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Mr. Darling: The hon. Gentleman mentioned extra money for older pensioners. Does he recall that he proposed to fund that by dismantling SERPS?
Mr. Webb: No, that is not how we propose to fund it. If the Secretary of State contains himself for a few weeks, he will be able see our proposals in a policy document which explains where the money comes from, although that will not be from the abolition of SERPS. By contrast, the Government stood on a manifesto that said that SERPS would remain for those who wanted it, but the right hon. Gentleman is abolishing it.
The key point is that if the Conservative party were in office, it would give pensioners the 75p that they deride as paltry. It has sought to make political capital out of that 75p, but pensioners have long memories and know that they would get nothing better from the Conservatives. It is not just their record in this Parliament that we have to worry about--we must also examine the record of 18 years of Conservative Government, which sends a clear signal about why pensioners do not trust the Tories on pensions.
In 1980, the Conservative Government broke the earnings link. The hon. Member for Teignbridge (Mr. Nicholls) commented on that link and rewrote history by implying that it had never been properly honoured. However, the history of the pension shows that its real value increased significantly relative to earnings in the 30 years after the war and that successive Governments, despite difficult economic situations, did more than simply retain the earnings link. I therefore reject the suggestion that, in a relatively prosperous nation, the link is totally unaffordable.
The Conservatives broke that link, thereby allowing the basic state pension for each generation that retires to fall further behind what it received when it was in work. If the role of a pension is to help people maintain living standards from work into retirement, letting the basic pension lose touch with what people are earning, whatever the mechanism, means that the state pension fails to fulfil that role.
Conservative proposals on winter fuel payments would make no difference to pensioner incomes over the lifetime of a Parliament. Once the Conservative party had done that, what would it do next? If inflation was at 1.1 per cent., it would give pensioners 75p, so nothing would change for pensioners. I strongly suspect that the hon.
Member for Havant was influential in Conservative policy-making circles when the previous Government devalued the basic pension and slashed SERPS. The real value of SERPS entitlements was more or less halved in legislation in 1986 and halved again in the Pension Act 1995. That is the Conservative record on state pensions, which pensioners remember.
Mr. Desmond Swayne (New Forest, West): The key phrase used by the hon. Gentleman was that the state pension was meant to help pensioners maintain their living standards. Does he agree that linking the pension to earnings would diminish the incentive for people to make additional provision, which was always the intention of the old age pension system under Beveridge?
Mr. Webb: The hon. Gentleman make a fair point. If we had only an earnings-linked pension and a price-linked means test, there is a risk that people would start to rely more on state pensions and less on their savings. However, we are not in that position, as we have an earnings-linked means test designed to ensure that today's poorer pensioners at least keep pace with the working age population. We do not oppose that. We do not oppose keeping those on income support out of touch with those of working age. However, doing that means that one cannot let the basic pension fall, which is the difference between the Conservative and Liberal Democrat positions.
The Secretary of State seemed to imply with a gesture that we had not said that before. Our criticism concerns letting the basic pension cut itself adrift from the means test, which creates the savings disincentive raised by the hon. Member for New Forest, West (Mr. Swayne).
Mr. Clifton-Brown: Does not that scenario give rise to the present problem? The Government's minimum income guarantee for pensioners is a minimum income guarantee only if those pensioners draw income support. It is disgraceful that any pensioner should have to rely on drawing any benefit to get a minimum income. That applies to some of the poorest pensioners in the land.
Mr. Webb: The hon. Gentleman has a short memory. For most of the period in which the Conservatives were in government, 1 million pensioners were getting income support, which is the same thing. The hon. Gentleman's party seemed to have no problem with that in office. Indeed, occasionally it made above-inflation increases to income support for pensioners in the same way that the present Government link it to earnings. The policy is the same, and the election did not bring any change to it. What was true when the hon. Gentleman's party were in office is certainly true now.
