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Pensions

Madam Speaker: We now come to the first debate on the Opposition motions. I have selected the amendment in the name of the Prime Minister.

1.25 pm

Mr. David Willetts (Havant): I beg to move,

That this House believes that the Government's policy towards pensioners is patronising and confusing; recognises that pensioners want the dignity of receiving social security through their basic state pension as an entitlement and not through complicated special payments; urges therefore that the winter fuel payment, free TV licence, and the age addition, along with funds from abolishing the failed New Deal for Lone Parents and other savings, should all be put into a substantial increase in the basic state pension for 2001/2002 of £5.50 for a single pensioner under 75, £7 for a couple under 75, £7.50 for a single pensioner over 75, and £10 for a couple over 75, together with a commensurate increase in thresholds for benefits and tax allowances, so that the value of the increase is passed on to all pensioners, ensuring that they are better off than at present under this Government's muddled and incompetent policies.

Yesterday, in his now notorious speech to the Women's Institute, the Prime Minister said:

We should put more faith in people's desire to engage in a conversation about the future.

What better way of engaging in a conversation about the future than a Supply day debate in the House?

We called the debate because we wanted pensioners' voices to be heard in the great national conversation called for by the Prime Minister. We want pensioners' voices to be heard because they are saying, loud and clear to all of us in our constituencies, that they are fed up with the Government's patchwork of special measures and gimmicks. Instead, they want money to go into the basic state pension as an entitlement.

The Government's special measures have gone down like a lead balloon--or perhaps we should now say that they have gone down as badly as the Prime Minister at the WI. They have gone down badly with the pensioners whom the Government claim to want to help. The Prime Minister's speech at the WI was received almost as badly as the Minister of State's, when he tried to explain the Government's policies at the National Pensioners Convention the other day. I am sure that he learned what pensioners think about the Government's policies.

Pensioners say over and over again that the Government's schemes are complicated, whereas pensioners want simplicity; the Government's schemes are patronising, whereas pensioners want respect. I shall quote from one of the many letters that I have received from pensioners. The letter arrived in my post this morning from a pensioner in Suffolk, who writes:

I wonder how long it will be for them to get it into their thick heads that pensioners do not want crumbs thrown at them from lord and lady Bountiful Blair's table. . . what they do want is a fair and reasonable pension, and the same amount of pension for all pensioners. We wish to pay our way like everybody else and object strongly when we are made to become forelock touching, cap in hand, second class citizens.

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That summarises what millions of pensioners think--not just pensioners, but their representatives. The director general of Help the Aged described the hand-outs as

a patronising pat on the back

and continued:

What older people want is a decent weekly income which they can spend as they wish, and with dignity.

Dr. Lynne Jones (Birmingham, Selly Oak): The hon. Gentleman quotes from organisations such as Help the Aged. He knows that those organisations are calling for a large increase in the state pension and a restoration of the link to earnings. Does the hon. Gentleman intend to change Conservative policy from the past, when the party broke that link, and restore it now?

Mr. Willetts: I recognise that many pensioners want the restoration of the earnings link, but neither the Opposition nor the Government are offering that. Pensioners must choose between the options before them. We believe that our option is superior to the only alternative, which is what the Government are doing.

Mr. Patrick Nicholls (Teignbridge): Bearing in mind the call that has just been made for the restoration of the earnings link, will my hon. Friend confirm that although the last Labour Government introduced an earnings link, for the last four years of the Labour Government they refused to implement it in practice? When their Secretary of State, who later became Lord Ennals, was quizzed by Pensioners' Voice about his statutory obligation, he sneeringly replied:

I have an obligation to take the figures into account. I do not have an obligation to get the figures right.

Mr. Willetts: My hon. Friend is right in his recollection of the history of that incident.

It is not just pensioners who are critical of the Government's schemes. Labour's activists and supporters say the same thing. Labour councillors lost 600 seats after the last local elections. A survey of Labour councillors who had lost their places on councils revealed that pensioners overwhelmingly preferred to get money straight into their pockets directly from their pension.

That is what even some of the Secretary of State's colleagues have been saying in the privacy of unattributable briefings in the Lobby. One Labour MP was quoted as saying:

It's like a poor employer who robs his workers every week, then gives them a turkey for Christmas.

Perhaps one of the Labour Members who are present today said that. Perhaps it was the Minister of State, speaking unattributably; who knows? [Hon. Members: "Deny it."] I will not ask Labour Members to deny it. That would be too embarrassing for them.

Another Labour MP said:

It's terrible. The Tory leader is saying in public what we have been saying in private for months.

