House of Commons
Wednesday 21 April 1999
The House met at half-past Nine o'clock
PRAYERS
[Madam Speaker in the Chair]
Pensioner Poverty
Motion made, and Question proposed, That this House do now adjourn.--[Mr. Jamieson.]
9.35 am
Mr. Paul Burstow (Sutton and Cheam): When I tell the House that
- "Older people are more likely to be living in poverty, whether this is defined as below half-average income or the receipt of means-tested benefits,"
In Britain today, one in four older people live on incomes that are less than half national average earnings after taking housing costs into account. However, it is often in the personal and the specific that we come to a better understanding of what such figures mean in practice. For some time, I have been a regular visitor to the Sutton Seniors Forum, which meets in my constituency every month. With a regular turnout of 160 people, it is one of the fastest growing of such forums anywhere in Greater London.
That interest prompted me to initiate this debate, but the final spur was a letter from a Cheam constituent which arrived in my constituency office last week. My constituent and his wife might not fall under the definition of poverty that I gave earlier, but the letter expressed sentiments that will find an echo in the constituencies of many hon. Members. Let me quote briefly from it:
What is a decent income? Last year, Age Concern published a report entitled "Raising the Wage of Retirement", based on work by Professor Eric Midwinter. In his analysis, Professor Midwinter came up with a figure
of £150 per week per person, but even that is modest in comparison to average earnings. At the time, only 27 per cent. of single pensioners had gross incomes at or above that level and only 28 per cent. of couples had at least £300 per week. The amount spent on the three basics that we all need--housing, fuel and food--takes a far greater share of poorer pensioners' outgoings. Figures suggest that a single pensioner who relies on state benefits spends more than half of his or her income on those basics, while a two person non-retired household spends only 37 per cent. When other hon. Members have the opportunity to speak, I hope that my hon. Friend the Member for Northavon (Mr. Webb) will be able to draw the House's attention to some figures on fuel poverty that he recently obtained. I could not believe the figures because their impact was staggering.
Professor Midwinter put the matter clearly. In the report, he stated:
What about pensioners who have incomes of less than £68 per week, but are disqualified from income support because they have savings of £8,000 or more? There are more than 600,000 such people caught in that savings trap. The Government's Green Paper, published last year, says a lot about income support, but very little about the basic state pension. However, the trends are clear; the steady erosion of the basic state pension began under the Conservative Government, when the link with earnings was replaced by a link with prices. That erosion is set to continue. In 1980, for every £100 of average income, the basic state pension amounted to £21; by 2010, it will have fallen to only £13.
The Government are often criticised for placing far too much weight and reliance on the work of focus groups and other research tools in determining their policy and direction. Would that it were so in the case of pensions. Last year, the Department of Social Security published research note No. 83 on pensions and retirement planning, which makes for interesting, but depressing, reading. That research found that most people aged under 40 believe that the state pension will disappear, and that older people do not see the state pension continuing for their children or for their children's children. However, almost no one--according to that research--wants the state to withdraw. People want the Government to stay in the pensions business for the long term. When it comes to providing a basic, bread-and-butter foundation pension, the research found that the fairness, universality and dependability of the state pension carried much weight with the vast majority of a representative sample of the population.
The research certainly bears out the views of many of the members of the seniors forum in my constituency and, I am sure, of a great many people in this country. A couple of quotes from the research document are especially relevant. It states:
I acknowledge that the Budget contains welcome improvements to the circumstances of pensioners, but one or two unfortunate, and perhaps unintended, signals were sent to older people. Take the new 10p tax rate: it delivered good headlines on Budget day, but the small print revealed that pensioners with small incomes from savings were not to benefit from the new tax rate. Almost 1 million older people will continue to pay 20p of every pound of savings income in tax. The savings to the Government derived from not extending the benefit of the new tax rate is only £55 million. I hope that the Minister will assure the House today that the Government remain open-minded and are willing to consider the representations from a wide range of organisations, not least Age Concern. I wonder how much, or how little, the Treasury consulted the Department of Social Security on the new 10p rate. What message should older people take from their exclusion from that tax rate?
Another issue that focus groups picked out was the belief that British pensioners do not fare well by European standards. That is hardly surprising, because it is true: average incomes of older people in the UK are lower as a proportion of average income of the total population than in most other European countries. Older people in this country are over-represented among the poorest 30 per cent. of the population compared with older people in other European countries.
The Budget can best be described as a bit of a curate's egg for pensioners--good in parts. The basic state pension remains, but the earnings link was broken by the Conservatives in 1980s. To restore that link fully and catch up from the time it was broken would cost £12 billion. My hon. Friend the Member for Southwark, North and Bermondsey (Mr. Hughes) raised that matter on Monday during Social Security questions, and the Minister of State made it clear that restoring the earnings link for the basic state pension was not an option that the Government would consider. To be honest, I doubt that Liberal Democrat Front Benchers are likely to declare a commitment to such a policy either. Nevertheless, it is worth noting that, had the link been maintained, a single pensioner would today have a pension of £94.50 per week.
"We are pensioners aged 65 and 67, we have the state pension, a very small private pension, and pensioners bonds that mature this year, making up our total income."
He goes on to describe the impact of price increases, tax changes and interest rate cuts, which, in his words,
"must be affecting many pensioners like ourselves. We have some hard earned savings but the interest is peanuts, so to meet the shortfall in income we will have to use our savings, but they will run out one day, and then presumably we live off the state."
Many older people are in the same boat as my constituents--living on a fixed income whose value is steadily eroding, while outgoings are steadily rising. That is the lot of far too many older people. That is where the Acheson report comes in; its recommendations stated that older people need higher state benefits to improve their living standards and, therefore, their health. A decent income is the foundation on which everything else rests.
"Many older people cannot live 'ordinary' lives, simply because they have insufficient incomes. They can stay alive, they can exist, but they are effectively excluded from much of what we would regard as normal life."
What is to be done? The Government's answer is more means testing for more pensioners, but that will condemn hundreds of thousands of people to a life of poverty. Indeed, as many as 700,000 older people who are entitled to claim income support are losing out now--on average by £16 a week. How a means-tested benefit can be called a guarantee is beyond me.
"Most people feel that a state pensioner should not need to claim income support--indeed, they see this as paradoxical."
21 Apr 1999 : Column 825
It continues:
It certainly is. The Green Paper rightly raises the possibility of some changes being made to the thresholds. Will the Minister tell us when decisions will be taken and, more important, when those decisions will be announced to the House; and when changes that will benefit our constituents will be made?
"There is also often disquiet about the fact that Income Support thresholds can leave those who have worked to provide for themselves with a small occupational or personal pension worse off than those who have made no provision at all. This appears unfair and demotivating."
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