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Pensioners (Tax Credits)

13. Mr. Roger Casale (Wimbledon): What assessment he has made of the potential impact of a system of tax credits on pensioner incomes. [129333]

The Secretary of State for Social Security (Mr. Alistair Darling): We believe that pensioners who have worked hard to provide for their own retirement should be rewarded rather than penalised. We intend to consult later in the year on proposals for a pensioner credit that will reward those who have modest pensions or savings.

Mr. Casale: Although it is absolutely right that the Government should do most to help the poorest pensioners, is it not true that some poor pensioners feel that they are losing out because they have modest savings or a small occupational pension that brings them above the threshold of the minimum income guarantee? Will my right hon. Friend seek ways--for example, tax credits or some other means--to reward those who make some provision for their future, and so ensure that all pensioners feel that they are treated fairly by the Government, while he, of course, continues to focus the lion's share of extra resources on those who need it most?

Mr. Darling: For years, the problem with the social security system was that it penalised those who had saved a little or who had modest occupational pensions. To ensure access to the minimum income guarantee we doubled capital limits, which as a result of Conservative policy had not been changed for years. Now we want to introduce a credit to make sure that if pensioners have built up a second pension--whether an occupational pension or a second pension under the amended and reformed state earnings-related pension scheme--they will receive the benefit of it. At present, under the system that has been in place for years, such people lose out.

Dr. Julian Lewis (New Forest, East): If the Secretary of State is now a convert to the merits of tax credits, does he admit that the Chancellor was wrong to abolish tax credits on dividends? Does he defend the Chancellor, or does he agree with the senior No. 10 spokesman who was quoted in yesterday's press as saying:


That must be a first--a No. 10 spokesman agreeing with the entire Opposition Front-Bench team.

Mr. Darling: As far as our changes in company taxation are concerned, companies will start to see the

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gain as the system works through from next year onwards. That will, of course, benefit pension funds. However, so far as I am aware, the Conservatives do not plan to reintroduce the tax credit system to company taxation. If they are not going to do anything about it, a period of silence on their part might be appropriate.

On the subject of pensioners generally, let us keep reminding ourselves that the Labour Government are the ones who are prepared to spend more on supporting pensioner incomes. With their guarantee--even the amended version--the Conservatives would have to cut £16 billion from public expenditure, and we are told that most of that would come from the social security budget. Given that pensions take half the social security budget, it is not too difficult to see who would pay the price of the Conservative party's spending policy.

Ms Rosie Winterton (Doncaster, Central): I assure my right hon. Friend that in my constituency, there is great appreciation of the Government's efforts to help the poorest pensioners, who remember how they were treated by the Tory Government. There has also been a wide welcome for the establishment of a working party to consider how to assist pensioners who have small occupational pensions. Can my right hon. Friend assure me that when the working party produces a report, there will be wide consultation with pensioners and pensioners groups, such as the National Pensioners Convention, run by Jack Jones, so that we can take pensioners with us and make sure that they help us in shaping future decisions?

Mr. Darling: It is important that any change to pensions should have widespread support. During the course of this Parliament, we have made changes to the pension system to ensure that more people can build up a second pension to go with their first pension, thereby increasing pensioner incomes. An essential part of that is the pensioner credit, which is designed to help pensioners who have saved a little money in the bank, or who have a modest occupational pension. The problem with the present system is that it works for those who are very well off, and the remaining pensioners lose out. We were not prepared to put up with that. That is why we have made the changes, which I believe will result in many pensioners being far better off than in the past.

Mr. Michael Fabricant (Lichfield): The Secretary of State heard the rant that the Minister of State directed at my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) when he dared to suggest that the minimum income guarantee was a disincentive to savings. Does the Secretary of State at least agree with his right hon. Friend the Member for Birkenhead (Mr. Field), who said:


Mr. Darling: I see that the hon. Member for Ruislip-Northwood has now gone, leaving just six Conservative Back Benchers present for this Question Time. I shall deal with the point that he made, albeit in his absence. He said that the minimum income guarantee was a disincentive for pensioners to save. However, the minimum income guarantee is designed to help people

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who have already retired. Those are people who, through no fault of their own in most cases, have ended up in retirement with such low incomes that they are entitled to income support. If we abolished the minimum income guarantee, that would simply reduce the amount of money that poor people get, and that does not seem to be fair, or the right thing to do.

We are determined to do two things. First, we are ending the situation that existed when we came to office, whereby one person in three of working age ended up on income support from day one of retirement. That is what the Tories left us--one third of people heading for retirement on income support. That is why we have improved SERPS, as well as improving the occupational pensions and stakeholder pensions available. Secondly, we had to deal with the plight of people who had already retired, and were so poor that they were on income support. That is why we introduced the minimum income guarantee, which has given many of them increases of £8 a week, over and above inflation. That would all be at risk under the Conservatives, because they would have to find £16 billion-worth of cuts. Pensioners, and others, would pay the price of any Conservative Government.

Child Support Agency

17. Mr. Tam Dalyell (Linlithgow): What assessment he has made of the extent of the problems experienced by the Child Support Agency in obtaining money from partners who are (a) domiciled and (b) resident abroad. [129337]

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): People who work abroad but live in the UK can be pursued for child maintenance by the Child Support Agency. Where possible, maintenance will be collected from wages by deductions of earnings orders. Non-resident parents who are not resident in the UK are outside the jurisdiction of the CSA. Parents with care who wish to seek maintenance in those circumstances must do so through the courts.

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Mr. Dalyell: Ministers will know, through their excellent Falkirk office, that the genesis of my question lies in a poignant constituency case. What will be done about men who have skedaddled? I understand what my hon. Friend says about jurisdiction, but more could be done on reciprocity, could it not?

Angela Eagle: We have many reciprocal agreements with other countries on such matters, on which, in the circumstances, we must rely. We want the CSA to be effective, but I am not sure that we can use it to deal with men who skedaddle all over the globe.

Child Poverty

18. Mr. Derek Twigg (Halton): If he will make a statement on the measures his Department is taking to reduce child poverty. [129338]

The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley): Increases in benefits are contributing more than £2.5 billion towards the extra £7 billion a year spending on families with children by 2001. That will lift 1.2 million children out of poverty by the end of the Parliament.

Mr. Twigg: All Labour Members are anxious to reduce and eliminate child poverty. Did the UNICEF report state that we were making good progress or that we had made a good start on reducing poverty? Is it not the case that the only guarantee from Conservative Members on which we can rely is that they will maintain and increase child poverty if they return to power?

Mr. Bayley: When the Conservative party was in office, the number of children in poverty trebled. We have set an ambitious goal of halving the number of children who live in poverty in 10 years, and eliminating child poverty in 20 years. If we achieve our goal of reducing by 1.2 million the number of children in poverty by the end of the Parliament, we will be on track to fulfil our objectives.

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