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Pensioners (Means-tested Benefits)

14. Mr. John Randall (Uxbridge): If he will make a statement on means testing among pensioners. [456]

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The Secretary of State for Work and Pensions (Mr. Alistair Darling): The benefits system has always included universal means-tested and non-contributory elements. In 1979, the proportion of expenditure on means-tested benefits was 17 per cent, by 1997 it was 35 per cent., but it is estimated that this year it will be about 30 per cent.

Mr. Randall: Has the Secretary of State ever been in favour of ending means testing for elderly people?

Mr. Darling: I believe that it is right, if the policy is to help people who need it most, to identify pensioners whose incomes are low. The alternative is to give people a universal, across-the-board increase. That is not currently the policy of any of the three major parties in this country and was certainly not their policy at the election. What is intolerable in this country is the situation that we inherited, in which 2 million pensioners were living in poverty. Their incomes were so low that they were automatically eligible for income support. We want to increase the amount that they get. If the hon. Gentleman is telling me that the Conservative party is against means testing, it must follow that he is now in favour of a universal pension.

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I must tell the Secretary of State that he should not lapse into speaking about the policies of parties other than his own.

Kevin Brennan (Cardiff, West): Does it annoy my right hon. Friend as much as it annoys me to hear Opposition Members bleating on about means testing? Is not it the truth that, whatever one's views about the earnings link, this Labour Government have done more for pensioners in the past four years than the hon. Member for Uxbridge (Mr. Randall) and his party would have done if they had been in power for a further 18 years?

Mr. Darling: My hon. Friend is right. It is necessary to take steps to end pensioner poverty. First, that involves finding out about pensioners' incomes so that they can be increased. Secondly, we must ensure that we have a policy that rewards thrift--something that did not previously happen in the social security system. Thirdly, we must help all pensioners not only through the universal basic state pension increase, but with other measures, such as removal from tax eligibility. It is worth bearing in mind that, from next year, almost three quarters of pensioners will either pay no tax or will pay it only at the 10p starting rate.

Mr. James Clappison (Hertsmere): May I give the Secretary of State another chance to answer a question that he was asked not only just now, but earlier, by my hon. Friend the Member for Buckingham (Mr. Bercow)? Does he still share the objectives set out by the Chancellor in 1993 to reduce or end means testing?

Mr. Darling: I was explaining my answer, but was shown the red card, so I shall be careful. The Government's policy is clear. We believe that we must end pensioner poverty. It is therefore necessary to identify pensioner incomes that are so low that they should be increased. We must also ensure that people who have

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modest savings or a modest occupational pension receive additional help through the pension credit. Both those measures involve ascertaining how much pensioners have. If we do not do that, there is a choice of alternatives. We can give no help at all--I think that that must be the hon. Gentleman's policy--or go back to universal, across-the-board increases, which would not address the pensioner inequality that we inherited and which we are determined to do something about.

Disability Rights Taskforce

16. Mr. Tom Levitt (High Peak): What measures he is proposing to take to implement the programme outlined in the Government's response to the final report of the disability rights taskforce. [458]

The Parliamentary Under-Secretary of State for Work and Pensions (Maria Eagle): Our consultation document "Towards Inclusion" sets out the wide-ranging action that the Government are already taking to improve civil rights for disabled people in all areas of life. That includes the recent introduction of the Special Educational Needs and Disability Act 2001. We will end the exemption of small employers from the Disability Discrimination Act 1995 in 2004 and make the other improvements to the DDA when parliamentary time allows.

Mr. Levitt: I thank my hon. Friend for that answer. She follows in the tradition of Ministers with responsibility for disability rights in this Government who have a strong record of delivery. I am sure that the document to which she referred will be the basis for continuing that tradition. Will she evangelise on the subject of the employers' threshold, which she mentioned? The threshold was a major demand of the disability movement for a number of years and is one of many aspects of the document "Towards Inclusion" that deserve taking forward and preaching from the highest rooftops so that not only disabled people but employers know what we are promising.

Maria Eagle: I have been asked to do many things in my life, but evangelise is not one of them. None the less, I shall undertake to be extremely positive, because it is important to take everybody with us as we approach 2004, including small firms and business in general, to ensure that the measure can be properly implemented. One thing is for sure: there is no point in having rights if they cannot be enforced or obligations if they cannot be met.

Mr. Tim Boswell (Daventry): I, too, welcome the Under-Secretary to her post. Does she feel that, important as disability rights are--we are not arguing about that--the greatest wish of up to 750,000 disabled people today is for a viable job that they can manage to discharge? In that connection, will she undertake to examine the much better record of private sector insurers in providing rehabilitation in a package alongside disability benefits and so getting people quickly into or back to employment?

Maria Eagle: The hon. Gentleman identifies an important issue that relates to getting people who have just become disabled back into work or to keeping them

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in their job. That is an important consideration which I undertake to look closely at as I find my way around my new responsibilities.


19. Mr. Howard Flight (Arundel and South Downs): If he will make a statement on the compulsory purchase of annuities. [461]

The Secretary of State for Work and Pensions (Mr. Alistair Darling): The Government have made it clear that it is important that pension funds that are built up with the support of tax relief are used for their intended purpose. The Government welcome the wider diversity and choice now available in the annuity market and remain open to workable and affordable alternatives.

Mr. Flight: Will the Government respond to the comments made by Dr. Oonagh McDonald to the effect that it is not the case that the recommendations of the McDonald report would involve a loss of tax revenue, as the Government have alleged? If there is not a fiscal case for opposing the end of the obligation to buy annuities, what are the Government's objections?

Mr. Darling: As the hon. Gentleman knows, Dr. McDonald recommended a retirement plan that would provide an income over a 20-year period. The question is what happens after that. We want to avoid a situation in which people do not have a fund with which to provide their pension during their retirement, which can happen if there is early draw-down or a 20-year retirement plan, as proposed by Dr. McDonald. We also want to avoid doing anything that would result in a further reduction in annuity rates, which would, of course, be detrimental for all pensioners. However, we remain open to workable proposals that are seen to improve matters. Although we will respond to Dr. McDonald's proposals, I am not sure that we are quite ready to do so.

Dr. Vincent Cable (Twickenham): Does the Secretary of State agree that a great many pensioners have been caused much distress by the collapse in annuity values over the past few years? Does he also agree that the Government's objectives could be perfectly well achieved if the element of compulsion were confined to the level of the income guarantee?

Mr. Darling: The hon. Gentleman is right; annuity rates have come down. There are two principal reasons for that: first, inflation is low, which benefits many pensioner incomes, and, secondly, increased life expectancy, which is a major determinant of the annuity rate. Those are good things, but annuity rates have fallen. One measure will help. He will be aware that in, I think, 1999, a study into pension funds showed that more than one third of the fund was eaten up by charges and fees. The stakeholder pension that we introduced caps charges at 1 per cent., the effect of which has been felt across the industry, and will result in more of the pension fund being available for retirement. As for compulsion, I believe that the hon. Gentleman knows that that already exists in the pension system.

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