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Mr. David Willetts (Havant): I begin by welcoming one of the few new announcements that we have had today. The Chancellor referred to the measure, but it was strangely missing from the Secretary of State's statement. I refer, of course, to the proposed new regime for unemployed benefit claimants who, we are told, will be required to sign on daily.
I recognised that policy announcement, and I think that it may be the first victory for the common-sense revolution. Only three weeks ago, we said:
Most of what the Secretary of State said was repeats. We had the minimum income guarantee for pensioners that we had heard about before. We had the winter fuel scheme, which is also a repeat. Stakeholder pensions are a repeat. The second state pension is a repeat. The home energy efficiency scheme is a repeat. In fact, it is no wonder that the TV licence is the centrepiece of the right hon. Gentleman's statement, because all he is showing is repeats.
What was conspicuous about the right hon. Gentleman's statement was the complete absence of a strategy for dealing with pensioner poverty. He began his statement by saying that if things had carried on, one in three pensioners would have been dependent on means-tested benefits. He then announced an increase in the basic pension of 1.1 per cent. and--I should be grateful for his confirmation of this figure--an increase in the minimum income guarantee, which he does not like to call a means test although it is one, of 4.9 per cent.
We should like to hear from the Secretary of State how many more pensioners he estimates will be brought within means-tested benefits as a result of the statement today. He cannot say in the same statement that he is trying to address the problem of more pensioners being dependent on means-tested benefits, and promptly announce a further increase in means-testing for pensioners.
Does not the right hon. Gentleman remember the Chancellor saying to the Labour party conference when he was in opposition:
Elderly people will not let the Secretary of State off the hook with a 75p increase in the basic pension, when in his Department's expenditure plans published only in March, he assumed a 1.3 per cent. increase in the basic pension--not the 1.1 per cent. announced today, but a £90 million saving from pensioners, which he has simply pocketed.
Meanwhile, the right hon. Gentleman is hitting pensioners with a range of measures that take money away from those who had the prudence to save--the £5 billion a year attack on pension funds through advance corporation tax; the abolition of dividend tax credits which hit 300,000 pensioners who are not even within the range of income tax; the scrapping of the married couples allowance, with no replacement for the pensioners who will find in future that their age allowance has been taken away from them, at a cost of £500 in tax a year.
The Government are taking from prudent pensioners who saved, in order to finance a further increase in means-testing. It is the wrong way to go.
May I also ask the Secretary of State about his policy on benefits and assistance for families? For the past year, he has fought to get through the House a measure, the working families tax credit, for which the central argument was that it was important for benefits to be delivered through the tax system. Has he any evidence whatever that paying a benefit of given value through the tax system rather than the benefits system has any effect on incentives or behaviour?
Perhaps the penny has dropped for the Chancellor. He announced today that a year after the working families tax credit comes in, he will promptly extract from the tax credit all the payments in respect of children, and convert them back into a benefit to be paid, usually, to the mother. After one year of the tax credit being paid through the tax system, a significant chunk of it will return to the benefits system. I should be interested to hear from the Secretary of State how he can defend that as a consistent and coherent strategy for dealing with incentives for families.
Finally, as he hears the Chancellor arguing the case for lower marginal rates for entrepreneurs, does the Secretary of State have a pang of guilt about the fact that later today he will impose a 73 per cent. marginal rate of tax on people in receipt of incapacity benefit, simply because they had the prudence to save?
Mr. Darling:
On the last point, I am particularly pleased that we will increase the amount of money that we give to young severely disabled people by £26 a week. The Conservative party did nothing about that for the 18 years that it was in power.
The hon. Gentleman asks about our strategy. Let me remind him of the strategy. He complains that some of what I say is repeated, but good stories are worth repetition. Thanks to Conservative policies, one in three people were heading towards retirement on means-tested benefits because they were getting so little through the pension system that we inherited.
