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Mr. Michael Weir (Angus) (SNP): I hear what the Minister is saying about pension credit, but how does he explain why so many pensioners seem reluctant to claim it? Why does the Government's own target project that a considerable number of pensioners will fail to claim their pension credit up to 2006?
Malcolm Wicks:
I am pleased with the progress that has been made. About 3.1 million individuals are now claiming pension credit, and the number of those on the guarantee element has increased considerably, compared with a few years ago. We are not complacent, however, and we want more and more people to claim pension credit. I am bound to say that I think there is a role for Members of Parliament in spreading the word about pension credit, rather than spreading cynicism, as sometimes happens. Whatever their views about income
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testing, I hope that Opposition Members will accept that the pension credit is a million miles away from the income testing of the past. That is a fact, and MPs who find out about pension credit and our local Pension Service know it. I am sure that the hon. Gentleman knows it, too. Perhaps he is going to acknowledge that fact now.
Mr. Weir: The Minister is missing the point. Most of us will encourage our constituents to take up what they can get under this system, whether we agree with the means-testing or not. The point is that many pensioners are not applying for pension credit. Why are they not doing so, if to claim for it is as simple as the Minister suggests? Many will not do so, and we cannot persuade them to do so. What will the Government do about those pensioners?
Malcolm Wicks: Well, the scheme only started in October. More than 3 million individuals are claiming, and our survey shows that those who have been through the process would recommend that their friends and neighbours should apply. This is a popular policy, but it raises a traditional issue. With any extra resource that we can devote to pensions, should we give every pensioner the same increase? The Liberals offer a variation on that question, with their proposed boost for the over-75s, and I shall come to that directly. Should we give everyone the same increase? Should the person with the big investment income and an occupational pension adding up to £50,000 a year in retirement get the same number of pounds extra each week as the 83-year-old widow trying to live on £80 or £90?
That is the issue—of course it would be simpler for us to give everyone the same increase, but simplicity is not a primary goal in social policy. Fairness is a primary goal, which is why we are investing in the pension credit.
Malcolm Wicks: I was about to ask what the Liberal party says to that, but I am equally interested in what the Conservatives might think, so I shall seek an answer.
Mr. Waterson: My commiserations to the Minister on not being reshuffled to the Foreign Office or somewhere less dangerous and more palatable. Will he confirm, however, that the age-related payment that his Government are giving in relation to council tax increases will go to everybody—the duke and the dustman? Can he confirm that the great attraction of increasing the basic state retirement pension is that the take-up rate is more or less 100 per cent?
Malcolm Wicks:
I was implying that the art of judgment, which I would commend to the hon. Gentleman, is to get the balance right between what we can do for all elderly people—which is why the winter fuel payment, for instance, goes to all elderly people in certain age groups, to which I shall refer later—and what extra we devote to the most hard-pressed. Although targeting raises issues and challenges in relation to take-up, and we are determined to meet those challenges, I nevertheless think that if we are concerned not just with simplicity but with fairness, targeting has a place.
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Let me move on to the Liberal Democrat proposals. Although we heard something about a citizen's pension, it seemed to be anyone at all's pension—I heard nothing about the concept of citizenship, rights and duties or of the idea of what one puts in, one takes out. It is fascinating that the Liberals, who could claim credit for inventing social insurance because of the great Beveridge and the initiatives of the early inter-war years, are now going to overthrow it totally.
What the Liberals propose is not a citizen's pension but anyone at all's pension. The hard-working British citizen who has contributed by providing care and working hard for their country will get exactly the same as anyone at all who might have spent their time in prison, down the pub or doing whatever. It is anyone at all's pension, so please do not stain the decent concept of citizen with it. I will give way to a hard-working citizen.
Hywel Williams (Caernarfon) (PC): I find it difficult to square the Minister's support for the contributory principle, which has been the basis of the social security system for such a long time, with the huge growth in means-testing under his Government. How does he square that circle?
