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Mr. Willetts rose—

Alan Johnson: But first I shall listen to the hon. Gentleman's intervention.

Mr. Willetts: I just wanted to check on what the Secretary of State said when he talked of going from an open mind to being positive. Is he saying that he no longer believes in contribution additions and the contributive principle and that we shall be going over to a different basis for pensions? He has just said something very significant.

Alan Johnson: Of course I said something significant. This is a policy debate and I try as much as possible to give straight answers to straight questions. The universal pension idea is really interesting and deserves much closer examination, which is, incidentally, why, during the passage of the Pensions Bill, my hon. Friend the Minister for Pensions accepted the suggestion that we have a separate report on women next year, to supplement the chapter in the Turner report.
 
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As I said to the House on Monday, we have not merely helped the poorest pensioners. There seems to an idea that lots of money is going to the poorest pensioners and that pensioners who are not as poor receive no additional help from the Government—a point made in an intervention. That is unfair criticism. We have helped all pensioners. Compared with the 1997 system, the average pensioner—not the average poorer pensioner—is £1,350 a year better off, with an extra £5 billion being spent this year on universal benefits. Let us consider, for example, a single pensioner, over 80, living alone but with a very good private pension and a full basic state pension, who would thus not be entitled to any means-tested benefits. To return to the point that putting the earnings relationship back into the basic pension would solve the problem, such an uprating would give her £9.90 extra a week. Instead, this year, as a result of our reforms, she has a basic state pension that has increased in real terms by 7 per cent. since 2000, a £300 fuel allowance—tax-free, of course—and a free TV licence worth £121 a year. That adds up to a gain of £13.55 a week, so even that pensioner, who would not qualify for pension credit, has set aside some savings and receives a full state pension, would be £3.55 a week better off than if we had simply restored the earnings link.

Ms Sally Keeble (Northampton, North) (Lab): Does my right hon. Friend agree that by proposing to increase the basic state pension, but not extending the increase to other pensioners, and retaining the means-tested minimum income guarantee, the Opposition would in fact be retaining means-testing, with all the pressures that involves for the poorest and most vulnerable pensioners, especially women? As he said, the real issue is the universality of pension entitlement and that is clearly reflected in the report.

Alan Johnson: My hon. Friend is right. I shall come on to some other aspects of the policy of Her Majesty's official Opposition, but that point is important. If we were to go down the route they suggest, the poorest pensioners would start to fall back again—from 21 per cent. of average earnings to 16 per cent. In the main, those people do not have a hugely influential voice in society and sometimes that is the problem in debates such as this. However, they are individuals, they live in all our constituencies and they are entitled to continue the advance in addressing poverty that we have begun.

Helen Jackson: Does my right hon. Friend recognise that the pensioners we are talking about often make some of the greatest contributions to society and to the health of their neighbours and families? Part of the reason why they are left at pensionable age with no proper means of support is that they have had caring responsibilities, perhaps for more than one person.

Alan Johnson: My hon. Friend is right. It is healthy that we are spending some time talking about such individuals. In the main, they are elderly widows who depend on their husband's national insurance contribution record. It was impossible for them to put in the full number of pensionable years. They have not been left in poverty because they were frivolous or
 
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because they did not try hard to put money to one side; it is due to the circumstance that they were bringing up our generation. That is a really important point.

Mr. Frank Field (Birkenhead) (Lab): Although it is clearly true that large numbers of poorer women could not achieve the full insurance record because they were caring for others, many other women took the married women's option when they could have paid a full contribution, so would not my right hon. Friend's life be easier if we had had a little more compulsion in those days? If everyone who could have done so had paid those contributions, he would not have to make the judgment of Solomon by trying to decide which groups are more deserving.

Alan Johnson: I accept that if some decisions made in the past had been different my life would have been easier. However, my life is not easier and I am in the current situation.

Even those people who are not receiving targeted support can be significantly better off through our help for all pensioners than they would be through the simple earnings link. The proposals of the hon. Member for Havant to restore that link are unfair to the poorest pensioners, for the reasons I have stated, and their relative position would worsen. His proposals would also impose an unsustainable burden on future generations. Even on his own figures, which I got straight from Conservative central office, a £500 million funding gap would develop in year 4, if there were a four-year Parliament; by year 5, the situation would be worse. That is another reason to question the policy.

How would a future Conservative Government—if there were one—pay for those proposals? The hon. Gentleman said that he would abolish the

"useless schemes and wasted money"

of the new deal. That is the new deal which has helped nearly 1 million people to find work and increased our gross domestic product by £500 million a year. That includes the new deal for young people, without which, according to independent evaluation, youth unemployment would be almost twice as high as it is at present.

We believe that work is the best benefit that Government can provide. As this morning's labour market statistics show, we have a record number of people in work, with a further increase of 220,000 in the last quarter. Also germane to the debate and the Turner report yesterday is the fact that those statistics show that the growth in employment among people aged 50 and over—a crucial part of the equation—has been faster than average. Since 1997, employment among older workers is up by nearly a quarter, and 1 million people are already working beyond the state pension age. This morning's statistics bring good news in relation to the messages that Turner gave to us yesterday.

We have increasingly focused support on the most disadvantaged groups: lone parents, those previously written off to become the passive recipients of incapacity benefits, and disabled people. We have removed the barriers for disabled people in particular, with much resistance from Conservative Members, especially in
 
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respect of the Disability Discrimination Act 1995. That Act, together with the measures that will be included in the disability discrimination Bill, will radically address the great emancipation issue of our time: civil rights for disabled people.

Alan Howarth: My right hon. Friend has just discussed the plans of the hon. Member for Havant (Mr. Willetts) to finance his policy, but my right hon. Friend did not mention that, in abolishing the new deal, the hon. Gentleman would of course abolish the new deal for lone parents. Is the hon. Gentleman not planning to discriminate against women three times over? He would freeze the guarantee element of pension credit, which mainly benefits women; he would concentrate the resources on the basic state pension, from which all too many women do not benefit; and he would fund the increase in the basic state pension by abolishing the new deal for lone parents, which is the policy that helps women into work and to build entitlement to a pension.

Alan Johnson: My right hon. Friend makes an absolutely superb point. Incidentally, the latest figure for single parents in work is up to 54 per cent., whereas, in 1997, unlike any other European Union country, we had a deep-seated problem with lone parents stigmatised by certain elements of the previous Government—not the hon. Member for Havant, who apologised for the stigmatisation of lone parents under the previous Government.

We should also acknowledge the fact that we have seen the first small reduction in the number of those who have received incapacity benefits for a long time. The figure is down by 4,000 on last year. That decrease is probably statistically insignificant, but the number has levelled off for the first time in many years. If the trend for people to go on to incapacity benefit under the previous Government had continued, 4 million people would now be claiming incapacity benefit—1.3 million more than the current figure.

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