That is what Labour Members think. The Secretary of State has even got his former ministerial colleagues saying it. A former Defence Minister has said that pensioners believe that winter fuel payments and

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concessionary television licences are diversionary measures and that pensioners want an increase, week on week, in the basic pension.

Mr. Steve Webb (Northavon): Why, then, did the hon. Gentleman tell the House:

We have no plans to remove the winter fuel payment.--[Official Report, 7 February 2000; Vol. 344, c. 33.]

Mr. Willetts: I was very careful. We have listened, we have learned, and we have now announced our policy. The hon. Gentleman's party fought the last election on a manifesto that pledged it simply to linking pensions to prices; subsequently, it changed its mind and said that it wanted to link them to earnings after all. That is a wild and uncosted policy, so that was a dangerous intervention.

Mr. John Bercow (Buckingham): Does my hon. Friend think that opposition to the Government's policies on pensioners explains the drop of over 1,000 in membership of the Sedgefield constituency Labour party, the recent emergence of a rebel breakaway group, and its decision to distribute a subversive newsletter that excoriates the Prime Minister's record?

Mr. Willetts: I am sure that my hon. Friend has made a powerful point. I am only surprised that he said "1,000" rather than "1,007 precisely", in the style with which we are so familiar. Anyway, he is entirely correct.

The fact is that pensioners do not support what the Government are doing, Labour councillors do not support what the Government are doing, and the Secretary of State's own Back Benchers do not believe in what the Government are doing. The question is why the Government plough on with such an unpopular and ill-considered policy, when everyone in the country apart from the Secretary of State and his Cabinet colleagues knows that it is a nonsense. That is the real question to which we would like to hear the Secretary of State's answer.

Kali Mountford (Colne Valley): Is it not the case that state pensions have been paid for through national insurance contributions? Is the hon. Gentleman now advocating paying for pensions in some other way, given that his sums do not add up?

Mr. Willetts: I will take the hon. Lady through the sums in a moment, if she wishes me to do so. The fact is, however, that we are talking about a carefully costed package that involves no increase in total social security spending. The national insurance fund is in surplus. Pensioners want a charge on the national insurance fund as part of a contributory entitlement, and it could easily be afforded.

Mr. Edward Leigh (Gainsborough): May I gently chide my hon. Friend? He talks about the Secretary of State. One thing that is really frustrating in life is, having dreamt up a good policy, finding that someone much cleverer has come up with it first. Could that explain the petulance behind the Secretary of State's remarks? Perhaps he was planning to introduce the policy, but my hon. Friend got there first.

Mr. Willetts: Who knows? It would be interesting to find out. The Government have been busy briefing away on all sorts of options. It would be fascinating to learn whether they have listened to pensioners as we have.

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Let me tackle the sort of arguments that we may hear from the Secretary of State. I am sure that he will not want to answer the question that has just been put. I suspect that he will say that the Government are doing the right thing, because they are targeting help on the pensioners who need it most. That is what he has been claiming. However, his claim does not stand up to scrutiny.

What we are doing is replacing the various special payments with a consolidated increase in the basic pension. The Secretary of State's special payments are very ill targeted. He has put much more money into the special payments than he has into the minimum income guarantee. This year, £1 billion more is going into the special payments than into the minimum income guarantee. Next year, £0.5 billion more will go into special payments than the guarantee. The money that the Government have put in has gone, above all, into the special schemes that we are consolidating into the basic pension. Nothing in our proposal affects minimum income guarantee expenditure. It is all about consolidating those gimmicks.

I was surprised by some of the Secretary of State's claims about the targeting of his measures. On 16 December 1999, in a press notice from his Department, he said:

The annual Winter Fuel Payment will be payable to everyone over 60.

I invite him to say whether that is an accurate and true statement on access to the winter fuel payment scheme. He knows that that is not an accurate statement of the way in which the scheme works. He knows very well--if he did not know when he issued that press release, he should have--that winter fuel payments are not available to pensioners in residential accommodation or nursing homes who are on income support. They are available to pensioners who are in nursing homes or residential accommodation who are not on income support, but they are not available if pensioners are on income support. There are 200,000 pensioners on income support who do not receive the payment, whereas more affluent pensioners in residential accommodation do receive it. It is nonsense.

Either the Secretary of State did not understand his policy when he made that statement, or he was deliberately misleading. The fact is that what we are doing, putting the money into the basic pension, is better targeted than the measures that it replaces. It is better targeted because the quirks, oddities and unpredictable effects of those schemes--which, to be honest, I do not think the Secretary of State fully appreciated when they were introduced--will be replaced by a steady, reliable simple system. Better than that, we are giving the extra money to the over-75s in particular. We all know that older pensioners tend to be the poorer pensioners.

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