The critical point is that the Conservative package would be of negligible value to pensioners and they can see through it. Just as across the land the Secretary of State is known as Mr. 75p, the Opposition spokesman will be known as Mr. 42p. There may be a gain of 42p, but there would be a significant number of losers--to whom fleeting reference has been made, such as the men aged 60-64 mentioned by the hon. Member for Cleethorpes (Shona McIsaac) who think they will get the winter fuel payments, but in fact will lose them.
The motion for debate states that funding will come from
- abolishing the . . . New Deal for Lone Parents
Shona McIsaac: The hon. Gentleman speaks about deceiving pensioners. If I understood him correctly, he does not support the winter fuel allowance, which the Liberal Democrats would get rid of. The Labour party is the only party to maintain the winter fuel allowance for pensioners and men aged 60 to 65. Those men would therefore lose out under Liberal Democrat policy.
Mr. Webb: There is no question but that we would honour existing entitlements--but the Conservatives would rip them up. However, it makes sense to feed those entitlements into the pension, as we have always argued. In the 60 to 64 group, people already expecting to get that payment, such as those in the income support category, should continue to do so. However, it is not necessarily sensible to keep that going in perpetuity. All existing promises, however, must be honoured.
Kali Mountford: Will the hon. Gentleman give way?
The hon. Member for Northampton, North (Ms Keeble) mentioned married women and pensions. The Minister of State and I had an exchange in an Adjournment debate on the position of married women who pay the reduced rate of national insurance, many of whom are the poorest pensioners in the land. Indeed, one of them wrote to me recently because she was receiving a pension of 8p a week. I suppose that 42p would be good news for her, but that is not so for most pensioners.
Having examined the history of the matter, I learned that the Leader of the Opposition was a pensions Minister in about 1993, when nearly 1 million married women paid national insurance at the reduced rate and therefore depriving themselves of future pension entitlements. A significant number were wrongly advised to pay national insurance at the reduced rate. Some of them were on such low pay that they could have paid less national insurance if they had gone into the full system. However, the then pensions Minister failed to draw that to their attention. The Leader of the Opposition is therefore partly responsible for today's pensioners being on such poor pensions.
The Minister of State kindly invited me to offer him individual cases. I have written to every pensioner who has written to me, passing on that invitation so that they
can respond through their own MPs. I am gathering information, and hopefully the Minister will also shortly receive information from pensioners throughout the land.I shall not follow the precedent set by the hon. Member for Buckingham (Mr. Bercow) yesterday when he spoke for 45 minutes in a Liberal Democrat Opposition day debate. I shall shortly draw my remarks to a close, but first I shall set out the alternative Liberal Democrat vision for the basic state pension. Two or three key principles distinguish our approach from that of the Conservative party and the Government.
First, we believe that the basic state pension has a central role and there should not be additional money for gimmicks and schemes. To that extent, there is common ground. However, we believe that the pension has been allowed to fall much too far behind means-tested benefits. The basic state pension is just over £67 and the means test is worth £78, so there is already a yawning £11 gap, and by the time of the election it will be larger still. Our commitment is to reduce that gap and, to respond to the point made by the hon. Member for Cotswold (Mr. Clifton-Brown), our goal is to ensure that no pensioner over 75 has to rely on means-tested benefits such as income support.
Our goal is to raise the basic state pension with particular emphasis on older pensioners, who tend to be women, to be poorer and to have run down their savings. Our approach is universal in that all pensioners will receive the pension and will not have to be means-tested, but it is targeted because the pension will increase substantially with age and will therefore reach those most in need. That is the right balance, and the Government's obsession with means-testing and the Opposition's approach, which recycles existing cash, are not. Our targeted approach will ensure that pensioners most in need--those who are entitled to the means test but who do not claim the benefit--get the money to which they are entitled.
We believe that the pensioners of this country have been insulted once by being given 75p, and they will be insulted again if offered 42p by the official Opposition. Only one party at the next general election will pledge a substantial, real increase in the basic state pension, and pensioners know who their friend is.
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