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Mr. Quentin Davies: On a point of order, Mr. Deputy Speaker. I know the Secretary of State sufficiently well to know that he would not set out deliberately to mislead
the House, but his answer to my intervention was quite inconsistent with page 45 of his own document. I think that--
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I do not think that that can be a point of order, if it is a point of debate. There will, no doubt, be an opportunity to make that point in the debate, if the hon. Gentleman succeeds in catching my eye.
Mr. Davies: It is a point of order, Mr. Deputy Speaker, because I thought that it might be in the interest of the integrity of the debate if the right hon. Gentleman had an opportunity to catch your eye again to put the record straight.
Mr. Deputy Speaker: It is not a point of order; it is a point of debate and a point of information. I have no doubt that it can be put on the record in the normal way.
4.42 pm
Mr. Steve Webb (Northavon): I note with interest that the Conservatives chose to debate Labour's policy on pensions. I regret that they did not choose to debate Conservative policy on pensions, because we could all have been home by tea.
So far as I can see, there is only one Conservative policy on pensions, which is to be against what they used to be in favour of--means-testing. There is plenty of meat in Labour's pension policy, and I shall address it in three aspects: first, the Government's record to date on pensioners; secondly, what is promised for the rest of the Parliament; and, thirdly, the longer term, of which there has been some discussion already.
The Government have much to be modest about in their record so far. When the Secretary of State made a statement to the House before Christmas, he said:
That figure of £140 a year does not bear much close scrutiny, because it comprises two elements: £40 from lower fuel bills, and £50 for winter fuel payments for people on income support this year and £50 for them next year. If I am not mistaken, the Secretary of State said "£140 a year", but he has counted the £50 twice. If a constituent said, "I hear that you are getting a £4,000 pay rise," a Member of Parliament would reply, "No, it's going to be only £2,000." If the constituent then said, "Ah yes, but I am counting next year's as well," one might feel a bit aggrieved. It is rather dodgy to include the same figure twice.
What have the Government achieved so far for pensioners, through the measures that they have taken? The Government's proudest boast is that they have done two things for pensioners. First, they have cut the rate of value added tax on fuel. We supported that, but what is it worth, on average, to pensioners? My hon. Friend the Member for Gordon (Mr. Bruce) tabled a written question asking what the cut in VAT on fuel from 8 to 5 per cent. would save an average pensioner household. The answer came back, 35p a week.
It gets worse, because the Government cunningly introduced that in August so that it would be reflected in the September retail prices index, which meant that, when pensions went up, they would go up by less than they would otherwise have done. When that factor is taken into account, the written answer says, the average gain to pensioner households from that VAT cut is 20p a week. If pensioners were to save that money for a month, they could buy a lottery ticket, so it is worth having.
Mr. Sutcliffe:
In opposition, we prevented the Conservative Government from putting VAT on fuel up to 17.5 per cent., so the saving is double the amount to which the hon. Gentleman refers.
Mr. Webb:
The Liberal Democrats supported attempts to prevent the Conservatives from putting VAT on fuel up to 17.5 per cent. However, the Labour Government's record should start on the day of the general election, so I am measuring from that point.
The 20p saving from the reduction in VAT on fuel is welcome but not exactly a king's ransom. What about the winter fuel payments? The Government are spending roughly £200 million on winter fuel payments and there are about 10 million pensioners, so that is £20 a head, or 40p a week. In total, the savings are 20p on VAT on fuel and 40p on winter fuel, which makes 60p a week compared with the Secretary of State's grotesque exaggeration of £140 a year.
I offer the following comment, to be sympathetic and to help the Government. I genuinely believe that, if they go on exaggerating their achievements, when people come up against reality and realise that it does not measure up, they will be disappointed. Rather than give the Government credit for having provided £20 for winter fuel and for having reduced VAT on fuel, they will say, "You have been going around saying that the saving is £140 a year, yet I am not better off by anything like that amount."
