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Mr. Corbyn: On a point of order, Madam Speaker. Is it in order for the hon. Member for Colchester, North (Mr. Jenkin) to make an intervention on private pensions without saying that he is, or was, an adviser to the insurance company, Legal and General?
Madam Speaker: The Chair does not rule on interventions. If the hon. Gentleman were to rise to make a speech, I would expect him to declare an interest at the beginning, but I cannot rule that he has to make such a declaration on an intervention.
Mr. Jenkin: Further to that point of order, Madam Speaker. May I point out to the House that I have had no connection with Legal and General for more than a year?
Mr. Lilley: I do not know whether the hon. Member for Islington, North (Mr. Corbyn) wants to intervene to apologise. The House will note his ungracious attempt to slur one of my hon. Friends, and I shall think twice about giving way to him in the future. [Hon. Members: "Oh."] Opposition Front Benchers apparently approve of such behaviour, which tells us something about them.
Mr. Robert G. Hughes (Harrow, West): Is there not collusion between Opposition Front Benchers on these matters? In the corresponding debate last year, my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) suggested that Labour would abandon its commitment to uprate pensions in line with earnings. When he did so, he was accused of peddling wild rumours from central office. We all know who was right.
Mr. Lilley: To respond to the important point raised by my hon. Friend the Member for Colchester, North (Mr. Jenkin), I welcome the Select Committee's conference, which I saw was attended by an impressive array of continental experts and parliamentarians. Officials from my Department, and other Departments, have been to the conference and will report to me on the views expressed, which could be very interesting. I know from the Franco-British Council conference on the subject of funded pensions that there is great interest and considerable admiration on the continent for our success in building up private pension provision on the back of solid state-guaranteed pensions for the future.
Britain's strong position was confirmed recently by a new report from the International Monetary Fund, which highlights our enviable position compared with other European pension systems. The IMF estimates that the ratio of public pension liabilities to gross domestic product is 5 per cent. in Britain, compared with 76 per cent. in Italy, 111 per cent. in Germany and 114 per cent.
in France. The value of assets held in UK pension funds exceeds those of all other EU member states put together. We believe that we are better placed to provide decent pensions for our pensioners in the future.
Only 43 per cent. of those who retired in 1979 were in receipt of occupational pensions. Now, the figure is 63 per cent., and it is even higher among those who have retired recently. Some 5.6 million people are holders of appropriate personal pensions. Seventy-three per cent. of pensioners have income from investments and savings, compared with 62 per cent. in 1979, and their average total net incomes have gone up by 60 per cent. more than inflation since then. That is a track record of which we can be proud.
I must mention two other issues before drawing to a conclusion. First, I refer to a recent misleading statement made by the Leader of the Opposition, the shadow Chancellor and the hon. Member for Peckham, who is the shadow spokesman on social security. All of them have said that it is regrettable that we spend less on education than on unemployment. Where they get those figures, I do not know.
The Parliamentary Under-Secretary of State for Social Security (Mr. Andrew Mitchell):
They make them up.
Mr. Lilley:
Yes, they must do. I want to put the actual figures on the record. We spend £36 billion a year on education. The cost of all benefits to unemployed people is some £9 billion and falling. I hope that those hon. Members will correct the misleading statements that they have made when they come before the House.
Since the welfare state was established, the cost of social security has grown twice as fast as the economy. It has taken a rising share of national income and has been the main factor in driving up taxes and in the changes and burdens on business. Because of the reforms that we have introduced, it is now set to take a declining share of national income, leaving scope for lower taxes and setting us on a virtuous circle of lower taxes, a more dynamic economy, generating jobs and getting people off welfare and thus further reducing taxes. We have achieved that because our reforms are focusing help on those in need, cutting out fraud, getting people off welfare and into work and helping to drive up private pension provision for the future. Those are achievements of which we Conservatives can be proud.
By contrast, the Opposition have attacked virtually every reform that we have introduced and every proposal that they have made involves spending more. The simple truth is that the Opposition cannot be trusted to reform the welfare state, because they believe that they have a vested interest in the votes of those who depend on the money from the welfare state. The Opposition tried to do an about-turn on the issue and to pretend that they can both spend more and save at the same time. As a result, they are riven by the internal contradictions that I have spelt out. They claim that they will live within our budget, but refuse to implement or replace the £1 billion of savings that we have announced.
We shall want to hear from the hon. Member for Peckham whether she will implement the changes that we have announced but have yet to legislate for on lone parents, housing benefit, backdating and so forth, totalling the best part of £8 billion.
Ms Harriet Harman (Peckham):
I will begin by setting out our position on today's business. I shall advise my right hon. and hon. Friends not to vote against the general uprating order, because, as the Secretary of State has said, it contains upratings in line with inflation, which are important to those who depend on benefits.
There are many aspects of the Government's approach, however, with which we profoundly disagree. The Government have delivered a double whammy--higher costs for the taxpayer and lower benefits for the claimant. Their failure is clear from their record on social security. Perhaps that is why the Secretary of State was so defensive today and spent nearly all his speech attacking our plans. Clearly, our plans are the only plans that he feels are worth discussing.
The Secretary of State is so defensive about his record that he dare not put it before the House. The fact is that the cost to the public purse is up, and life for those on benefits is harder. The Tories are hitting the taxpayer and hitting the poor. They have failed on welfare because they have failed on work. One in five households of people of working age, not including pensioner households, have no one in work. In our divided Britain, there is poverty from the cradle to the grave: one in three are born into poverty; one in five pensioners die in it.
As this Parliament draws to a close, this debate provides a good opportunity to review the Secretary of State's record. At the last general election, the Tories posed as the party that would cut taxes; this afternoon, Secretary of State said that they had cut taxes. Could he have been referring to the Government's 22 tax increases? They posed as the party that would cut taxes, but instead put them up. They also posed as the party that would cut the social security budget, but instead they increased it. Since he became Secretary of State, the social security budget has risen. It is £15 billion a year more than it was in 1992, and takes one pound in three of all Government spending.
When the Secretary of State is in the mood to admit the increased spending, he blames the elderly. Like the Under-Secretary of State, the hon. Member for Hertfordshire, North (Mr. Heald), he says that it is all the fault of our pensioners and that it is the Government's generosity: they are generous to a fault; the problem is demography, the aging population, more people with disabilities.
The right hon. Gentleman claims that it is generosity to the sick, the elderly and the disabled that has driven up the social security Bill, but it is not. More than half the increase, £8 billion extra a year, is a direct result of
the growth of poverty and unemployment, which has led to the growth of income-related benefits. That is the price of Tory economic and social failure. It is not the elderly who push up the social security budget, but poverty.
Mr. Lilley:
The hon. Lady keeps making that point. The problem is that she does not understand the figures. Her predecessors, the hon. Member for Islington, South and Finsbury (Mr. Smith) and the right hon. Member for Glasgow, Garscadden (Mr. Dewar), did their home work, discussed issues with my officials and got their facts right. I have great respect for them. If she wishes to be informed, I would be glad to help. Indeed, I am happy to give her a table with a breakdown of the £8 billion extra expenditure on income-related benefits that she equates with extra expenditure on unemployment.
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