---

Mr. Peter Duncan: Would the hon. Lady care to remind the House which party has given people a £5 billion per year tax grab on pensions?

Ms Keeble: I just say this: which party gave this country the most stable economic management, with the lowest unemployment and lowest inflation, that I can remember in my lifetime? It was this party. The sound working of the economy is the underpinning of any pensions policy. That is why, painful as it was, the decision on tax credits was right.

Who gave us cold weather payments? We should remember the lack of dignity involved in trying to get benefits at the time when if the temperature went below a certain level for four nights one could claim £5. As a councillor, I ran around in the snow with claims forms so that bitterly cold pensioners could claim £5; now, they automatically get £200 as of right.

I also remember who introduced the eye tests. Let us think back to the time when only the pensioners who lived in Labour areas got bus passes; now all pensioners have them as of right because they have a Labour Government.

Women will remember how, if they were lone parents, they used not to be able to get out to work because they did not have help with child care costs or nursery provision, and they did not get the support that they now receive through the new deal for lone parents, which is one thing that the Conservatives have said they would scrap. Having been unable to get out to work, those women then copped it by not having proper pension provision or carer's allowance for their old age. I hope that people will remember what happened before and think about how things have now changed. Pensioners can now be warm enough in winter, and women can go out to work and have a proper pension entitlement.

We all recognise that life is not perfect, but I hope that people will realise that this Government's carefully worked out approach to pensions is on the right track—even though everything is not perfect yet—and that there has been a quantum leap in the living standards of older people in this country.

3.1 pm

Mr. Peter Duncan (Galloway and Upper Nithsdale): Yet again, it is an Opposition day debate that provides us with the opportunity to discuss the pensions crisis in the United Kingdom. The hon. Member for Northampton, North (Ms Keeble) talked about the carefully crafted approach to pensions, but I came across some extraordinary figures yesterday that referred to the liabilities in Government pension funds. They showed that, whereas in 1997 the liability figure

15 Oct 2003 : Column 157

was £290 billion, it is now estimated by Mercer—an independent consultancy firm—to have exceeded £600 billion. In the last year alone, it has gone up by £110 billion. Is it any wonder that we are debating—in Opposition time—a pensions system that is in crisis?

There was a regrettably long delay last year before the appointment of a Pensions Minister, and this year we have seen a tax grab of another £5 billion. I think that the cash register is now ringing up a figure of £35 billion taken from the nation's pensions. Is it any wonder that the system is in crisis? We have no debates on this issue in Government time because, irrespective of what the hon. Member for Hamilton, South (Mr. Tynan) says—I regret that he is no longer in his place—the Government do not want to talk about pensions because they know that there is a crisis in the system.

John Robertson: May I inform the hon. Gentleman that the reason that my hon. Friend the Member for Hamilton, South (Mr. Tynan) is not here at the moment is that he is in the European Scrutiny Committee? My hon. Friend said earlier that the Conservative party had done absolutely nothing to help the poor; perhaps the hon. Gentleman can tell the House what he would do in that regard.

Mr. Duncan: I am grateful to the hon. Gentleman for making that point. I shall come to that matter in a second, and I shall be delighted to have the opportunity to do so.

My hon. Friend the Member for Havant (Mr. Willetts) rightly pointed out the spiralling system of lower-funded schemes and increasing means-testing. In 1998, the Green Paper stated that the Government wanted that situation to be reversed. Has the policy changed, or has it just failed? I hope that, if nothing else, the Minister will provide an answer to that question when he responds to the debate.

As a constituency MP, I am aware that 60 per cent. of the pensioners who are not claiming means-tested benefits are among the poorest fifth of pensioners. My constituency is very rural and isolated, and a significant problem is that many of those who live in rural areas are simply excluded from the most complex and detailed of benefit systems. I am engaged in a regular dialogue with the Dumfries and Galloway elderly forum, which I am happy to recognise as the pensioners' voice in south-west Scotland. It is an active organisation that gives politicians a hard time. It is not party political; it gives politicians on all sides of the fence a hard time, and I am delighted to recognise the role that it plays in doing so.

The forum's members are powerful advocates for all pensioners, and particularly for the poor. They would recognise that, as the Pensions Policy Institute has pointed out, the income of the bottom fifth of pensioners in 1979 was 23 per cent. of average earnings, yet by 2001 this figure had fallen to just 21 per cent. The poorest pensioners are getting poorer. Pensioners recognise that, I recognise that, and I hope that, if nothing else, this debate will give us the opportunity to provide a pointer towards a way of reversing that trend.

