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8.15 pm

At that time, we tried to ensure that pensioners did not lose out in periods of high inflation, which is what we had at the time, and that, when earnings and prices were yo-yoing with each other, we tried to mix the best of both. I was not in the Government at that time and I doubt whether the matter was discussed, but I cannot prove that when the forecasts were made for what SERPS would deliver in 20 years, the policy assumed that the basic state pension's link with prices or earnings--whichever was the higher--would be retained. The scenario was different, because it was a different world.

By law, the majority of the pensioner population is now forced into two pensions. They are either contracted in or contacted out, so they are virtually forced into two pensions. Obviously some people have missed out, and that is why have introduced the state second pension for the low paid and for carers.

Mr. Austin: After all my right hon. Friend's fine words, will he tell the House whether he could live on the present state pension?

Mr. Rooker: The answer is no. I would not dream of trying to do so. I do not think that any Member of Parliament should try that even though a Conservative Member once tried to do so. In one week, one does not face the problems of buying an iron or a kettle and there are not many clothes to buy, so that is not the issue. Nobody should be required to live on the basic state pension of £66.75 a week. That is not enough, and that is why the minimum income guarantee exists.

Mr. Tony Clarke (Northampton, South) rose--

Mr. Archy Kirkwood (Roxburgh and Berwickshire) rose--

Mr. Rooker: I give way to the Chairman of the Select Committee on Social Security.

Mr. Kirkwood: The Minister is putting a brave face on the matter and concentrating on means testing and the relative incomes of pensioners. However, the national insurance fund is a contributory system and contributions

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are, subject to the upper earnings limit, earnings related. I am certain that the right hon. Gentleman will acknowledge that the national insurance fund--certainly in my experience, and probably even in his--has never been in a better condition. The Government actuarial quinquennial review, which was published last July, made it quite clear that the Government Actuary believed that relinking pensions with earnings was affordable. Does the right hon. Gentleman accept that? If that is true, and given what was said in the review that was published last July, the money is available to re-establish the link as of this year.

Mr. Rooker: I have great respect for the hon. Gentleman, and his argument is seductive. However, the Government Actuary's report that I want to see is the one that will be produced now that we have made a policy announcement on inherited SERPS. All the Government Actuary reports published to date, including the specific one on the Bill, assume that inherited SERPS was not an issue and that, from March this year, pensions would drop from 100 to 50 per cent. The scenarios of the possible costs to the Government of inherited SERPS are for figures of between £8 billion and more than £20 billion, and I must tell the House that that money must come out of the national insurance fund because it is a national insurance fund benefit. We simply cannot operate on that basis.

Under the minimum income guarantee no one is expected to live on £66.75, the basic state pension. That is not enough. We know that the average single pensioner's total income--net of any tax--is £132 a week and, for a couple, the figure is £248. I know that people might argue that we do not come across many pensioners like that, but they exist and those are the average figures.

I am the first to admit that averages can be misleading. However, we cannot ignore the fact that average pensioner income is virtually double the basic state pension. That has happened because of SERPS and occupational pensions and--despite the fact that some were mis-sold--because of some personal pensions. That explains how the extra income is made up.

Although we shall not accept new clause 8, we recognise that the chances are that the older people get, the poorer they are likely to be. That is inevitable. By and large, they will be female. That is why, on the basis of next week's increase, MIG for pensioners aged 60 to 74 will provide an income of £78.45, which is well above the basic state pension. For those aged 75, the figure goes up to £80.85 and, for those aged 80, the figure is £86. The MIG figure for an 80-year-old is almost £19 a week higher than the basic state pension. We recognise that pensioner poverty is connected to age. There is no doubt about that, and, when we roll out the publicity machine for the MIG take-up campaign that we have announced, we shall target that group. We shall write to 2 million people.

We estimate that between 500,000 and 700,000 people are currently missing out. Why should that be the case? I am not sure whether or not it is due to stigma. I meet constituents and receive letters from them, but I have not met anyone for a long time who has said that they do not claim because of the stigma of the means test. They might say, "I'm not going down the social. I'm not going to Soho road along with that lot." They do not consider themselves to be beneficiaries, and there is something in

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that because Governments have in the past treated pensioners as a block and mixed them up with everyone else who claims from the Benefits Agency.

Of our benefits payments of £100 billion a year, £47 billion, or 47 per cent., goes to pensioners, but only about 10,000 of the Benefits Agency's 80,000 staff work on pensions and pensioners, which is wholly disproportionate. That is why, three or four weeks ago, we announced that we will centralise pensions and move all aspects of pension planning and provision out of the Benefits Agency into a separate, free-standing agency responsible to the Department. We have started planning that only in the past couple of weeks, so I cannot say when it will start. That agency will deal with a big chunk of the Department's money.

It has been said that many pensioners who are entitled to MIG do not claim it even though they readily claim housing and council tax benefits. Why do they claim one and not another? Housing and council tax benefits are central Government money but they are delivered via local authorities, and pensioners can pop into what is, in my constituency, their friendly neighbourhood office. It is different from the social. There is therefore a paradox, in that pensioners will claim one means-tested benefit but not another because the delivery of the first is perceived to be more pensioner-friendly. That is why we are, as I have said, separating pensions from the Benefits Agency.

Many of my hon. Friends have read out the Government's record, including measures such as the free television licence for those over 75. The measure is worth £2 a week to those pensioners: that cannot be gainsaid. The winter fuel allowance this year is worth £3 a week to an individual or a household. For those over 75, that adds up to £5 a week that they would otherwise have spent out of their income. It is real money; it is not a token.

That is on top of all the other measures that we have included in the pensioner package, including the first-time concessionary fares for areas of the country that hitherto did not know what the words meant. Of course my city invented concessionary fares in 1956. That is not a benefit that I would boast about to my constituents, and I might add that it has been under threat when we have had the odd Tory controlled-council.

I say to my hon. Friends that it is unacceptable to use words such as "betrayal", "rottenness" and "failure". Those are unacceptable descriptions of the Government's package of policies for pensioners, rich or poor, since May 1997. Frankly, they feed the lie that those who are opposed to our party, from the left and the right, will permeate through society come the general election, and it is no good lending credence to that lie.

Mr. Winnick: Is my right hon. Friend aware that although I have absolutely no illusions about the poverty of many pensioners and I am glad about the minimum income guarantee, I will not be supporting the new clause simply because the Government have done more than they promised at the general election? They gave £100 of winter fuel allowance, which has now risen to £150, which many of us campaigned for year after year when the Tory Government refused to take action, and the same applies with the free television licence. Although I

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certainly want the Government to do more on pensions, I recognise that much has been done, and no one could accuse me of looking for a job.

Mr. Rooker: Nor me. My hon. Friend is right.

I want to finish on a point that is not generally appreciated, and when we make it, people do not believe us, but it demonstrates the scale of the problem that we are dealing with among millions of our fellow citizens. The minimum income guarantee is at present targeted at 1.5 million people, who happily apply for it and collect it. We want to encourage the other 500,000 to do so. With the changes to MIG and the winter fuel payments, the pensioner population are receiving £800 million more in the first three years of this Parliament than they would have done if we had restored the link between the basic pension and earnings. I ask my hon. Friends to think about that.

We are unable to do everything that we want to do. I want to do more. There is not a single Minister or Back-Bench Labour Member who does not want the Government to do more. However, we have to tell the truth, and so far over this Parliament we have delivered £800 million more to the pensioner population--targeted, it is true, in the case of MIG, but as a balance the other measures are widespread--than we would have spent if we had simply raised the basic pension in line with earnings. That is a record that we should be proud of, and not one that we should attack.

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