THE PARLIAMENTARY DEBATES
OFFICIAL REPORT
IN THE SECOND SESSION OF THE FIFTY-SECOND PARLIAMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND [WHICH OPENED 7 MAY 1997]
FORTY-EIGHTH YEAR OF THE REIGN OF HER MAJESTY QUEEN ELIZABETH II
SIXTH SERIES
VOLUME 327
FIFTH VOLUME OF SESSION 1998-99
House of Commons
Monday 8 March 1999
The House met at half-past Two o'clock
PRAYERS
[Madam Speaker in the Chair]
Oral Answers to Questions
SOCIAL SECURITY
The Secretary of State was asked--
Pensioners (Income Support)
1. Mr. John Grogan (Selby): If he will make a statement about the pilot study carried out by his Department in York to encourage take-up of income support by pensioners. [73038]
The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley): As a Back-Bench Member for the City of York, I welcomed the Government's decision to pilot take-up activity in York. The outcome of a pilot in York, and in the eight other locations, is being analysed. Until the full evaluation is complete, the results will not be meaningful, and it would be premature to comment.
Mr. Grogan: Given that official estimates suggest that at least 500,000 pensioners do not claim the income support to which they are entitled, how many pensioners in York and North Yorkshire does my hon. Friend
estimate will be eligible for the Government's new minimum income guarantee when it becomes effective in April, and what plans does he have to use publicity to encourage them to claim their entitlement?
Mr. Bayley: I thank my hon. Friend for that question. When it is introduced, a minimum income guarantee will prove a real boon to the poorest pensioners, providing a minimum of £75 a week for single pensioners and £116.60 for couples. We estimate that approximately 4,000 pensioners will benefit from the minimum income guarantee in the York local authority district, and about 14,500 in North Yorkshire.
Means-tested Benefits
2. Mr. Peter Viggers (Gosport): What proportion of total payments made by his Department are means-tested. [73039]
The Secretary of State for Social Security (Mr. Alistair Darling): The proportion of total social security expenditure going on means-tested benefits was 34 per cent. in 1997-98. In 1979, it was 16 per cent.
Mr. Viggers: Does the Secretary of State agree that means-tested benefits are much more expensive to administer than universal benefits and can be grossly unfair? Is it not a fact that someone who has saved for his or her retirement can actually be worse off than someone who has made no provision and who will get the benefit of the minimum income guarantee, together with housing benefits and council tax benefit? How can he possibly begin to justify that to decent and respectable people who want to remain independent?
Mr. Darling: If means-tested benefits are unfair, they were as unfair in 1979 as they are now. The hon. Gentleman supported the previous Government when they doubled the number of means-tested benefits.
When we came into office, we found that the disparity in income had grown dramatically over 18 years, and we deliberately set about doing far more for poorer people--
by introducing the working families tax credit, the disability income guarantee, the minimum income guarantee for pensioners and other measures. We have also increased universal benefits, such as child benefit, and our pensions proposals are designed to ensure that we end one of the great scandals of today--that more than a third of pensioners are likely to rely on income-related benefits when they retire. We aim to lift those people out of that position.
The Government are taking action across the board, but I do not agree that means-tested benefits are inherently wrong. They do a great deal to help the poorest people in our society.
Mr. Derek Twigg (Halton):
Is my right hon. Friend aware that, when the Tories talk about means-tested benefits, my constituents live in fear that they really want to talk about cutting benefits and attacking people in poverty? Is not the difference between the parties that, when the Labour party talks about means-testing, we talk about ensuring that those most in need get the benefits that they deserve?
Mr. Darling:
The working families tax credit has a very flat taper; it is designed to help people who would not otherwise receive help, and to make work pay. We are determined to do--as we said that we would in our manifesto--far more to help the poorest pensioners, some of whom did very badly in the previous 18 years. Unlike the Conservative party, we are genuinely anxious to tackle not just the immediate effects of poverty but, above all, the causes of poverty, into which far too many people have fallen.
Mr. Quentin Davies (Grantham and Stamford):
Is it not both unreasonable and thoroughly unfair that, according to the Government's proposals, the only pensioners who can look forward to their earnings in retirement being linked to average earnings will be those who qualify for income support--for the Government's so-called minimum income guarantee? Under the Government's proposals, nobody who has earned an occupational pension or a state retirement pension by contributing to the national insurance system for 40 years can dream of that measure of protection. Are not the Government thoroughly ashamed that, after all the rhetoric of the last Parliament and all the promises delivered by hundreds of Labour candidates before the general election, no move at all has been made to deliver on the promise to link the state retirement pension to earnings?
