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10 Apr 2003 : Column 469—continued
Mr. Smith: We need to do more about take-up of those benefits. I acknowledged that when the figures were published. What neither the hon. Gentleman nor the hon. Member for Havant has mentioned is the acknowledgement in that and other reports of the considerable impact that our take-up campaigns have already had. For example, 150,000 more pensioners have benefited from the minimum income guarantee by an average of £20 a week. As we roll out the new pension credit, we will contact every pensioner in the country with unprecedented energy and attention to ensure that every pensioner gets the entitlements that should be their right, and which they deserve.
James Purnell: Does my right hon. Friend recall that the hon. Member for Wycombe (Mr. Goodman) is a
member of the Work and Pensions Select Committee, and that it unanimously welcomed the pension credit? It said that the pension credit
- "will ensure that most pensioners will be better off as a result of having saved for their retirement, compared to those who have not."
Mr. Goodman: I am certainly happy to acknowledge that I signed up to the report on the pension credit—if the hon. Member for Stalybridge and Hyde (James Purnell) will also acknowledge that he signed up to its concluding paragraph, which states:
- "However, the Pension Credit unquestionably adds further complexity to an already byzantine system of retirement provision, which is causing confusion for pensioners, pension providers and those saving for their old age."
Mr. Smith: We have had an illustration of the fine tradition of compromise that underpins the standing and integrity of our Select Committee reports. However, I cannot but draw the House's attention to the fact that the hon. Gentleman supports the pension credit, whereas the hon. Member for Havant opposes it. Their position is going to come apart between now and the next general election.
To provide greater financial security and to reduce anxiety for those who stay longer in hospital, we will ensure that, where pensioners and those receiving income-related benefits currently lose about 40 per cent. of their pension after six weeks in hospital, everybody admitted to hospital from yesterday onward will be able to keep their benefits in full for stays of up to 52 weeks.
Mr. Andrew Miller (Ellesmere Port and Neston): My right hon. Friend has sneaked in a little word—as did the Chancellor—that nobody has properly picked up. The hon. Member for Havant (Mr. Willetts) often accuses the Department of keeping things to itself. However, am I right in saying that this provision will apply to everybody who is on income support, and will that not constitute a huge benefit to the mentally ill in particular, who have complained for years that when a schizophrenic, for example, is sectioned under mental health legislation, they lose their housing benefit after a few weeks, which makes it even more difficult to get back into the community? Is this not a fantastic gain for people such as the mentally ill?
Mr. Smith: It is a very important gain, and I am grateful to my hon. Friend for reminding the House that the provision applies to all income replacement and benefits for up to 52 weeks. For the avoidance of doubt, it will not apply to attendance allowance and disability living allowance, because those are living cost and care cost benefits that are met while people are in hospital.
For pensioners aged 80 or over, the Budget also introduces, from yesterday onwards, an extra payment of £100, over and above the £200 winter fuel payment, for the remainder of this Parliament. Almost 2 million people aged 80 or over will benefit.
We have just reached the end of the largest ever consultation on occupational pensions. We shall shortly produce plans to open avenues to flexible retirement and to increase saving through proposals to make informed choice a reality, to improve the information and advice available for people planning their retirement, to simplify radically pensions legislation and red tape to make it easier for employers to provide good pensions, and to improve protection for scheme members and restore confidence in pensions. Anxiety over scheme closures undoubtedly undermines such confidence.
Mr. Willetts: I want to take the right hon. Gentleman back to higher winter fuel payments, which he touched on briefly. He used a phrase from the Red Book, which states that the additional £100 is
- "for the lifetime of this Parliament".
Mr. Smith: The hon. Gentleman can look forward to that being in our election manifesto.
Mr. Smith: I well recall, however, how Opposition Front-Bench Members—I think including the hon. Member for Havant—were foolish enough to deride the winter payment as a gimmick when it was first introduced. At first, the Opposition were going to abolish it. Then, if I remember correctly, they were going to consolidate it in the pension. Then, in abject confusion as the election came upon them and they saw how popular the measure was, they were going to give pensioners a choice as to whether it was consolidated or paid separately. In his own interests, I urge the hon. Gentleman to think carefully and not to repeat the same mistake. [Hon. Members: "We want him to repeat the mistake."] Labour Members want the hon. Gentleman to make the same mistake again, so perhaps he will.
Mr. Smith: This year's Budget builds on our achievement since 1997. We are giving children the best start in life. We are making work pay. We are making sure that pensioners share in the country's rising prosperity.
Kali Mountford: Will my right hon. Friend give way?
