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The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond): Before the hon. Lady moves on, I hope she will recognise that decisions on consultation on post office closures or changes are matters for the Post Office. Does she accept that the Government share her understanding of the importance of local post offices to local communities, and especially to older people? Will she also accept, as my hon. Friend the Minister for Pensions said, that that is why we are putting £2 billion into the Post Office network, including £450 million for rural post offices, and why we welcome Post Office discussions with the banking sector to ensure that we can underpin the viability of the post office network by allowing it to offer banking services?
Mrs. Calton: I am extremely grateful for the Minister's intervention, because I hope that such thinking will go into the decision on Cheadle road post office. If it does, that post office will undoubtedly be saved or some alternative arrangements will be made. Unfortunately, that has not been the pattern so far in my constituency, and we await the results of the so-called consultation any day now, which we are concerned will affect real people in real communities. The fact that they do not live in a rural area but, according to the Post Office, in a so-called urban sprawl, means that they do not get as much consideration as people who live in rural areas.
We should maintain old people's independence, and ensure that they do not lose their links with the community. I tried the House's patience by reading out all those names, but there are dozens more people in the same position. If this post office closesand I have no reason to suppose that it will be treated differently from the othersthe cost of social services and health care will rise as all those people become isolated and dependent on others. I am delighted that they want to remain independent in their 80s and 90s. I glory in their desire to do so. The post office makes that possible, and motivates them to go out and collect their pensions by whatever means they choose. There is no local bank, and if the post office is taken away many of them will be unable to make the journey on their own. Along with local shops, the post office is central to their independence.
If the closure is really necessary, what will be done to promote and maintain that independence? It is not sufficient to say that more will be spent on social care and health, for these are people who want to live without those services. Could not post offices, with the Government's encouragement, form an association with supermarkets? Could there not be mobile post offices? They would be a valuable accessory to the mobile library in Stockport, which has made a real difference, although Stockport is an urban area surrounded by suburbs.
It is simply not right to say that the council tax is applied fairly. In my constituency, which is considered to be affluent, its application takes no account of the fact that 51 per cent. of people in the borough are receiving either pensions or benefits.
Mrs. Annette L. Brooke (Mid-Dorset and North Poole): What concerns pensioners particularly is that while the state pension is the same throughout the country, council tax levels differ from mile to mile, and do not reflect the level of services. Some people pay less council tax than my constituents although they have free transport. Is there not a case for equal treatment?
Mrs. Calton: My hon. Friend makes my point for me. People in their 80s tell me that they cannot afford to live much longer because the council tax keeps going up. They can cope with everything else, but the council tax is becoming too great a burden. It is not fair to expect older people to retire having made what they thought was reasonable provision, and then find that the council tax is the biggest cost that they must meet each year.
The Government have a responsibility to communities, not just in regard to decisions on how much grant areas should receive and how much they should raise for themselves. The Government also have a responsibility when it comes to post offices and other small local services. The one thing of which I can be sure is that if those services are allowed to disappear, the Government and local communities will pay more in the long run.
Rob Marris (Wolverhampton, South-West): The hon. Member for Cheadle (Mrs. Calton) ended by talking about the council tax. It seems to me that the Liberal Democrats are again being somewhat two-faced on the
The difficulties that exist throughout the country this year, especially in the south-east, have been caused by councils' unrealistic views over the years on the level at which they should set their taxes. In my area of Wolverhampton, in the west midlands, we have had no such problems, because the Government's new formula redresses the historic imbalance affecting the rate support grantnow the formula spending sharethat the city council used to receive.
Let me give an example to bolster my assertion that there was an historic imbalance in England. When I entered Parliament two and a half years ago, I moved into a property in the London borough of Lambeth. Like the property in which I have lived for many years in my constituency, it is in band D. I found that the council tax in London was considerably lower than that in Wolverhamptonnot because Wolverhampton council is much more inefficient than Lambeth, as hon. Members probably realise, and not, as far as I can deduce, because the services provided for Lambeth residents are much worse than those provided in Wolverhampton. Given the considerably higher cost of conducting council business in London, I think the differential can only be explained by the historic imbalance of moneys from central Government. The adjustments that have been made surely redress that imbalance, as you may agree, Madam Deputy Speaker.
Mr. Neil Turner (Wigan): The house in Wigan that I have lived in for some time is in band C, but I pay exactly the same council tax as I pay in London, where my property is in band E. Does that not reinforce my hon. Friend's point?
Rob Marris: Indeed, and we as a Government are now working out how to redress the imbalance. That has caused difficulties in the past year, but it would have been wrong of the Government to back away.
Should the Government allocate the additional £9.2 billion that they are providing to all pensioners, or only to the neediest? That question has caused a key political division between the parties. Not surprisingly, I support the Government. As a socialist I have always wanted to focus resources on the neediest in society, and that means applying the modern means-testing regime that we are introducing to pension credit and the Government's minimum income guarantee.