The Government will raise expectations if they overstate their case by saying that they are spending £20 billion on health and £19 billion on education, when those sums represent three years added together and all the numbers have been counted twice. People will be disappointed, and that will damage the Government. In a spirit of conciliation and friendship, I urge them to give more accurate figures.
I asked how much it costs to administer the one-off winter fuel payments, and the answer was £12 million. Could that 40p a week not have gone on the pension? I asked how much that would cost to administer, and the answer was nil, so £12 million has been wasted for a few winter headlines.
This policy is patronising to pensioners. Do the Government think that pensioners cannot be trusted to put by 40p a week for their winter fuel bills, and that they must have it in a one-off payment otherwise they may spend it? This is not a sensible way to proceed.
Mr. Rendel:
Does my hon. Friend agree that winter fuel payments are unlikely to be made at exactly the
Mr. Webb:
My hon. Friend is right. When the Government first introduced this policy, many of the payments arrived well into what one would unambiguously call spring.
The Secretary of State tried to defend the £140 a year figure last Thursday when we discussed the operating orders, but he realised that he was on a sticky wicket. The right hon. Gentleman said, "What does the hon. Gentleman know? Pensioners do not smoke like a chimney, so we cannot count the effect of tobacco taxes. Pensioners do not drive as much as other people, so we should not count the effect of petrol tax rises. Pensioners tend not to have private medical insurance, so we should not count that." That attitude is utterly patronising to pensioners. Most of the 10 million or so pensioners are fit and able, and contribute fully to society. Many of them, heaven forbid, have cars and drive. The effect on them of the petrol tax rise is very real, and the Secretary of State should not disregard it.
To arrive at that figure of £140 a year, the Government counted two beneficial items and exaggerated them. They should be set against the tax increases on petrol and tobacco and the abolition of the dividend tax credit, which we debated a few weeks ago. During that debate, my hon. Friend the Member for Kingston and Surbiton (Mr. Davey) challenged the Economic Secretary. He argued that poorish, non-taxpaying pensioners with dividend income will lose on average up to £75 a year. The response he was given was that the Government have introduced an income guarantee for those pensioners. My hon. Friend said, "Yes, but many of them will be disqualified because they have savings." "No, they won't," said the Economic Secretary, "because they won't have that much in capital."
To discover the truth, I tabled a question to the Department of Social Security--unlike the Treasury, the DSS still answers questions--which said that, out of the 300,000 non-taxpaying pensioners with dividend income, 250,000 would be disqualified from the guarantee because they have savings of more than £8,000. The Economic Secretary was wrong, and gave the House an inaccurate impression, inadvertently I am sure. Large numbers of people will lose out, because they will not be covered by the guarantee. The Government's record so far is modest in the extreme and has been grotesquely overstated.
What about the future? When my right hon. Friend the Member for Yeovil (Mr. Ashdown) challenged the Prime Minister during last week's Prime Minister's questions, the Prime Minister made a fatal mistake. He mistook a Government announcement for reality. He said:
"Under the new Labour Government, Britain's pensioners are £140 a year or more better off".--[Official Report, 15 December 1998; Vol. 322, c. 761.]
I, with a little help from my friends, describe that as Arthur Daley economics, which shows how long it is since we all watched television regularly.
"In addition to the things . . . that I mentioned a moment ago"--
the fuel payments and the VAT cut--
"from April this year, there will be . . . concessionary travel."--[Official Report, 27 January 1999; Vol. 324, c. 338.]
Everyone understood him to mean a national system of concessionary travel for pensioners, as proposed by the Deputy Prime Minister. However, although a scheme has been announced, it will not happen this year. It might happen next year. Pensioners hear such announcements or
read about them in the newspapers and, bizarrely, they believe them. To give another example, I met a group of pensioners recently and one of them said, "I see in the newspaper that we are going to get free television licences, so I am going to stop buying licence stamps." I had to say in reply, "No, you might get free television licences next year or the year after, but not yet. The Government wanted a few good headlines, but I am afraid that it will not happen for a while."
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