Mr. Smith: I must draw my remarks to a close, but I cannot resist giving way to my hon. Friend.
Kali Mountford: I am very grateful to my right hon. Friend for giving way. Does he agree that trust in pensions, especially in private and occupational pensions, is extremely important? Will he build on the
work of my right hon. Friend the Member for Makerfield (Mr. McCartney)? Before he left his post as Minister for Pensions, he was dealing with pension liberation schemes. People who had put money into pension schemes honestly had it virtually stolen from them in scams. Several companies were brought to book by my right hon. Friend the Member for Makerfield. I believe that the cases have gone through the courts and that the companies have been punished for their dreadful acts. Will my right hon. Friend ensure that the regulations will look at pension schemes, and protect pensioners from that sort of vile activity?
Mr. Smith: Absolutely. My hon. Friend draws attention to a very important matter. She is right to commend the work of my right hon. Friend the Member for Makerfield (Mr. McCartney) in this area. I assure her that the fine tradition that he established will be carried forward. We will prosecute anyone who tries to defraud pensioners in this country.
In conclusion, I believe that we have set out our vision for a fairer, more flexible and more enterprising Britain. We have rejected the Tory failings of the past—the economic instability, the high unemployment, and the under-investment in our schools and hospitals—which denied people opportunity and quality public services.
This Budget, as with all the others over the past six years, is about building a Britain of full employment. It is about maintaining a course of prudence and stability. It is about investing in our public services.
We reject—as I believe that the British people reject—the 20 per cent. cuts proposed by the Opposition, and the shadow Chancellor's doctrine of shackling public spending to short-term shifts in gross domestic product. That would damage public services and investment, destabilise the economy, and take us back to boom and bust. That is where the Opposition are headed with the Howard doctrine.
The truth is that the Opposition have learned nothing, but Britain has learned that, with Labour's prudent course of economic stability and enterprise, flexibility and fairness, we can achieve full employment and quality public services, and give everyone the chance to make the most of their potential.
This Budget carries forward the Government's work of building a strong economy and a strong society, where enterprise and social justice go together. I commend it to the House.
4.23 pm
Mr. Paul Burstow (Sutton and Cheam): I rise to address the issues to do with health and welfare, which are the principal subjects for debate today. I want especially to deal with matters connected with benefits and pensions, because yesterday's Budget statement omitted any reference to the growing pensions crisis. It did little, if anything, to reverse the Chancellor's love of complexity in our tax and benefits system. It leaves real questions about how we as a country will be able to resource, in the medium to long term, the Government's commitments—which Liberal Democrats support—to invest in our public services, most particularly in education and health. The Budget also raises questions to do with the resourcing of social care, and I shall return to that matter in a moment.
We have a pensions crisis in this country, but we do not have a pensions Minister at the moment. It is a particularly bad time to have a vacuum in such a key ministerial post within the Department for Work and Pensions—not least as the Green Paper consultation process comes to a close. It has been useful to hear the Secretary of State talk about his expectations for occupational pensions, but what we really need is a Minister for Pensions working now to give the public confidence that the Government are not in denial of the pensions crisis, but are taking action to deal with it.
Why does the Prime Minister believe that managing the Labour party and appointing a party chairman is more important than tackling the pensions crisis? We have had six Pensions Ministers in six years of Labour government, so what does that say about their approach to pensions? Does it mean that every one of those Ministers was not up to the job? What does it demonstrate to the public? What confidence can people have that the Government are on top of the pensions difficulties faced by so many of our constituents? Undoubtedly, the current vacuum in respect of a Pensions Minister is sending out the wrong signal.
More and more of our fellow citizens coming up to retirement and, indeed, many who are currently retired, face the prospect of a period of poverty. The latest Government figures show that more than one in five pensioners—2.2 million of our senior citizens—live in poverty today. As we have already heard, the Government's approach is to provide more and more means-testing. However, when he was the shadow Chancellor, the Chancellor was not in favour of means-testing. Indeed, in 1993, he said:
- "I want the next Labour Government to achieve what in fifty years of the welfare state has never been achieved—the end of the means test for our elderly people."
The Department published figures a week ago—the Secretary of State acknowledged that they were not good enough—that bear repetition. Pensioners are currently missing out on up to £1.8 billion of benefits and up to 270,000 pensioners are missing out on housing benefit. Some 670,000 are missing out on the minimum income guarantee and up to 1.43 million on council tax benefit. As council tax bills land with a loud and disappointing thud on people's doormats, we should reflect on the failure to increase take-up of council tax benefits. In fact, we have seen a reduction in the number of people taking up such benefits to the extent that people are losing, on average, £7.60 per week.
