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The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley): The hon. Gentleman refers to three figures--£5, £10 and £15. Under the Liberals' proposals, when would each of those be introduced?
Mr. Webb: They would be introduced simultaneously. Pensioners under 75 would receive £5, those aged between 75 and 79 would receive £10 and those aged 80 and over would receive £15. That is our proposal.
For several years, I and my colleagues have argued in the House that £250 of capital for £1 a week of income is absurd, and that the capital limits discourage people.
We batted away for years, and suddenly the Secretary of State announced on Monday that the Government have always thought that the capital limit rules were silly and will now change them. We welcome the sinner repenting, but we had to put up with an awful lot of rubbish while the Government tried to defend an unjustifiable system.There is an important practical question. Under these orders, from next April pensioners with £6,000 in the bank will not have a penny imputed from their savings. If that money is in a 5 per cent. interest account, they will get £6 a week actual income. When the Government switch over to using actual income for the purposes of assessing means-tested benefits, what will happen to those people? Will there be a £6 disregard so that no one with £6,000 capital will lose out? Have the Government decided that yet? I know that consultation is taking place. The Minister shakes his head, so perhaps the Government have not decided yet. I urge them to ensure that pensioners with modest savings who have no imputed income--even from capital of £6,000--do not lose out, particularly once the orders are in force. I hope that the Minister will reassure us that that is the Government's goal for that group. It would be perverse if the opposite were true.
The Government are still incapable of paying all pensioners their pensions on time. We have raised the NIRS2 computer problem many times in the House. These pensions increases will not reach pensioners on their pension date, in some cases because of the computer problems. After three and a half to four years, the excuse that it was the other lot's fault starts to wear a bit thin. We have been promised that this matter will be resolved by certain dates, and every one of them has been missed. I hope that as a Christmas present to Britain's pensioners, the Minister will tell us finally whether before the next election every pensioner reaching pension age will get their pension on time.
On a more upbeat note, an announcement was made during the year on the widows' state earnings-related pension scheme proposals. That was a welcome change of heart. People will not lose their inherited SERPS entitlements, provided that they have already reached pension age. I stress how much we welcome that.
The document contains many welcome measures, such as the additional support for carers and for disabled people. We welcome the £5 on the pension. It is not clear why the arguments that justify a £5 increase this year justified only 75p last year. As I have argued, the Government's strategy is incoherent and inconsistent. It would be nice to think that we will have a response to the specific points that have been raised, but experience suggests otherwise. As it is the festive season, I shall live in hope.
1.42 pm
Mr. Laurence Robertson (Tewkesbury): The Secretary of State said that I was the only Conservative Back Bencher in the Chamber. I am sorry to say that that remains the case, but I promise him that I am not a token Back Bencher, because I serve on the Select Committee on Social Security under the expert guidance of the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood). I also served on the Standing Committee considering the Child Support, Pensions and Social Security Bill a short while ago, so I take an interest in these matters. I do not intend to speak for
long, but I want to make a few comments about the current situation on pensions and about future pensions. I also want to refer to some of the points that the Secretary of State made. I am sorry he is not in his place to answer my points.The more one considers an issue, such as law and order or Northern Ireland--two subjects that I am also interested in--the clearer it becomes that there is no one big answer to any of those problems, and that that is so with all aspects of social security, especially pensions. I share the Government's stated objective of relieving poverty among the poorest pensioners. Although it is difficult to define poverty, we all accept that many pensioners are poor, especially elderly women. Their position cannot be corrected in one go, because although people may not be particularly poor when they retire, given the income that they receive, as they get older life becomes more difficult. Things that they bought new when they were 65 are not new when they reach 80. Problems may come about simply because they have got older. Although the problem may be solved for someone of 65, it could recur when they get older.
What the Government are doing is not necessarily helping. Given the spirit of the debate and the fact that Christmas is approaching, I shall not be too critical or unfair, but it is a little easy for the Government to say that they are providing the minimum income guarantee so that no one should be on less money than that minimum. The Government know that many people do not take up the MIG--we have heard eloquent speeches explaining why that is so. The fact that people do not take it up must be taken into account, regardless of the reasons.
At a Select Committee meeting, the Secretary of State said that we should judge a system by how effective it is, and I entirely agree with him. He hung himself with his own words. The system is not effective because people are not taking up the minimum income guarantee. Why are they not doing so? I take the point that the hon. Member for Gedling (Mr. Coaker) made. As well as the practical difficulties, there are philosophical arguments. I accept that those people claim housing benefit and council tax benefit, but there is a crucial difference. They get bills for rent and for council tax, and that provokes some action, whereas they have to be proactive to claim the minimum income guarantee. Although I sympathise with the hon. Gentleman's view, I think that there is a difference. If the MIG were part of the basic state pension, they would automatically claim it, because there is a philosophical expectation of that pension. They understand correctly that they have paid into the system all their lives and are entitled to claim a pension. If they see the minimum income guarantee as welfare, they do not believe that they have paid in all their lives for that, even though they have. There is a very big difference.
