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Mr. Dafydd Wigley (Caernarfon): I support the hon. Gentleman wholeheartedly on the need for a relevant index. Does he accept that that would not in itself make up for the loss that pensioners have suffered since 1980-81, when the change was made? Does he also accept that we need to bridge that loss for pensioners as far as we can and as quickly as possible?
Mr. Webb: The right hon. Gentleman is right. I was going to describe the second part of the package.
The oldest pensioners have lost most from 20 years of price indexing the basic state pension. Those who retired when the link was broken have had nothing but price indexation for 20 years. Inflation has eroded their savings. Many of them are elderly widows on low incomes. That is why our party wants substantial additional resources to be focused on the oldest pensioners--the over-75s and over-80s. We want a targeted approach that does not rely on means testing, but which would help to deal with the problem that the right hon. Gentleman raised.
The hon. Member for Workington referred to how the Government's other policies have helped pensioners. Those policies are listed at considerable length in the amendment. Let us take a look at some of them. The amendment stretches the truth considerably on the tax guarantee, saying that it
What about the winter fuel money? It might as well be called the winter biscuit money or the winter tea money, because it has nothing to do with fuel. Clearly it is welcome, but why was it not put on the pension and related benefits? When the Government had £500 million--or whatever the figure was--for pensioners, why did it go on winter fuel money? Winter fuel money does not have to be indexed, so next year it can be £100, the same as this year. Who knows whether a future Government will carry on with it? Have we voted for a winter fuel payments Act? Of course we have not. The change did not need primary legislation because it is a social fund payment. I wonder whether hon. Members who are older than 60 realise that they are the beneficiaries of social fund payments. That is how easy the measure was to introduce and that is how easy it will be to do away with. Had the money been put on the pension, it would at least have had to be indexed. Although it might have been phased out slowly, it would have been better on the pension.
The Government sometimes say that our proposal for age additions is poorly targeted, but what else is paying £100 tax free to everyone in the country older than 60? It is scarcely a targeted strategy. The Government are guilty of inconsistency.
At least the Government have listened to us about the additional needs of older pensioners when it comes to television licences. Their policy is welcome to that extent, although there seems to be no explanation of why pensioners are not being given the money to spend for themselves.
The minimum income guarantee is a good benchmark, but to coin a new Labour phrase, it should be for the few, not the many. It should be a residual measure, catching the few who fall through the safety net. It should not be a mass approach for hundreds of thousands of pensioners. The Government tell us that in 2047 all will be well, but we have slightly more urgent priorities. Critically,
one third of those entitled to the so-called guarantee do not get it. Money on the pension would reach them, but the so-called guarantee is not guaranteed.
Mr. John Bercow (Buckingham):
On the subject of effective targeting, does the hon. Gentleman agree that it would be very wise, as my right hon. Friend the Leader of the Opposition recommended, to abolish the 65-year age restriction for claimants of invalid care allowance and the carers premium, thereby helping 55,000 of the poorest pensioners in the country?
Mr. Webb:
I have a lot of sympathy with the hon. Gentleman's point, which is why I am curious as to why the Leader of the Opposition did not do that when he was a social security Minister.
The objection to such increases in the pension is usually that they would not benefit the poorest pensioners. It is sometimes said that if extra money is put on the pension it will just come off their income support, but that ignores three important, deserving and needy groups of pensioners, all of whom would benefit from a pension rise.
The first group are the 750,000 pensioners--as estimated by the Government--who are entitled to income support but do not claim it, typically missing out on £1,000 a year. They would benefit in full from a pension rise, and they are the poorest pensioners in the land, bar none. In addition, there are 600,000 pensioners who live below the income support line but who have capital above the measly £8,000 threshold. I should point out that £8,000 is not very much life savings. Most of us would be concerned if we started our retirement with only £8,000 accumulated. However, that is enough to deny someone the so-called guarantee. Those people would get a pension rise in full.
The third and final group--the group who write to me most, from all around the country--are those who have small amounts of savings, taking them beyond the reach of the means-tested benefits system. They get nothing from the so-called guarantee; they get pension rises in full. If the Government really believe, as they say in the amendment, in
How would our proposals--pensioner price indexation and extra money for the older pensioners--be paid for? Has anyone looked at the value of the national insurance fund recently? The balance is getting on for £15 billion, and the annual surplus is in excess of £1 billion. The package that I have just proposed would cost about half that. These are modest demands, yet the vast amounts in the national insurance fund suggest that the money is there. It is about priorities. The specific figures that we have identified are a £5 increase for those over 80 and a £3 increase for those over 75--as a down payment, with more to come.
Mr. Bill Rammell (Harlow):
I have sympathy with the hon. Gentleman's view that we need to be doing more for pensioners. However, did I correctly understand him to say that there is a £15 billion surplus, half of which would be taken to fund his party's proposals? Could he clarify that?
Mr. Webb:
I apologise if that was unclear. The balance is £15 billion, and there is an surplus of more than
I have outlined what I believe should be done. It is not enough for Opposition parties--as some are wont to do--to say how terrible things are without putting forward a credible alternative. [Hon. Members: "Like the Liberal Democrats."] We have proposed what we would do today.
The motion is simply about this April's pension rise. As regards the basic state pension, the Government have said that they will carry on with what the Tories did. Pensioners will get 75p this April unless the House can convince the Government that that is unacceptable.
Mr. Frank Field (Birkenhead):
I was one of those who willingly signed the relevant early-day motion, and I will continue to do so in future. I am sure that the hon. Gentleman is aware that I am not the only Labour Member to sign it. While one is pleased and proud with what the Government have done up to now, many of us had hoped that the Government would be doing even more by the time of the general election. That is why we signed the motion.
Mr. Webb:
I am grateful for the right hon. Gentleman's support, and we share his hope that the Government will do more before the election. We would like them to do something this April, rather than let pensioners have another year of inadequate incomes.
Mr. Simon Hughes (Southwark, North and Bermondsey):
My hon. Friend has expressed the views of the parties, and he answered the question from the hon. Member for Workington (Mr. Campbell-Savours). What is the view of the pensioners' movement and pensioners' organisations? In my experience, this is one of the two main pensioners' issues that all the pensioner groups make the most representations about. They are livid that the Government do not understand how measly their proposal for this year is.
Mr. Webb:
My hon. Friend is right. Not long ago, I addressed the national pensioners' convention in Blackpool--an audience of 1,500 pensioners. They are calling for earnings indexation and a substantial increase in the pension for older pensioners, in line with our arguments. We are finding that our arguments are gaining resonance, and pensioners are concerned that people are out of touch.
"now means that two thirds of pensioners now pay no income tax".
The use of the word "now" twice is proof that nothing has happened. One would expect the number of pensioners paying income tax next year to be only a fraction of the number the year the Government came to office, but the facts show that the figure is the same. So much for a tax guarantee. The Government can guarantee only that as many pensioners will be paying tax as ever.
"letting pensioners benefit more from their savings"
they will reward those people who have saved, and not penalise them.
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