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Mr. Willetts: The Secretary of State said that nothing had changed, but something important has changed: now that the pension credit has arrived and is being implemented, more than half of all pensioners are on means-tested welfare and, as he knows, the predictions are that the number will grow and grow. That is what we need to reverse, and that will secure more than half the cost of delivering the earnings link.
Mr. Smith: That is another way of saying that what the hon. Gentleman purports to give with one hand he will take away from the poorest pensioners with the other. No wonder the shadow Chancellor admitted that the Tory policy would do nothing for the poorest pensioners in our community. Given that unsustainability, it is hardly surprising that only last week the hon. Gentleman's Front-Bench colleague, the right hon. Member for West Dorset (Mr. Letwin), once again let the cat out of the bag when he admitted that
- "we may have to make some further painful decisions"
The Conservatives should tell the British people what painful decisions they have in mind. Where will the axe fall? Will it be on schools or on the police, or will it be on the hospitals on which our pensioners rely? The whole House will have been struck by the Conservatives' failure to match our commitment to invest in hospitals and schools.
Lynne Jones : I entirely agree with my right hon. Friend that it is essential that pensions policy is sustainable in the future, not least to allow younger people, who are currently trying to make informed choices about pensions, to know what they can rely on. Does he think that such people can rely on the current Government's pensions package being in place when they reach retirement age, because as he is aware, most informed commentators do not think that that will be the case?
Mr. Smith: I assure my hon. Friend that the Government's record shows that we have given more help to all pensioners and, especially, extra help to poorer pensioners in the dramatic terms that I have already set out. The combination of above-inflation increases in the basic state pension, the introduction of the winter fuel allowance—up to £300 this winter for those aged over 80—free eye tests, free television licences for the over-75s and the pension credit is the basis for helping pensioners out of poverty towards dignity and security in retirement. Of course, we shall need to do more for the future. Our record shows that as action becomes necessary, we will take it, but we shall do so on the basis of fiscal sustainability and financial prudence, not on the basis of opportunistic, unsustainable, half-cocked, half-baked, back-of-the-envelope, calculations like the Opposition's.
Bob Spink (Castle Point): As the right hon. Gentleman is talking about the Government's record on pensions, may I point out that it has been said that, under seven years of Labour Government,
- "occupational pensions . . . have come under particular pressure, which has undermined people's confidence in pensions."?
Mr. Smith: As I made clear earlier, we recognise that there is a challenge in relation to occupational pensions. I have already charted the history. What did so much to damage confidence was the whole mis-selling scandal, the Maxwell scandal and all the rest. Through our action to put in place a pension protection fund and our actions on full buy-outs on the wind-up of schemes and the requirement for protection under TUPE—the Transfer of Undertakings (Protection of Employment) Regulations—so that firms cannot use takeovers or mergers as an excuse to scrap pension schemes, the Government are setting up the building blocks to restore confidence. We should have the support of the Opposition in doing so, because those proposals are supported by the—
Mr. Willetts: Will the right hon. Gentleman clarify an important point? Is it the Government's intention if re-elected to increase the value of the pension credit by earnings during the lifetime of the next Parliament?
Mr. Smith: Our pledge for this Parliament is to increase the pension credit by earnings, and so we will. As I told my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones), we will take such decisions for the future as are necessary and we will announce them at the proper time. Unlike what we have heard from the Opposition, those decisions will be based on what is financially responsible, fiscally prudent and sustainable. We are taking the long view and maintaining control of public expenditure, while the hon. Gentleman and his colleagues are seeking a quick fix that they know cannot be sustained. They are putting a false prospectus to the nation's pensioners. They know that they could not sustain their policy in the future, any more than they thought a few months or years ago—
Mr. Smith: I must make a little more progress.
Nobody can believe the Leader of the Opposition—whoever that is—when the Conservatives claim on one hand that they can make such huge spending commitments for the future while on the other claiming that they can cut taxes.