It is fair to say that the feeling on the Select Committee is that the MIG is unlikely to be taken up universally unless it is part of the basic state pension. I shall quote one of the witnesses to the Select Committee. He may seem to be making a point that is opposite to the one that I am making, but I shall explain what I mean.
Mr. Andrew Dilnot, a director at the Institute for Fiscal Studies, said:
- If our only concern is targeting the standard of those living on the lowest incomes, then we will always be driven towards relying more on means-testing and less on universalism. If our key concern is upholding the dignity of the elderly, then we are driven towards universalism.
There are also the practical problems of claiming the MIG. Are elderly people, whom we accept are probably the poorest in society--whether they are men or women does not matter for the purpose of this point--the most likely or the least likely to claim the minimum income guarantee? I suggest that such people, by virtue of their age, are probably the least likely to claim the MIG, yet they are the very people who need it. It is almost certain that it will fail.
If the problems are philosophical or about practicalities and not about information, is the take-up campaign likely to succeed? As the hon. Member for Northavon (Mr. Webb) said, the system is not working. Regardless of the philosophical arguments that we have all made, the fact that the system is not working should be taken into account.
When preparing its report on pensioner poverty, our Select Committee stopped short of recommending a restoration of the earnings link, although many members favoured that. One factor was our wish to see how the pension credit system would work before returning to the issue, but I warn the Government--I hope that the hon. Member for Roxburgh and Berwickshire, the Chairman of the Select Committee, will agree if he catches your eye, Madam Deputy Speaker--that we may return to the subject if it is felt that pensioner credits are not doing enough. I suspect that the evidence received so far suggests that they will not do enough.
Our report called for an increase in the state non-means-tested pension sooner rather than later. It also called for an increase in the basic state paid pension for those aged over 80 to minimum income guarantee level, so that the income of the poorest members of society could be guaranteed.
When we--Members on both sides of the House--are trying to make political points, we tend to stress that the United Kingdom is the fourth largest economy in the world. I am proud that it is, but when that fourth largest economy apparently cannot afford to do what it should be doing, we should question the motivation that may be involved. It horrifies me to think that members of my family might have to claim under the minimum income guarantee, and I suspect that other hon. Members may also not be too happy about the idea.
Pensioners are clearly not happy about proposals for the future. Labour Members must receive the same letters that we receive; pensioners must visit their surgeries, as they visit ours. They must have heard pensioners complaining about the level of the basic state pension only a few weeks ago, in Westminster Hall.
Although I have suggested that the basic pension should be increased, I recognise the problems posed to continual uprating by demographic changes. I speak from
memory, but I believe that 50 years ago there were about five and a half contributors to every pensioner. I think that the figure is now 1.8; the Minister will correct me if I am wrong. Those figures suggest that there is a problem--and the figure of 1.8 is due to fall over the next few years, and as we enter the next century. I do not accept that we have entered the next century yet: I am one of those who think that will start at the end of the current year. Anyway, the figure will fall as we reach 2030, 2040 and 2050.I accept that, in the long term, we shall find it difficult to provide a basic state pension that will retain the degree of comfort and dignity that the recipients deserve. That is why the Conservative party wants a pensions system that is funded. Why have a number of pensioners--not all, of course--become better off recently? Because they have taken up occupational or private schemes. Although I have made criticisms of the Government's approach, I accept--as I have said--that it is difficult to provide a basic state pension that enables pensioners to live as they would want to live, and as we will want to live when we reach their age.
It is rather disingenuous of any Labour Member to suggest that we would scrap the basic state pension. That is certainly not our policy. I am sure that, if it were proposed by my hon. Friend the Member for Havant (Mr. Willetts), it would not be accepted by the Conservative party, and I do not think such allegations serve politicians--or, indeed, the House--very well.
Many general elections ago, we were accused of planning to abolish the national health service. We won many general elections, and did not do that. We have no intention of scrapping the basic state pension now, and I would not support it if it were a proposal; but saying that is very different from making plans to help and guide people to provide for a better future. We betray those people if we do not stress the importance of their making their own pension provisions. Whatever our argument, and on whichever side of the House we sit, the fact remains that that is the only way in which those people will enjoy any prosperity in their old age.
It will come as no surprise to Conservative Members that our proposal to allow people to opt out of the state pension and, perhaps, to receive a rebate that can be invested in a private scheme is not unique. Other countries are well ahead of us. As I have told Front Benchers, two years ago I went to Mexico and studied its pensions system. Mexico is already up and running in this regard: the proposal is not exactly revolutionary.
When I was in Mexico, I asked Ministers whether there might not be a bit of a black hole in resources, given that those in retirement would continue to need funding. They said, "We feel we can manage that", adding, "We would rather face the problem now than pass huge burdens to our children and grandchildren". That, I think, is a very responsible attitude for a so-called developing country to take, but it is too revolutionary for the fourth largest economy in the world.
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