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Mr. Darling: I agree with my right hon. Friend. The Conservative party has now got itself into a position whereby, when Conservative Members knock on a pensioner's door next April, they will say, "Good evening, madam. I'm going to take £200 off you." Call me old fashioned, but I do not think that that makes for good politics.

The other thing that causes the Conservative party gloom is that it could never have increased spending on pensions by the extent to which we have because, throughout most of the time that it was in government, there was a deep financial crisis and it had no money to do any of those things. Conservative Members criticised us in the first two years of the Parliament when we spent considerable time and effort sorting out the mess that they had left behind, clearing up the deficit and all the debts that they had run up. Because we have made those tough choices, we can now make money available for pensioners, disabled people and others, which they could never have done.

Although my right hon. Friend did not ask about it, the other day I heard him on the radio making the point about maintaining the value of people's savings in retirement. Because it is earnings related, the pension credit will help us to do that.

Sir Norman Fowler (Sutton Coldfield): Personally, I do not quarrel with the Secretary of State's proposals on pension credit. Having introduced family credit, I have long advocated an extension of that to pensioners with the aim of helping those who have saved, but who through no fault of their own have been unable to build an occupational pension.

What I do quarrel with is the Government's failure to do anything about the £5 billion a year pension tax. That is making it more difficult and more costly for people to build their own pensions and, unless we are careful, it will lead to those people requiring extra Government help in years to come.

It is right to help the pensioners of today--I make that clear--but surely we should be concerned about the price that the Government are paying. That price seems to be that we are harming the interests of pensioners tomorrow.

Mr. Darling: I thank the right hon. Gentleman for his welcome for the pension credit. He spent, I think, some six years in the job that I have. I have looked at the photographs along the hall outside my office; he seems to have been there longer than anyone else. I do not know what he did to deserve that, but he will know from his experience that one of the big problems in the social security system is that it seems to fly in the face of

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all logic. We want people to save and to put money by, but the system that we inherited did not encourage that. The pension credit will, for the first time in the history of the modern welfare state, reward saving. It is one of the most fundamental reforms that the system has ever seen.

I cannot agree with the right hon. Gentleman's second point. He will recall that we moved away from the advance corporation tax system because we wanted to ensure that decisions on investment were taken by managers rather than in a drive to increase dividends. It allowed us to reduce corporation tax to the lowest rate ever, which has increased company profitability, which is in turn being reflected in dividend levels; and of course, the biggest shareholders in companies are pension funds.

Mr. Gerald Kaufman (Manchester, Gorton): Now that my right hon. Friend has disposed of the Conservative party, will he dispose of the con party--the Liberal Democrats--90 per cent. of whom have not even bothered to turn up for this statement? Will he point out that their policy was a 75p increase this year with no winter fuel payment, no free television licences and wild promises of unsubstantiated increases, which they will make other taxpayers finance without even saying what the income tax increase would be?

Mr. Darling: The Liberal Democrats' pensions policy, as with all their other policies, is to say whatever they think the listener wants to hear. When we compare what they say on different policies in different parts of the country, it is not surprising that they have been Britain's third party for most of the last century and, I suspect, all of this.

Rev. Martin Smyth (Belfast, South): I join the general welcome for the Secretary of State's announcement. I do not fully understand why people are concerned about the higher mortality rate among older people; that is the law of averages I suspect, as most of us are longing to get home by that stage.

On disability, I welcome the increase, but does the Secretary of State agree that the bureaucracy in the system sometimes hinders people's attempts to obtain benefits to which they are entitled? One of my constituents came to see me this week because he has been off work for six years following an injury. He has been taken off disability living allowance and been advised that he should have claimed incapacity benefit with income support. After claiming, he was told that he would have to wait 40 weeks before receiving any benefit. Surely there is something wrong with a system that holds people back when they should have been advised to claim much earlier.

Mr. Darling: If the hon. Gentleman writes to me about his constituent, I will look into the matter because it does not sound right to me. I am not sure that I agree with the hon. Gentleman about the mortality rate. It is self-evidently true that older people die eventually, but the mortality rate for older people in this country is far higher than one would expect when we compare ourselves with other countries. We know that fuel poverty is a real problem affecting about one third of pensioners in this country, and that is why we have introduced the winter fuel payment on top of everything else that we have done

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to help pensioners. I suspect that some of the poorest pensioners were most at risk in the past and that is why we are increasing the amount of the minimum income guarantee to over £92 next April.

Miss Anne Begg (Aberdeen, South): Over the past few months I have met many pensioners in Aberdeen, South. Although they understand the Government's need to improve the lot of the poorest pensioners and to narrow the gap between rich and poor, the group who felt most aggrieved--there was a real grievance--were those just over the basic state pension level with incomes of between £80 and £200 a week. They felt that the present system discriminated against them and that they were not being rewarded for their thrift and hard work. I am sure that they will be delighted with today's announcement about the introduction of pensioner credit and the lifting of the cap on saving, which was something about which they felt strongly. I do not want to be churlish on a day of good news for pensioners, but I am sure that they will ask why it will take to 2003 before the pensioner credit can be introduced. Why not do it sooner?

Mr. Darling: It will take that time because we need primary legislation and because we have to finish the consultation period so that we get the detail right. Also, we need to change the IT system so that we can deliver the credit--[Interruption]--and we have the money to do that.

I certainly remember standing with my hon. Friend on Union street, speaking to pensioners and making precisely the point that she has just made. If I remember rightly, there was a pensioner who had about £10,000 in the bank--which is not that much--and a modest occupational pension, but felt that he was getting absolutely nothing for making those arrangements. Although he did not mind people getting the minimum income guarantee, he said, "I have done what you and successive Governments have told me to do, but I feel that I am getting nothing for it." Now, for the first time ever in the history of the social security system, people will be rewarded, not punished for doing what they believe to be right.

Miss Julie Kirkbride (Bromsgrove): Will the Secretary of State explain why the Government are robbing pensioners retiring this year of their married couple's allowance--at a time in their lives when they are more financially vulnerable--but making them wait three years, until he introduces the pension credit scheme, for the bit of recompense that they might receive for the cutting of that allowance?

Mr. Darling: The £5 increase in the basic state pension is being made next April, when, for the poorest pensioners, the minimum income guarantee increases to £92. It is therefore not true to say that pensioners have to wait until 2003, which is when the credit is being introduced. As the hon. Lady supports the Conservative party, I am not completely surprised that she has failed to recognise the benefit of the credit, which I think will benefit quite a few of her constituents. Nevertheless, I am a little surprised that she is against it and, at the next

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general election, may be campaigning for its repeal. It is unfortunate that she does not recognise that, next year, we are giving more money to pensioners.

Mr. Kevin McNamara (Hull, North): I congratulate my right hon. Friend on the breadth of his statement covering the disabled, pensioners and carers. It has a very broad sweep and is very welcome indeed. He will recall that the parlous state of pensioners started when the Conservative Government abolished the link between wages and pensions. He will also know that that specific matter still greatly concerns pensioners--all of whom recognise the important action that my right hon. Friend and the Government have taken in concentrating on the poorest pensioners and providing the winter fuel allowance. Nevertheless, pensioners still feel that they have paid their national insurance contributions, and, as a body, they cannot understand why they are not at least being promised that the link between wages and pensions will be restored.


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