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Mr. Paul Burstow (Sutton and Cheam): I beg to move, That the clause be read a Second time.
Mr. Deputy Speaker: With this it will be convenient to discuss new clause 36--Annual increase in basic retirement pension--
'.--The Secretary of State shall each year increase the basic retirement pension by not less than an amount equivalent to--
(a) the percentage increase in the general level of earnings during the preceding year; or
(b) the percentage increase in the retail prices index during the preceding year,
whichever is the greater.'.
Mr. Burstow: We believe that the quickest and most cost-effective way of getting help to many of our poorest pensioners is via the basic state pension. We hope, though, that the campaign that was finally launched by the Government last week, amid much publicity, to promote the take-up of the minimum income guarantee is a success. Who would not want to see between 530,000 and 870,000 of our fellow citizens who are entitled to the minimum income guarantee getting it? The sad fact is that
those pensioners and many others are living below the poverty line. We must make sure that we get help to them in the most effective way.
We know from the Government's research that the success of the campaign that they have just launched is finely balanced. It will be tough for the Government to deliver a substantial increase in the uptake. A report published by the Government last year, entitled "Helping Pensioners--A Contextual Survey of Income Support Pilots", found that four out of 10 pensioners said that they would definitely claim as a result of the campaign. That is great.
We welcome the fact that four out of 10 pensioners would claim the minimum income guarantee. Another 18 per cent. said that they would probably claim. Most important and disturbing, however, was the fact that a further 36 per cent. said that they would not claim. They cited a number of reasons why they would not claim. The research reports a feeling of stigma, uncertainty and unwillingness to deal with benefits offices. The report details in considerable depth pensioners' concerns and the reasons why they were not keen on going down the means-testing route.
We know from parliamentary questions and statements from Ministers that the Government accept that the largest group of pensioners missing out on the minimum income guarantee are older women. Given that the evidence about income distribution on the basis of age suggests that the oldest pensioners are our poorest pensioners, why do we not consider ways of ensuring that they do not have to fill in any forms to get additional income into their purses?
We believe that a cost-effective and stigma-free way of doing that would be to lift the basic state pension through further age additions. A precedent already exists. There is an age addition to the basic state pension when the pensioner reaches the age of 80. It was set at 25p in 1971, and has been frozen at 25p ever since.
Hon. Members in all parts of the House know from meetings with pensioner groups in their constituencies that that 25p is a source of anger and frustration. Why on earth has it not been increased in all this time? There is no good answer to that. It is simply wrong that there has been no increase. If the sum had been indexed to earnings, it would now stand at £3.70 per week. More should have been done to uprate that figure, year on year. In our view, the age addition at the age of 80 should be set at £5.
We believe that a new age addition should be introduced into the basic state pension at the age of 75. That would mirror the Government's recognition of the need for age additions. The only problem is that the Government have decided to attach age additions to the minimum income guarantee. Attaching an age addition to the basic state pension would provide a cast-iron guarantee that the money would find its way into pensioners' pockets. That is why our new clause proposes age additions to the basic state pension.
Mr. Bercow:
I am grateful to the hon. Gentleman for giving way. Given his specific recommendations, why do he and his hon. Friends propose--rather feebly, if I may say so--in new clause 8 that in future the detail should be dealt with via regulation?
Mr. Burstow:
Unless the hon. Gentleman wants us to have to move amendments to primary legislation every
New clause 36, tabled by other hon. Members, gives us an opportunity to debate the future of the basic state pension. Our view is that age additions which targeted guaranteed additional income on older pensioners would ensure that the basic state pension had a future purpose, which it otherwise will not have because successive Governments have allowed its value to be eroded against earnings.
Whereas in 1980 the basic state pension was worth 22.6 per cent. of average earnings, by 2050 its value will be about 6 per cent. of average earnings. Age additions are undoubtedly the way forward, but we should take the opportunity of today's debate to signal the importance that the House attaches to the basic state pension.
A rally was organised a few weeks ago in London by the Greater London Forum for the Elderly to express its concern. People carried coffins to symbolise the demise of the basic state pension. That is a measure of what pensioners feel has happened to the basic state pension. The earnings link was broken by the previous Government, and has not been restored by the present Government. Many, many pensioners think that the earnings link should have been re-established.
We know that at the general election, the Government included in their manifesto a commitment to establish a different sort of link, based on growth in the economy. Since the general election, that has not happened. This year there was an indexation on the basis of prices, which has given pensioners only an additional 75p in their basic state pension in the coming year.
Mr. Christopher Leslie (Shipley):
Did the Liberal Democrat manifesto commit the party to re-establishing the link with earnings?
Mr. Burstow:
The hon. Gentleman is not asking an awkward question; he is asking one that I am happy to answer. We did not commit ourselves to re-establishing the link. [Interruption.] If the hon. Gentleman will allow me to continue, I can explain that we continually review the matter, as do the Government. However, the Government have departed from their manifesto commitment and left our poorest pensioners with even less than they would receive if the Government had honoured the commitment to link the basic state pension to growth in the economy. No one can claim that 75p is a proper reflection of the growth in the economy.
Mr. David Winnick (Walsall, North):
The hon. Gentleman is courteous in allowing hon. Members to intervene in his speech. He made it clear that the Labour manifesto stated that the state pension should be uprated only in relation to prices. Does he accept that our manifesto did not mention winter heating additions or free television licences, which we have provided? Some of us have campaigned for that for years. It is a tremendous benefit to pensioners. Does the hon. Gentleman accept that?
Mr. Burstow:
I congratulate the hon. Gentleman on his campaigning and on the success that he believes that
We have lately been worried about some of the comments that several Ministers have made from the Dispatch Box about channelling additional resources through the basic pension. They suggest that, because the benefit is taxable, it is somehow inappropriate to use it to target our poorest pensioners. Again, that is nonsense. Taxing the basic pension allows the richest of our pensioners, who are in the minority, to perceive that redistribution is taking place. What is wrong with that? Targeting money through the basic state pension is sensible.
The incomes of the richest fifth of pensioners rose by £87 a week between 1979 and 1997, while those of our poorest pensioners increased by only £10 in the same period: 18 years of Conservative rule and only £10 in the pockets of the poorest pensioners to show for it.
New clause 36 provides a useful opportunity to send a clear signal that the House believes that the basic state pension has a role as a key foundation stone of support for our poorest pensioners. That role should continue well into this century and beyond. The basic state pension should not leave pensioners in poverty, but should provide a reasonable standard of living.
Dr. Lynne Jones (Birmingham, Selly Oak):
I support new clause 8, which the hon. Member for Sutton and Cheam (Mr. Burstow) moved, and new clause 36, which would uprate the basic state pension. I am a little shocked to be called, because I anticipated that my hon. Friend the Member for Hayes and Harlington (Mr. McDonnell) would be called first, to speak to new clause 36.
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