The most important test that the Conservatives are failing is the test of fairness. Under their plan, as the shadow Chancellor conceded, nothing will be done to help the poorest pensioners, who would not only fall further behind but would see any increases in their state pension knocked straight off their pension credit. As a consequence, women would fare especially badly; half of them do not receive a full basic state pension so they would be seriously short-changed. With pension credit, women actually get two thirds of the available money, so our policy helps to tackle entrenched gender
inequality while the Opposition would make it worse, as borne out by an analysis published this morning by the Pensions Policy Institute.On fairness, how typical it is of the Opposition to look for extra funds to benefit the better off by going straight to a cut in the support provided to unemployed people. That is madness, given that the best foundation for retirement and pensions is to have a job in one's working life, and given that the policies that the Opposition propose to abolish have helped more than 1 million people into work since 1997.
The hon. Member for Havant has re-started his war on lone parents. He only called it off a year ago, so the truce did not last long. He will deny them their opportunity through the new deal for lone parents by his proposal to abandon it. Furthermore, he has not come clean about how young children will be affected by his plans to force lone parents to look for work. That is another part of the hidden arithmetic behind his plans. He and his colleagues must make it clear how young a child has to be before the Tories would allow its mother to stay at home to look after it.
The Government have helped 200,000 lone parents into jobs and expanded child care provision, and we have also ensured that 15 million people on low to moderate earnings will be able to build up a better state pension. With the state second pension, 5 million carers and disabled people will for the first time be able to build up entitlement. Yet just as that is going into people's hands, along come the Conservatives with their half-baked plan to take it away. If their ramshackle policy were ever implemented, even the higher pension that they say they could deliver, taken with the scrapping of the state second pension, would eventually mean losses of £43 a week for millions of carers, disabled people and low earners.
While the Tory policy is unfair, unsustainable and unaffordable, the Government will continue our drive to tackle pensioner poverty, while giving more help to all pensioners. With pension credit, we put the poorest first and reward saving.
Mr. Michael Weir (Angus): As the Secretary of State is talking about fairness, does he accept that one element of fairness is ease of applying? The problem with the pension credit is its complexity, even when applying by phone. I spoke to an old lady who phoned the helpline, got a recorded message that she did not understand and was so frustrated that she gave up, so we had to intervene on her behalf. What would the right hon. Gentleman say to her? There is a problem even applying for the pension credit.
Mr. Smith: I should be happy to look into any case that the hon. Gentleman or other hon. Members would like to raise with me. Both the feedback that we are getting and our own monitoring show that the pension credit application line is working remarkably well and that 94 per cent. of calls have been answered within 30 seconds—not by a mechanical answering machine, but by a human voice. People really appreciate the help that they are being given.
I shall quote a letter in today's Daily Mail. It is not always my pleasure to quote the Daily Mail in the House, but I am pleased to do so now. The question at the head of the letter was, "Is pension credit too hard to get?" Someone wrote in and said:
- "Here's my timetable for having obtained the new pension credit. I received the letter from the pension service and phoned through my application last month. I was connected in seconds. My application form was completed in 20 minutes. Two days later the form was returned to me for signature and proof of income. I returned the form, signed and with the relevant proof. On September 23 my application was approved. I received my payment book on September 29 and my first payment on October 6. The application process is very efficient."
The hon. Member for Havant spent a large part of his speech claiming that he would keep pension credit; that the Conservatives would not want to take money away; and that, yes, everyone should apply, while spending the rest of the his speech—95 per cent. of it—branding the pension credit as means-testing, saying that it was complicated and effectively discouraging people from getting it.
People are getting that help and receiving the credit itself from a dedicated Pension Service and, along with all the other things that we have done to make the application procedure simple and straightforward, the policy is a million miles away from the old-style means test and the images of carting people's furniture out the door that it raises in people's minds. All hon. Members ought to join in helping the whole country to understand that pension credit is an entitlement, that it is helping poorer pensioners and rewarding saving, that the Pension Service is doing a first-rate job in delivering it and that we should all get behind it and make it a success.
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