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9 Apr 2003 : Column 339—continued
Mr. Tynan : I accept the figures on the basic state pension. Does my hon. Friend accept that the minimum income guarantee is dealing with the problems of the poorest pensioners, and that the heating allowance, which it has been announced today will increase from £200 to £300, will make a tremendous difference and, hopefully, save many of the lives that have been lost in the past?
John McDonnell: I was about to deal with that. The Government's anti-poverty strategy, much of which I support, is based on what I can only describe as means-tested benefits. I would like to find another way to encourage take-up. I am happy to explore the use of the minimum income guarantee.
I do not think that anyone has worked harder in their constituencies than a number of Labour Members to encourage take-up. We have held surgeries and there
have been all sorts of stunts to advertise the means-tested benefits. The reality is that, as the Public Accounts Committee report that was published at one minute past midnight last night demonstrated, between one fifth and one third of pensioners do not take up the MIG. Nearly £2 billion worth is not claimed every year.I refer my hon. Friend to the report. Basically, it sets out in an objective way that
- "2 million pensioners live in low-income households",
- "£1.86 billion of the main benefits remain unclaimed".
John McDonnell: May I finish this point because I do not want to lose track of it?
I refer my hon. Friend the Member for Hamilton, South (Mr. Tynan) to the report, which states:
- "Many pensioners and those that advise them consider the systems and administrative procedures for claiming benefits to be too complex. In all there are 23 potential entitlements for pensioners, with 36 different linkages between 16 of them".
Mr. Wray: My hon. Friend mentioned poverty. According to the last survey, four of the 11 most deprived areas were in Glasgow. Does he agree that there should be a deadline and that all the benefits that are not taken up should be ring-fenced and put into deprived areas?
John McDonnell: My hon. Friend makes an interesting suggestion. The Public Accounts Committee report examines every method that has been used to encourage take-up. Some have worked, but many have not. Now, we need to consider how we reassess the take-up levels and the impact of promotional campaigns and whether we should target some of the resources strategically.
According to PAC analysis before the report was produced, the administration of means-tested benefits is six times more costly than the administration of a universal benefit. Some of the campaigning agencies say that it is 12 times more costly to administer a means-tested benefit than a universal benefit. That must be of concern.
We need urgently to do something for pensioners. We should listen to what the pensioner organisations are telling us. Last week, 150 pensioners from the Greater London Pensioners Association visited the House of Commons to meet the Financial Secretary to the Treasury. Their basic demand was the restoration of the link between pensions and earnings. They want to continue to share in the wealth of this country as it grows in future years—as I am sure it will under the Government. It would cost £530 million to re-establish that link this year. That money could be found from the Budget. If we can draw down £3 billion for the war from contingency funds, we should be able to find £530 million to restore the link between earnings and pensions, so that pensioners do not lose out from the growth of incomes and wealth in this country.
My second point on pensioners relates to older elderly people, who are more likely to be poor. Often, they are women, living alone and suffering from illness or disability. Today, I am pleased that the Chancellor acknowledged their plight—a real breakthrough. He added £100 to the heating allowance. Unfortunately, however, that amounts to less than £2 a week. Help the Aged and others have been campaigning for a £5 increase. The 25p a week increase was derisory, as the Chancellor accepted. Indeed, last week, one pensioner said that it would not even pay for a phone call to the Chancellor to tell him where to stuff it.
I should like the increase to be more than £5; the Liberal Democrats want a £15 increase. A £5 increase would cost about £550 million—not a lot in the context of overall public expenditure, but it would address real needs.
The concessionary travel schemes that have been introduced in some local government areas are one of the most welcome benefits for pensioners. When I was a member of the Greater London council, I—like other hon. Members who are present—supported the introduction of the concessionary fare scheme in London. Free public transport in London dramatically improved the quality of life for older people. It has allowed them to enjoy travel in London and visits to their relatives. It has brought about an overall improvement in their social lives.
The funding was extended and there is now free travel in London, Scotland and Wales, but only 20 per cent. of England is covered by a concessionary scheme. It simply depends on where one lives—[Interruption.] As my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) says, there is an excellent scheme in the west midlands.
The Government have introduced a wonderful initiative to extend the concessionary fare scheme throughout the country, but only for half-price fares. One of the simplest ways of improving the quality of life for pensioners throughout the country would be to introduce free travel nationally. It would cost £300 million, according to the Minister of State, Department of Transport, whom I am quoting faithfully. Those initiatives for pensioners would increase the credibility of the Government's claim that they are tackling poverty among the poorest.