On targeting money on the neediest, figures from the House of Commons Library, which got them from the Department for Work and Pensions, show that expenditure on the minimum income guarantee for the financial year just ended200203was about £4.5 billion, at this year's prices. The projected expenditure on the pension credit for the next financial year200405is about £5.3 billion. There are 7.2 million single-pensioner households in the United Kingdom, and 2.8 million couple-pensioner households in which at least one of the couple is a pensioner. That totals about 12 million pensioners. If that pension credit moneythe minimum income guarantee and the pension credit, totalling some £9.2 billionwere evenly divided, each pensioner would get £16 a week. That would take the basic state pension for a single pensioner from £77.45 a week to £93.45 a weekin contradistinction to the single pensioner with the minimum income guarantee, who gets £102.10 a week. In round terms, that is £9 a week more for the neediest pensioners. I salute and support the Government for doing that.
Mr. Webb: The hon. Gentleman, who is a member of the relevant Select Committee, is thoughtful and knowledgeable, and I have been following his argument with care. How does he reconcile the figure he has just given of £9 a week less for the poorest pensioners, if this money were spread evenly, with the absurd figure of £30 that the Minister quoted?
Rob Marris: I go by my own figures, although I always stand to be corrected. [Interruption.] I heard the Minister say £30 a week, but I go by my own figures. As the hon. Gentleman will agree, there would still be a considerable gap, even if his party's policy of introducing such a provision across the board were adopted. That is the key political divide, and it is one of the divides that we are debating today.
I want to move on to something that rarely gets mentioned in terms of this Government's provision for pensioners: the massive increase in spending on the NHS. Two thirds of NHS spending goes on older people, and I support that. Again, that is supporting the neediest, with provision free at the point of use. So, in examining what this Government have tried to do to assist pensioners, we should not overlook that magnificent investment in the NHS, two thirds of which is rightly benefiting pensioners.
I want to turn to the "pensions crisis", as the Liberal Democrat motion describes it. That phrase is very overworked and does not illuminate what is happening with pensions. In terms of pensioners' average incomes and the average amounts saved by prospective pensioners, there is no crisis whatever. Rather, as ever, there is an imbalance between poorer and better-off pensioners, which this Government are seeking to redress.
The difficulties for prospective pensioners and for certain recently retired pensioners in company schemes have been highlightedif not made transparentby the Government putting forward the financial accounting standard FRS 17 and by the minimum funding requirements for pension funds, which disclosed under-provision in some private companies' works pension schemes. Those difficulties came about partly because the stock market came down, but principally because many private companiesnot allwould not put their hands in their pockets to make up shortfalls in private pension schemes arising from pension contribution holidays that they had taken when times were better. In other words, they took the money out in the good times, but did not put it in during the bad times.
There is also the scandal whereby managers of companies with company pension schemes suddenly retire when the company is about to go bust. They become pensioners three months later, when the company finally goes bust, and are thereby a different category of claimant from the poor working stiff who does not see the writing on the wall or have the inside information, is still employed and gets treated differently, in terms of their prospective pension, from the managers who have jumped ship.
The final salary scheme debate has been used by companies as an excuse to cut their pension contributions. When companies move to a money purchase scheme for new entrants, they cut their pension contributions greatlyon average, by about half the employers' pension contribution to the works pension scheme. Companies have used this as an excuse to lessen the pension emolument that they pay to their employees. Given what we have experienced in the past three or four years, in the medium term, final salary schemes in the private sector will wither and die, particularly for new pensioners. Such schemes were designed to provide security. People who worked for a company for 40 years, say, knew what pension they would get. If it was an eightieth-based scheme, they would get 40 eightieths on retirementin other words, a half-pension. Every year they would clock up an eightieth and get a half-pension if they stayed with the company for 40 years.
However, the countervailing security is whether there is any money in the kitty to pay people out when they have done the 40 years. Those chickens have come home to roost, and in the medium term the work force, whether unionisedas they should beor not, will not stand for a lack of security, whereby it is uncertain whether there will be any fund at all, or whether it will come anywhere near meeting promises that were made when in employment. Final salary schemes will be able to continue in the public sector because Government backing will be there to top up local authority schemes, for example, if necessary, but that will not happen in the private sector. We must look at this issue, because it is a question of how we view the term "security".
When we as a society focus, as we should, on the under-provision of pensions for women in particular, we must note that final salary schemes often discriminate against the low paid, many of whom are women. A cleaner, for example, who has been in a local authority final salary scheme for 30 years, doing the same job and paying the same contributions, would get 30 eightieths, but if they were a cleaner for 20 years and worked for the