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Mr. Darling: My right hon. Friend the Minister of State said at Question Time that average pensioner net income is about £132. Like many other sections of the population, there are some pensioners who are well off and there are some who are appallingly badly off. The right thing to do is to help pensioners who have lost out, and to get those living in poverty out of poverty. That is the right approach for any reasonable and sensible Government to take. [Interruption.] From a sedentary position, the hon. Member for Northavon (Mr. Webb) mutters about the winter fuel payment, which was universal. However, it benefits disproportionately those on low incomes. Again, it is more help for pensioners on low incomes who would not otherwise have received help.
Mr. Archy Kirkwood (Roxburgh and Berwickshire): The hon. Member for Gedling (Mr. Coaker) made an important point, and it may benefit the House to know that the Select Committee on Social Security may soon be looking at pensioner poverty and where the real financial agony lies. That would help the debate.
It is perfectly valid for the Secretary of State to say that targeting poverty within available resources is sensible, but there is another aspect. The contributory principle has a wider social role, distributing income horizontally across people's lives. If there is so much of a surplus in the national insurance fund, surely there should be some balance, not just this obsession with targeting the poor.
Mr. Darling:
I am glad that the Select Committee is to look at pensioner incomes, as I suspect that it is indeed commonly held that all pensioners are poor. That is not the case. Many have investment income or substantial occupational pensions, which have largely built up through the 1950s, 1960s and 1970s. At the same time, we have pensioners who have lost out badly.
I am glad that the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) recognises that--so should his party's spokesman, the hon. Member for Northavon, who has researched this matter. That research has been helpful. Presumably, the hon. Gentleman helped to write the Liberal Democrat manifesto, which states that the party would increase pensions in line with prices and would have earnings-related help for the poorest pensioners. The hon. Gentleman has learned the lessons of his research--it is a pity that he has not followed through the logic of that position today.
The hon. Member for Roxburgh and Berwickshire has stated that the Government Actuary reports that the national insurance fund is in surplus. He will know that the fund has to retain a working balance, which accounts for more than half that surplus. The remaining surplus would be eaten up in two years if we were to adopt the policies that the hon. Gentleman and some others are advocating--increasing the basic state pension up to £75, or the minimum income guarantee. That policy might get the hon. Gentleman by for a couple of years, but it is no long-term pensions policy.
The Government actuary's report and the quinquennial review of the national insurance fund do not take account of the changes that we have made in policy since March 1999. To base a pensions policy on a surplus that is there today but that would be eaten up within a couple of years is not a sensible way of proceeding in the future.
The hon. Member for Roxburgh and Berwickshire referred to the contributory principle. Part of the problem is that pensions are contributory, but that far too many people have not contributed during their working lives to looking after themselves in their old age. That is why we want to build on the minimum income guarantee; why we have introduced stakeholder pensions; and why we have reformed the state second pension to increase the amount that the state gives, not only to low but to moderate earners, through the rebate structure.
I remind the House that someone earning £6,000 gets £14 a week under the state earnings-related pension scheme but will get £54 a week under the new state second pension. We are not only helping today's pensioners but ensuring that far more people will be able to build up pensions in the future.
Clearly, one cannot save if one does not have a wage. That is why we have attached so much importance to ensuring that people of working age stay in work, and to trying to prevent pensioner poverty in the future by going back to the root of the problem and giving children the best possible start, which will allow them to get good jobs and eventually retire on good incomes.
I want to touch on the measures in the orders to help to combat child poverty. We are the first Government ever to commit ourselves to eradicating child poverty in 20 years and to halving it in 10: another policy to which the Conservative party is opposed. When we published our poverty report in September, setting out the scale of the problem and what we intended to do about it, Conservatives simply laughed and wanted nothing to do with our efforts, despite the fact that, during the 20 or so years in which they were in power, child poverty trebled. That is a damning indictment of the previous Government.
As a result of our Budget measures, we have already taken nearly 1 million children out of poverty. We are also helping parents to get into work and increasing the
amount spent on families and children. We are helping children to get a decent education in school. From April next year, the new child credit will be worth up to an extra £416 a year.