Pensioners have welcomed the proposal elaborated at our party conference last week to restore the earnings link. They remind me constantly that that is the one item that they wanted to see: a simple restoration of the link

15 Oct 2003 : Column 158

that would give a benefit to each and every pensioner up each and every farm track, including those who do not have access to the telephone and free phone lines. Each and every pensioner should be able to get an earnings-linked pension, and I am delighted that my Front-Bench colleagues have proposed such an innovative scheme. Our proposal is supported by all pensioners' groups. Help the Aged has welcomed our

"commitment to lift pensioners off a dependence on means-tested benefits. The pledge to link pensions to average earnings will allow older people to share in the rewards of growing national wealth."

I, too, welcome the proposal, and I hope that it will reach fruition when we see a Conservative Government within the next two years.

Means-testing is part of the problem, not part of the solution. In 1993, the shadow Chancellor of the Exchequer, now the Chancellor, said:

"I want the next Labour Government to achieve what in 50 years of the Welfare State has never been achieved. The end of the means test for our elderly people."

He understood the problem; he saw that means-testing was part of the problem and not the solution in terms of providing dignity for people in their old age. Yet, since then, we have seen an extension of means-testing. I accept the genuine approach of the hon. Member for Northampton, North to the question, but the fact is that, if the pension credit looks like a means test, breathes like a means test and walks like a means test, it is a means test. Pensioners know that. When this Government took office, 40 per cent. of pensioners were dependent on means-tested benefits; that figure has now reached more than 60 per cent. and is heading for 75 per cent.

Ms Keeble: The hon. Gentleman said that he was in favour of restoring the link to earnings. Would that include the catch-up for what has been lost? What level does he envisage for the pension? A figure of £84 has been floated.

Mr. Duncan: I shall try to put this as simply as possible. Pensioners' groups throughout the UK will welcome the fact that the next Conservative Government will restore the annual link between the old age pension and average earnings.

The trend towards greater means-testing is wrong and is taking away people's dignity in retirement. The hon. Member for Hamilton, South—who I understand is now in Committee—painted a moving picture of life in a tenement where means-testing had a stigma attached. I understand that, and to many people, there is still a stigma attached to lifting the phone and having to go into great detail about their life savings. That does not provide them with any dignity. An increasing proportion of our pensioners have to go cap in hand to the Chancellor of the Exchequer to find dignity in their retirement, and I believe that that is wrong.

The pension credit was lauded by the Government as their great solution, but the simple fact is that 1 million households will be excluded from it after three years. Even on the Government's own figures, some 1.4 million pensioners will not be getting the money to which they are entitled. I do not want Labour Members to suggest that I am talking down the pension credit. I am always accused, when discussing Scottish issues, of talking

15 Oct 2003 : Column 159

down Scotland. I am talking down neither Scotland nor the pension credit. I want every single person in my constituency who is entitled to this credit to get it, but the Government's own figures tell us that it will not reach every person who is entitled to it.

I was particularly impressed by the evidence in the report of the Select Committee on Work and Pensions, which the hon. Member for Greenock and Inverclyde (David Cairns) will know intimately. It states that the pension credit

"does significantly increase the number of pensioners who fall within that means test."

I find it surprising that the hon. Gentleman suggested in a sedentary intervention that MPs say, "That's what we're paid for", when dealing with increased inquiries to expand the use of the pension credit. It is the Government's role to provide benefits to those entitled to them. I was astonished by the amount of time it took my office to sort out the chaos in the child tax credit a few months ago. I was willing to do that because it is part of my role, but it should not have been necessary. It was chaos of the Government's making and it is shameful that they have continued to preside over a system that does not provide benefits to those entitled to them.

There is a growing perception, and reality, that looking after oneself is not worthwhile. I was shocked last week to be described for the first time as old; I am only 38. I read that I was at the end of the baby boom generation, born between 1945 and 1965, who are now becoming old and having to look after themselves. Where is the incentive for people of my generation to start looking after ourselves?

Figures provided by Mercer, the independent consultants, show that a pension fund of £180,000 is required for a married couple before they are better off. If that is not the case, the Government must deny it. That is our understanding. It is a shocking figure and an indictment of how means-testing has so permeated the system. Means-testing takes away all incentive to look after oneself, not least by the ridiculous 10 per cent. assumed rate on savings beyond £6,000, which, as my hon. Friend the Member for Havant said, is an appalling travesty of reality.

The pensions crisis will never be resolved until we reverse the trend towards greater means-testing and go back to a system whereby it is in people's own interests to start looking forward to their old age and the opportunities that it provides, and until we provide dignity in what is surely one of the most attractive phases of life.

---