What additional steps are being taken to learn the lessons from the failures of the take-up campaign for the minimum income guarantee and ensure that more people take up council tax benefit? Is it not a pity that the Chancellor did not take the opportunity yesterday to
announce his acceptance of our policy of cutting council tax bills by £100 across the country? Given the regressive nature of council tax, that would have helped the poorest people in our country and the poorest pensioners among them.If take-up is already a problem, it will be even greater in respect of pension credit. The Government estimate that 3.8 million households will be eligible—half the pensioner population, the Secretary of State tells us—but that only 2.8 million will receive the benefit by October 2004. By 2006, an extra 200,000 are expected to claim it, taking the total to 3 million people. The Public Accounts Committee rightly described the Department's target as entirely unambitious in respect of driving up pension credit take-up. That is why we reject the reliance on means-testing and argue for the boosting of the basic state pension. We propose a £5 across-the-board increase, plus extra help that is targeted on the basis of age additions—£10 at the age of 75, and £15 at the age of 80.
Yesterday, the Chancellor made a welcome announcement on age addition at the age of 80. The figure of 25p has not been increased since it was introduced more than 30 years ago. However, rather than increasing the age addition, he chose to go down the route of paying it through the winter fuel allowance—the extra £100. It would be churlish not to welcome that extra money, but it is worth pointing out that, if we consider what the 25p would be worth today if it had been indexed to prices over the past 30 years, we find that it would stand at the princely sum of £2.19 a week. That is based on figures that were published by the Department for Work and Pensions in July last year. Obviously, they have to be updated slightly, but they give a good indication. The £100 equates to £1.92 a week. All that has been achieved by the Chancellor's largesse yesterday is a catch-up on the past 30 years of failing to index the age addition. That is hardly generous, despite the way in which it was presented. Liberal Democrats believe that the targeting of extra help to the over-80s requires a substantial extra investment. That is why we propose an extra £15 a week, or £780 a year, to the over-80s.
Yesterday, the Chancellor made much about flexibility in the labour market. He talked about additional support and assistance to schemes to promote employment among the over-50s. However, if we are serious about addressing labour market inflexibility, we have to tackle deep-seated ageism in the labour market. Ageism denies access to employment for many thousands of our fellow citizens and it denies people their dignity and liberty. It makes no economic sense. The cost of ageism to our economy—as estimated by the Employers Forum on Age—is £31 billion a year in lost production, lost taxes and lost opportunities. What a waste of money.
Today, one in three people who are over the age of 50 but below the age of the state pension are out of work. Some of those people have made a deliberate choice to retire, to take up voluntary work, or whatever. However, far too many of them have been tossed on the scrap heap by employers who have adopted ageist assumptions about their capacity to do the job. Age should not be seen as a proxy for a person's capability or competence to do anything; and yet, still today, surveys shows that employers use age as a criterion when
deciding whether to employ a person. We need age-discrimination legislation. The Government must signal that they will not wait until the last minute of the last hour of 2006 to introduce legislation under the European Union directive on equal treatment. The Government must not simply legislate for employment but legislate to deal with age discrimination across the whole economy—in terms of goods and services, whether publicly or privately provided, as well.I want to touch on a couple of other issues, the first of which is the child and working tax credits and the £9 million advertising campaign that we have all seen on our televisions over the past few weeks and months. From answers that the DWP has given, 2 million of the 5 million families who are entitled to this tax credit are not claiming it. Again, complexity is denying access, denying benefits and denying extra income. At the same time, the old tax credit system is winding down. A constituent came to see me last weekend and said that they had applied for the old tax credit and been told that they would have to wait because the staff who would process it were now processing all the claims for the new system. My constituent may also lose out on a maternity grant because time scales mean that they will be timed out. I hope that that will not be the case and that, when I write to the Department, Ministers will confirm that my constituent will get the tax credit and will not be penalised because of processing delays in the system.
The Liberal Democrats welcome increased investment in the national health service. Last year, we voted for the national insurance increase because we believed passionately that extra investment was needed. However, the Labour Government spent too much time during their first term inflating figures to create the impression that substantial investment was being made. They raised expectations that were not met, thus allowing the Conservatives to peddle their current line that extra investment will not make a shred of difference to our national health service. That is a false argument, but the Government have brought it on themselves by the false figures and accounting of their first term.
Where is the money going? Waste is a serious problem in the NHS. I offer the House some examples. Agency nurse costs have risen threefold since Labour came to power and are currently £529 million a year, half of which is spent in Greater London alone. NHS resources of £500 million are going into agency costs rather than into the provision and retention of directly recruited staff.
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