we have already taken action to stop people seeking a distant relative on income support to make the application. I thought that we had the support of the Opposition in that measure. Are they now withdrawing it?

Mr. Dewar: Is the right hon. Gentleman seriously maintaining that the growth in the number of funeral grants is the result of abuse, lead swinging and fraud? Is it not rather a direct reflection of the growth in poverty over the past few years?

Can we take it from the parliamentary answer to the hon. Member for Sutton and Cheam (Lady Olga Maitland) on 5 April that the £875 ceiling--a figure that is below

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the mean and the median award in the previous financial year--is now being abandoned? Does the right hon. Gentleman accept that the one essential test for any replacement scheme is that it genuinely allows for a dignified funeral for a bereaved family facing difficult circumstances?

Mr. Lilley: Since we took steps to ensure that the nearest relatives or friends with a genuine connection with the deceased undertook the funeral--rather than distant people brought in purely for the purpose of ensuring eligibility for grants--the growth in claims has stopped almost overnight. The hon. Gentleman may wish to withdraw his support for that measure, in common with the Opposition's usual practice of not taking any steps to ensure that money goes to those who are genuinely in need.

Conservatives want to ensure that those in receipt of income support can give their relatives a proper, dignified funeral, but we do not want to see the money wasted under the method to which the hon. Gentleman seems to wish to return.

Occupational Pensions

10. Mr. Dunn: To ask the Secretary of State for Social Security what proportion of retired people had occupational pensions in 1979 and 1994; and if he will make a statement.     [20128]

Mr. Arbuthnot: In 1979, 43 per cent. of people over state pension age had an income from an occupational pension. By 1992, the latest year for which figures are available, that proportion had increased to 60 per cent.

Mr. Dunn: Will the Minister confirm that the Government's encouragement of occupational pensions has helped to achieve a 50 per cent. increase in pensioners' average net incomes since 1979? Will he further confirm that measures in the Pensions Bill, against which the Labour party voted, will help to make occupational pensions more secure in future?

Mr. Arbuthnot: Yes. Our policy is to encourage private pension provision, the money from which goes into industry and into creating assets to build up pensions for the future. Last Monday, however, in its reasoned amendment, the Labour party voted not to give the Pensions Bill a Second Reading. It voted to deny pensioners the security that the Bill will provide, it voted to deny women the equality that the Bill will provide and it voted to deny the entire country of the choice that the Bill will provide, yet Labour Members pose as the friends of pensioners.

Mr. Ingram: Everyone would welcome the growth in the number of people in receipt of occupational pensions, but will not many millions of our fellow citizens, who will become pensioners in the years ahead, be dependent on the state earnings-related pension scheme to supplement their pension income? Does the Minister accept the assessment of the Government Actuary that the proposed changes to SERPs in the Pensions Bill--the very Bill that he is defending--will substantially reduce people's supplementary pension income, with a total

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reduction of more than £9 billion by 2050? Will he give detailed figures assessing the effects of those changes on individual entitlement at the time of retirement?

Mr. Arbuthnot: Today is Labour Day and this is new Labour speaking. It surprises me that Labour has decided to attack a reduction in state spending in the light of its new Labour image on Saturday. It also surprises me that Labour dares to say anything about pensions, as it will not even tell the country whether, if it were in office, it would uprate pensions by prices or by earnings. It is necessary, as I have said before, to improve and increase private pension provision. One of the reasons why there will be a reduction in SERPs is that so many people will be going into private pension provision over the next 20, 30 or 40 years.

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