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State Pension

6. Jeremy Corbyn (Islington, North) (Lab): What representations he has received from the National Pensioners Convention concerning the level of the state pension. [190396]

The Secretary of State for Work and Pensions (Alan Johnson): A copy of the National Pensioners Convention "Pensioners Manifesto" was received earlier this year. The Government share its aims of securing dignity and fulfilment for pensioners.

The system that we have in place for today's pensioners is balanced, fair and sustainable, and targets money on the poorest who need it most. In addition, all pensioners have benefited from a 7 per cent. real-terms increase in the level of their basic state pension between April 2000 and April 2004.

Jeremy Corbyn: Will my right hon. Friend meet the National Pensioners Convention to discuss its aims that the state pension should become a major part of the income of retired people and that the calculation of the state pension should be linked to the increase in earnings, starting from a state pension that is the equivalent of the minimum income guarantee, so that pensioners get a substantial increase? In advance of the Turner report tomorrow, does he recognise that the state pension is the best hedge against poverty for older people, rather than the vagaries of the stock market?

Alan Johnson: I will be delighted to meet the National Pensioners Convention to take forward a discussion that we have already begun, because I went to its reception at party conference a couple of weeks ago. It is important that we make it clear that the basic state pension is a central part of pension income. When we came into government, we had a crisis in which millions of pensioners were in abject poverty. It is dealing with that issue that is still a priority. It might not make the Sunday colour supplements or the leisure and style
 
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magazines, but it is crucial to millions of our constituents and it is central to how we take the debate forward.

Mr. Julian Brazier (Canterbury) (Con): Does the Secretary of State accept the fact that, as so many of the costs that pensioners face, especially council tax, have risen by much more than the basic state pension, roughly half our pensioners are left on means-tested benefits? A very large number of people who are coming up to retirement are asking what possible point there is in saving. By the time they have paid tax and seen the withdrawal of various benefits, including council tax benefit and housing benefit, as well pension credit, there will be no extra benefit in self-provision or in people saving for their retirement.

Alan Johnson: I find that a confusing argument. First, we are providing an extra £100 because of the specific problems of council tax payments this year. We also found, when getting people on to pension credit, that a large number of them were entitled to housing benefit and council tax benefit, so as a result there has been an added bonus, through helping those people, too.

The confusing part of the argument is that it is almost as if we would be better off saying to pensioners in abject poverty, "I'm sorry, but rather than confuse you or add complexities to the pension system, we are going to leave you in abject poverty." We had to do something about that and we are right to continue to pursue it as a principal priority.

Mr. David Watts (St. Helens, North) (Lab): Can the Secretary of State assure me that he will not increase the state pension by cutting targeted help to the poorest families in our community? Can he also assure me that he will ignore comments from the Opposition, who seem to ignore the poorest pensioners in Britain?

Alan Johnson: I can give my hon. Friend that assurance. It is important to remember that we have concentrated on the poorest pensioners, but as I said in my answer all pensioners have received a real-terms increase, above inflation, of £5 a week. They have had the winter fuel allowance and the free TV licence, which are universal. It would have cost us £3 billion to link pensions with earnings, but we have actually spent £5 billion on all pensioners universally—not just the poorest pensioners but right across the board. It is important to keep that in mind when we look at the balance that we have struck on pensioners' incomes.

Mr. David Heath (Somerton and Frome) (LD): The Secretary of State prayed in aid the money given to some pensioners to offset council tax increases, but of course that was for one year only. As no one expects council tax to go down next year, will he say that they will receive that money again or do they face a double whammy—increased council tax and a reduction of £100?

Alan Johnson: I shall not make policy on the hoof. The £100 for this year was to address a specific issue, which we may seek to address next year as well. The basic issue relating to pension credit and means-testing
 
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is how we can lift the poorest pensioners to a level where they can live a life of security and decency. That is why targeting the resources is so important.

Ms Karen Buck (Regent's Park and Kensington, North) (Lab): Thousands of my constituents in receipt of pension credit have an average award of £66 a week, among the highest in the country. The reason that it is among the highest is because I have such a high proportion of pensioners who are not entitled to the full basic state pension. In reviewing future developments, and accepting that the basic state pension must be a cornerstone of post-retirement entitlement for future pensioners, will my right hon. Friend ensure that the position of people who have not reached the full basic pension entitlement—particularly women—will be protected?