Mr. Darling:
It is my recollection that the Conservative Government broke the earnings link with pensions in 1981, and we certainly made it very clear that we were not proposing to restore the earnings link with pensions. Instead, we have done two things. We have made proposals to put the long-term basis of pensions on a proper footing, with a new state second pension that will help those on the lowest earnings and that is designed to ensure that someone who works for a lifetime and saves during that period need not rely on income support at the point at which they retire. Our other proposals are all designed to alleviate the poverty that we inherited among pensioners and others. Across the board, the Government are determined not only to deal with the effects of poverty
Mr. Paul Flynn (Newport, West):
Would not the best way of achieving my right hon. Friend's aim of fewer pensioners reliant on income support and other means-tested benefits be to raise the level of the basic pension? The Conservative party broke the earnings link in 1980. If it had been maintained, the basic pension next month would be not £66 but £90. Does my right hon. Friend agree that most of the pensioners who will not receive the guaranteed minimum income--between 400,000 and 700,000 of them--are those who say, "For all our lives we have never taken any handouts and we will not start now"? They would accept an increase if it were an entitlement and on the basic pension, but they will not take it if it is on income support because they perceive it as a handout. We have enough money--more than £6 billion--and the cost would be £3 billion. Why do we not go some way towards undoing the damage done by the Conservative Government and raise the basic minimum pension to £75 this year?
Mr. Darling:
The cost of increasing the pension to £75 this year would be substantial. I point out to my hon. Friend that more than half of those who do not receive the minimum income guarantee have excess capital of more than £20,000. About 190,000 people have capital of more than £50,000. In our pension proposals, we ensured that we had a new system through the state second pension that would benefit those who are on lower earnings throughout their lifetime. Alongside that is the £2.5 billion package that we announced last summer. We make no bones about it: we decided that, rather than spread the sum available far more thinly--something that would not have helped some of the poorest pensioners about whom my hon. Friend and I are most concerned--we would give far more help to those on lower incomes.
If we increased the basic state pension to £75 a week, that would cost about £3 billion. I believe that it is far better to spend our money helping those pensioners who did least well over the preceding 18 years, as well as putting into law proposals that will ensure that the problem is not so acute in years to come.
3. Mr. David Rendel (Newbury):
What steps he is taking to improve the financial position of thebereaved. [73040]
The Minister of State, Department of Social Security (Mr. Stephen Timms):
The reforms in the Welfare Reform and Pensions Bill will provide specific help for the first time to widowers as well as widows. The new lump sum bereavement payment at £2,000 will be double the value of the existing widow's payment. Our aim is to concentrate help where and when it is most needed at the time immediately following bereavement and on those with children.
Mr. Rendel:
I know that the Department received a letter from Captain Mongor pointing out that, as recently as September 1998, it wrote telling him that his widow would get the full additional pension even if he died after
Mr. Timms:
This is another measure inherited from the previous Government. Many people knew about the change and made plans accordingly, but it is the case that Department of Social Security leaflets were not updated until 1996. We are investigating why that was so. I can tell the House that we shall consider a claim for compensation from anyone who can establish that he or she received advice that did not reflect the change from April 2000 and, as a result, acted to their detriment. We shall be announcing further details shortly.
Mr. Frank Field (Birkenhead):
One promise in "New Contract for Welfare", is that
Mr. Timms:
The coverage is being extended to widowers. It will be a new contributory benefit for widowers. Those with children will continue to receive non-means-tested help until the youngest child for whom they are responsible ceases full-time education. The income support safety net will be in place for those who are older than 55 when the measures are introduced and who are widowed in the following five years. We are concentrating help--I think that my right hon. Friend will support this--on those who at the time need it most.
Mr. John Bercow (Buckingham):
Further to the highly pertinent inquiry from the right hon. Member for Birkenhead (Mr. Field), how does the Minister seriously expect to eradicate the something-for-nothing culture if he continues to pursue his reform of widows pensions in such a way as completely to undermine the contributory principle and to leave worse off no fewer than 250,000 women the length and breadth of the United Kingdom?
Mr. Timms:
I have made the point that there is a new contributory benefit for widowers. There has been no such measure before; we are introducing one. It is time-limited, but not means-tested. All widows will receive non-means-tested benefit for six months to help during the transition, and those with children will continue to receive non-means-tested help until the youngest child ceases full-time education. We are modernising the system. Now, seven in 10 married women are in work. When the original system was introduced, the proportion was very much lower. We must change the system to reflect the changing times in which we live.
Mr. Tony McNulty (Harrow, East):
Can my hon. Friend confirm that, for the first time, widows and widowers will get comprehensive assistance via the single
Mr. Timms:
My hon. Friend makes an interesting point. I looked carefully through the documents issued this morning by the Liberal Democrats to see whether the matter was dealt with there. My hon. Friend is right--it is not. He is also right about the extra help that we are making available through the single work-focused gateway. That is an extremely important change, which will help many thousands of people. It is important for the House to know, too, that we are doubling the lump sum that will be payable to both widows and widowers on bereavement.
"people can have greater confidence that they will get proper protection in return for the contributions they make."
How does my hon. Friend square that with the proposals to strip out coverage for widows benefits, even though many people have paid 30 years' contributions for that cover?
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