Malcolm Wicks: As I was saying, we must strike that balance. One of the difficulties with the insurance concept in practice—not the principle—is the carers issue: people caring for young children have been credited rather late in the day by Government. When it comes to retirement age, the great majority of men retire on more or less a full basic state pension, but very large numbers of women do not. That has been the flaw in the practice of social insurance but not, in my judgment, in the principle of it.
The Liberal Democrats, who have advocated an anyone at all's pension, have some sense of costings and economics, although they would abolish a whole Department—in fact, they would not actually abolish the trade and industry but many of the things that support it, which we shall discuss later. Because they have some sense of arithmetic—I know that the hon. Member for Northavon has his own calculator—first, they say that they will only pay the extra money to the over-75s. I think that I have that right. As is often the case, the hon. Member for Northavon starts with an interesting, important notion: the relatively poorer status of the very elderly or the over-75s. Sadly, with that important idea, and a bit of evidence base behind it, he gets over-excited, and, instead of the need to improve that status becoming a strand of policy, it determines, dominates and ultimately destroys the credibility of his whole pension plan.
Let us look at the evidence. Yes, older pensioners have lower incomes on average—pensioners over 75 have only about 90 per cent. of the income of those under 75; but it is 90 per cent., not 60 per cent. or 70 per cent.
A significant reason for the fact that older people have lower incomes is—among other things—their lower private pensions. Let me give the hon. Gentleman some evidence. Pensioner couples with a head of household
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under 75 receive an average of £139 a week from private occupational pensions; when the head of household is over 75, they receive an average of £108. So far I am with the hon. Gentleman, which is why I think this should be a strand of our social policy. But—and these are important qualifications—although older pensioners are on average poorer than younger pensioners, there is a wide variation in circumstances. In fact, over half—about 56 per cent.—of pensioners in relative poverty are under 75. [Interruption.] I am trying to have a serious debate with the hon. Member for Northavon. He must pull himself together, because these are important statistics.
At the other end of the income spectrum, a quarter of all pensioner couples with a head of household over 75 have net income of over £308 a week. In other words, age—although an interesting factor—should not be a dominant guide for policy.
On 27 February 2003, there was an interesting exchange between our former Secretary of State, my right hon. Friend the Member for Oxford, East (Mr. Smith), and the hon. Member for Northavon. My right hon. Friend said to the hon. Gentleman
"In the interests of open debate on distributional issues, which the hon. Gentleman says he welcomes, does he accept that the cost of his strategy is not only that some older rich pensioners get money that they arguably do not need so much, but that younger poorer pensioners do not get money that they do need?"
"I accept that."—[Official Report, 27 February 2003; Vol. 400, c. 442.]
So the hon. Gentleman has accepted the difficulties involved in his own position.
I think that there are also serious issues relating to financial sustainability. The Liberals' proposals would cost an additional £16 billion over five years, which would double over 10 years. I thought that the Liberals were going through a period of financial stricture, yet here is a major financial commitment.
As soon as an Opposition party starts saying that it is going to abolish things to pay for social programmes, I become wary. Later the hon. Member for Eastbourne (Mr. Waterson) will tell us that his party is going to abolish the whole new deal. Never mind the fact that that micro-labour market policy has contributed to a move back to full employment; never mind the fact that it is helping a lot of lone parents back into work; never mind the fact that in many places—most places—we have abolished long-term youth unemployment because of the new deal. The Conservatives are going to abolish it in order to pay for their rather wobbly pension proposals, which we took apart—I think fairly effectively—last week.
For the Liberals, it is obviously a learning game. They scratch their heads: how can they pay for their policy? They ask parliamentary questions. I reply because I want to be helpful, and because I am committed to an evidence base. At the end of the day, however, they cannot make the policy work within social security.
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They are going to abolish trade and industry, or at least the Department of Trade and Industry. It is a wholly incredible policy.
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