Alan Johnson: I know my hon. Friend's constituency well. I was born there and lived there for 19 years. I understand why she quoted a figure of £66 a week. The average for the country is £41, with more than £1,000 being paid in arrears. My hon. Friend points out one of the problems with saying that the magic bullet solution would be simply to link the basic state pension to earnings, because that would do little for the women to whom she referred, who do not even have the national insurance contributions to get the basic state pension in the first place. That is another area to which we should pay more attention. My predecessor was certainly looking into it and I shall carry on that work.

Mr. David Willetts (Havant) (Con): I, too, welcome the new Secretary of State to his post. I very much appreciated the decency and courtesy of his predecessor; it is good to see the right hon. Member for Oxford, East (Mr. Smith) in the Chamber today.

The Secretary of State faces a crucial strategic decision, which he will have to take early in his time as Secretary of State. Does he envisage for the foreseeable future a large number of pensioners dependent on income-related benefits, or is he willing to consider reform of the state system and, in some form or other, increasing the value of the basic pension so that fewer pensioners need to claim income-related benefits?

Alan Johnson: I wonder where anyone has ever got the notion that we have said that the basic state pension must be preserved in aspic, frozen and kept the same into the future. I shall come back to that point in just a second.

This is the issue for the hon. Gentleman: I heard him say on the radio this morning that the Conservative party has been part of shaping the consensus that the basic state pension should increase. Once upon a time, that party proposed radical, cutting-edge ideas. Now, it wants to take a little bit of credit for helping to shape a consensus. That shows where the Tory party has gone. Achieving that consensus is easy: anyone could go into the Dog and Duck in Havant and ask, "Do you believe that the basic state pension ought to be increased?" This
 
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is pretty mind-numbing stuff. How many people would say no? People will very easily achieve a consensus on whether to increase the basic state pension.

The real question that the Government must face in an era of people living longer, lower birth rates and a new situation developing in the next few years is how we can have the basic state pension at the core of pension provision, how we can ensure that other provision is available because people will not retire comfortably on a basic state pension alone, and how we can also look after the poorest pensioners. That is the nub of the argument about means-testing. Means-testing is supposed to be deeply sinful. It is pensioner poverty that is deeply sinful. We could not go to the pensioners who were in abject poverty when we came to government and advise them to go to an actuary, to look at how much they were saving, and to wait for the consensus on the future of pensions to emerge. We had to give them immediate help, and the fact that we have lifted two thirds of pensioners out of abject poverty and the fact that now, for the first time in generations, pensioners are less likely to be in poverty than those in any other strata of society is crucial.

Mr. Willetts: I always enjoy exchanges with successive Secretaries of State, but it is always better if we can keep up the pace just a bit, rather than having long speeches.

May I tell the Secretary of State that what is really sinful is that 1.7 million pensioners are entitled to the pension credit but are not claiming it because they are put off by the system? I do not know why he was so sniffy about consensus. The Prime Minister said this morning that he wants consensus on pensions. We are offering him consensus on pensions, alongside the National Association of Pension Funds, Age Concern and many people of all parties, and saying, "Reform the state pension", rather than defending the mass means-testing of pensioners. Is the Secretary of State really going to spend the next the six or eight months until the election defending mass means-testing? If he thought that defending the Government's higher education policy was difficult, he will find that one hell of a sight harder.

Alan Johnson: I will try to be more pithy. I entirely accept the point that the hon. Gentleman makes about the pensioners who are entitled to pension credit but not taking it up. We must work harder. Although we are the first Government ever to set a target for people claiming benefits and we are doing very well on that target, there is more to do. But that is a completely different argument from criticising the Government for concentrating on the poorest pensioners. If we had tried to put all the money into the basic state pension, every pensioner would have got £11 more; the poorest pensioners would have got £30 less a week, even with £11 on the basic state pension. That is why I make the point that that is a crucial part of our policy. Means-testing is not the only part of our policy, but it is a crucial part of our policy, when we are dealing with the legacy of pensioners in abject poverty that we found when we came into government in 1997.
 
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