The changes that we are making--reforming SERPS and increasing the amount of money that lower paid workers get--will mean that most people, after working for a lifetime, will be able to retire above the means-tested level. Most people would consider that a strategy worthy of support.
Let me also set out what we are doing for today's pensioners, about which the hon. Gentleman also complains. As is clear from what the shadow Chancellor said last year, the Conservative party opposes all the additional expenditure that the Government have put in place since taking office. We are facing up to the fact that, during the past 20 years, more than 2 million pensioners lost out as a result of the Conservative party's policies.
The hon. Gentleman has told us time and again that he is against the minimum income guarantee. That means that the 2 million pensioners now receiving the minimum income guarantee would be £8 a week worse off as a result of Conservative party policy. He complains that we are bringing more people into the minimum income guarantee, and, yes, 25,000 to 30,000 people will come into the minimum income guarantee, but the point is that they will be getting more money as a result. I am willing to stand at the Dispatch Box again and again to defend giving more money to the poorest pensioners in Britain--those who lost out under the Tory Government.
As the shadow Chancellor has made clear, the Conservative party is against the winter fuel payment, £100 for every pensioner household, which benefits the poorest pensioners most. The hon. Gentleman has not told us what he thinks about free television licences for 75-year-olds. Presumably, if all Government expenditure is reckless, he must be against that as well.
The point is that, unlike the previous Government, we are determined to tackle pensioner poverty. We are not prepared to put up with a situation where people who have worked hard all their lives and have spent a lifetime caring for people end up with so little money that they are frightened to turn up their heating and do not know whether they can make ends meet. I am more than happy to go into the next election defending what we have done for today's pensioners, as well as the reforms that we are making for tomorrow.
Mr. Frank Field (Birkenhead):
I warmly welcome my right hon. Friend's statement today, during which he rightly condemned the Conservative party for allowing one in three pensioners to be dependent on means-tested assistance, but what will that proportion be when our programme for pension reform is fully implemented?
Mr. Darling:
My right hon. Friend knows that the proportion of people on means-tested benefits during the course of their retirement will fall. It will take some time for our pension proposals to take place, because we are talking about saving over the next 30, 40 and 50 years. [Interruption.] It must have occurred even to Conservative Members that it takes some considerable time to build up a pension. They may have managed to go a long way towards running down pensions in the 20 years that they were in power, but we have put in place reforms to the pension system which will mean that those who have worked hard throughout their lives will be able to retire on a pension above income support levels.
The Conservative party is still committed to a policyof wholesale privatisation of the pension system--ideological nonsense. We are ensuring that we help today's pensioners as well as pensioners in the future.
Mr. Steve Webb (Northavon):
I commiserate with the Secretary of State for having to listen to the Chancellor give away the goodies on television licences and then having the humiliation of announcing a pathetic 75p increase in the state pension. Can he confirm that that is the lowest ever state pension relative to the means test? Can he also confirm that, if council taxes for pensioners rise by £40 next April, as they did last April, that will take up the whole of the pensions rise, leaving pensioners with nothing for any other price increase next year? What did the Secretary of State mean when he said that most national insurance benefits will rise by 1.1 per cent.? Will any rise be less than 1.1 per cent.? Can he confirm that he plans to take action on the disincentive to save in the means-tested benefits system? So far he has told us that he will be pushing more pensioners on to means-tested benefits and penalising those who have saved. Is he content to be the Secretary of State who has brought Britain the lowest ever pension figure relative to the means test?
"If unemployment claimants look as if they are working and claiming, or not taking jobsearch seriously, they will have to sign on at their Jobcentre on a daily basis."
We therefore welcome the announcement. It is a pity that the Minister of State denounced that at the time as right-wing madness, but three weeks is a long time in politics. If the Secretary of State wants any advice on how to deliver that policy, we are, of course, willing to oblige.
"I want the next Labour Government to achieve what in 50 years of the Welfare State has never been achieved: the end of the means test for our elderly people"?
What a contrast between what he said then and the statement today.
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