A great deal has been said about the need to attract young people into education and employment. However, students have not been treated particularly well by successive Governments. The removal of grants by the previous Conservative Government and the introduction of tuition fees by the Labour Government have undoubtedly resulted in hardship. Barclays Bank estimated that the average debt for students graduating in 2002 was £12,000, a 28 per cent. increase on the previous year. The National Union of Students and other lobbying bodies have examined student loans and other forms of student debt, including credit card debt. In some cases, students have accumulated debts of £25,000.
That is a disincentive to study or to stay in education. The drop-out rate for higher education is 20 per cent. People get into financial difficulty, which undermines
their motivation. When the Department for Education and Skills held a consultation to find out why students were dropping out, financial difficulties were the major factor. In one survey, a third of the students cited finances as a factor when considering dropping out of higher education.
Mr. Bercow: I do not dissent from what the hon. Gentleman has just said. Does he recall that, as long ago as 14 April 1997, the Prime Minister was quoted in the national press as saying that Labour had no plan to introduce tuition fees and that that commitment was underlined and reinforced 10 days later by the right hon. Member for Livingston (Mr. Cook)? I accept the legitimacy of the hon. Gentleman's concern about the impact of tuition fees on students, but may I put it to him that the Government would do well to reconsider their capricious and arbitrary target of 50 per cent. participation in higher education?
John McDonnell: I do not believe that that target is capricious; I want the largest number of pupils, particularly from working-class backgrounds, to enter higher education. I would like a higher target to be set, and achieved.
On student debt, we should remove any barrier that we can that prevents people from entering higher education or dropping out of it. Financial hardship is increasing that pressure, and it is causing stress. All hon. Members whose constituencies contain universities have had experience of the increasing mental health problems among students, even including breakdowns. We should lift that burden from young people and restore the incentives to study, so that they gain the skills needed to go into industry, creating the industrial development that has been discussed today.
Our communities and economy need those skills, so I recommend that we abolish tuition fees. That would cost £1.4 billion—a minimal amount. Today the Chancellor introduced something that I welcome—the baby bond—but as has been said, it seems as though the baby bond will only amass a sufficient amount of money to pay the tuition fee in future. Let us at least look again at tuition fees, and remove that disincentive to continued study.
I welcome the continued investment in public services, but I have some anxieties about school budgets in the current year. A number of my local schools have reported to me that the national insurance change has had an impact on recruitment and that we are returning to the days when some teaching posts were frozen. I would welcome an urgent and immediate review of school budgets. The Chancellor has moved in some areas and an additional sum—£38 million, I believe—has been put into some local education authorities to cope with some of the problems that have occurred, but the problems extend well beyond those areas, and we need an urgent review to avoid returning to a growth and cuts situation in education.
One public service has dogged the Government in the past 18 months—the fire service. The wage settlement for the fire service is in desperate need of resolution, to avoid the Deputy Prime Minister imposing a settlement and undermining the atmosphere in the fire service and trade union rights. So I urge the Government to set aside a sum to settle the fire service dispute as quickly as possible.
I have met firefighters at two local fire stations in the past week, and they have just been invited into what is described as new dimension training. The Chancellor has set aside a sum today to fund some of that training, which is about tackling the biological and chemical weapons threat from terrorism in this country. As well as calling on our firefighters to tackle that threat, we should acknowledge their commitment and professional skills by paying them appropriately. That is why we should set aside a sum—it would cost £240 million—to settle the firefighters dispute at the 16 per cent. wage offer, as proffered last November, but payable immediately. That is not a large sum of money to pay for a dedicated team of workers, whom we are now asking to risk their lives against a new and very dangerous peril.
In conclusion, I wish to say that, surprisingly and coincidentally, the total cost of those Budget proposals comes to about £3 billion—give or take £200,000. This alternative Budget will afford modest expenditure in priority areas and significant improvements for Britain's pensioners, students and firefighters.
Since 1997, new Labour has alienated key groups that have traditionally supported us through thick and thin in difficult years. They have worked for us and voted for us, and we need to address their concerns. They think that we have not always done that, which has resulted in some alienation. The invasion of Iraq has provoked massive opposition among many Labour supporters and voters. We need a Budget that addresses those concerns and transforms that disillusionment into recommitment. By giving back to those people who have invested so much in this country their hopes and their dreams, we will mobilise a large amount of support not just for the Government, but for the public services that we are trying to provide.
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