The orders increase child benefit beyond the retail prices index for the second year running, so the eldest child gets £15 a week, which is over £3.50 more than only two years ago. We have increased the amount that parents on income support get for the under-11 rate of personal allowances by more than £9 a week, or about £400 a year.
We are determined to ensure, through a variety of measures, including increasing income, that children have the best possible start in life and that there is enough money in people's homes for them to bring up their children properly.
Mr. David Willetts (Havant):
We will not vote against the orders, because we do not want to stop the uprating of benefits, but I want to ask the Secretary of State some questions about the value of the uprating: 1.1 per cent. on income-related benefits and 1.6 per cent. on the Rossi index.
The Secretary of State will be aware that his Department's spending plans, published in March, said that non-income-related benefits are assumed to be uprated by 1.3 per cent. in April 2000 and that income-related benefits and jobseeker's allowance are assumed to be uprated by 1.9 per cent. in April 2000. The orders save him £200 million compared with his own Department's expenditure plans for 2000-01. We want to know what has happened to that money. We are also concerned, and we understand pensioners' frustration, about the increase of 75p in the basic pension. The Conservative vision is one in which pensioners increasingly share in the rising affluence of our country, because they have genuine private savings.
Mr. John Cryer (Hornchurch):
Is the hon. Gentleman proud of the fact that the Government of which he was a member cut the earnings link with the state pension?
Mr. Willetts:
Well, the figures that I was about to cite from the latest pensioners' income series give a good picture of what happened to pensioner incomes in our years in office. The figures show that
The Government's figures also show that, by 1997-98, 60 per cent. of pensioner units had an income from occupational pensions and
Mr. Coaker:
Does not the hon. Gentleman's point confirm that the Government's policy is right? If a big group of pensioners are better off, why should they be given extra money that they do not need when we can target extra help at the poorest pensioners and make a difference to their lives? Why spread the jam across the whole group, many of whom do not need it?
Mr. Willetts:
I accept and welcome the figures that I have given. More and more pensioners enjoy higher incomes because they have occupational pensions and private savings, and fewer and fewer depend on the basic state pension alone. We are happy to hear Ministers talk about that, because it is what we achieved. Our objection to what the Government are doing is that they are imposing a double whammy on pensioners. They will receive a measly 75p increase in the basic pension, but they are also suffering from all the attacks on occupational pensions and private savings, which mean that the boost in pensioner incomes that we have seen over the past 20 years is under threat.
The representatives of funded pensions--the people whom the Secretary of State is praying in aid to defend the tiny increase in the basic pension--have commented unfavourably on his policies. In a survey of 216 occupational pension schemes, more than half the participants felt that
Almost half of the participants in another survey by a leading fund of actuaries think that
"The proportion of pensioner units with some income from investments was 68 per cent. in 1987-98. The average amount received by those units with some investment income was £40 per week in 1997-98, having grown by 80 per cent. between 1979 and 1996-97."
We delivered increasing pensioner incomes because more and more pensioners had investments and occupational pensions.
"The average amount received by those units . . . was £92 a week in 1997-98."
When I hear the Secretary of State and the Minister of State explain to their somewhat sceptical colleagues that that increase in pensioner incomes means that the basic pension is less and less well targeted at relieving pensioner poverty, I know that the Ministers are using the evidence of the success that we achieved. We encouraged more and more pensioners to have funded occupational pensions or private savings.
"the thrust of the government's proposals was not helpful"--
when it came to encouraging occupational pension provision. A story in Personnel Today was headed "Uncertainty brings pensions delay" and it stated:
"A survey by the National Association of Pension Funds shows under 3 per cent. of occupational pension schemes were improved in 1999. This compares with between 7 and 10 per cent. in each of the past five years."
There is a planning blight, caused by uncertainty about what the Government will do to the occupational pension regime with their proposals for stakeholders.
"the introduction of stakeholder plans will make it less likely that employers will want to offer or continue to offer occupational pensions."
The picture that is building up is of a measly increase in the basic pension as well as policies that are a threat to the alternatives that the Conservatives want to encourage--funded occupational pension provision and private saving.
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