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Pensioner Poverty (West Edinburgh)
4.25 pm
John Barrett (Edinburgh, West) (LD): The first report of the Pensions Commission made stark reading for the Government and hon. Members. It set out clearly and fairly the tough choices that lie ahead in respect of pensions, and the even tougher consequences of any failure to act. One of the true measures of a decent, fair and free society is how it treats its older citizens. Surely one of the most important social issues facing any Government is the need to ensure that older people can, after a lifetime of contributing to their country, retire with dignity, free from poverty. That challenge can be broken into two basic parts: how do the Government alleviate the pensioner poverty of today, and how do they prevent the pensioner poverty of tomorrow?
I am pleased to have secured this Adjournment debate, because it will allow me to raise some problems faced by pensioners in my constituency. The Minister for Pensions, whom I am delighted to see in his place, is well known for his considered replies and I look forward to such a response today. In that spirit, I say at the outset that the position in my constituency is far from being all doom and gloom. The fact is that pensioner incomes vary enormously. Many pensioners in my constituency enjoy a high standard of living, often because of the extra savings that they made throughout their working lives. However, too many others in Edinburgh, West do not enjoy the standard of living that they should be able to expect.
Given that 2 million pensioners still live below the poverty line in this country—the fourth richest in the world—there is no room for complacency. However, it would be wrong of me not to acknowledge the measures that the Government have taken to benefit pensioners in my constituency. I do not want to steal the Minister's thunder, but it does not take much foresight to predict that he will refer to such measures as the winter fuel payment, free television licences, the Christmas bonus, the £100 towards council tax bills and pension credit. I recognise that each of those measures has, in its own way, benefited a section of people in my constituency. However, I have to warn the Minister against simply rattling off that list as a defence, because as welcome as many of the measures are, if the Government really have done everything right and delivered a fair deal for pensioners, I must ask why I receive so many letters and telephone calls from older people in Edinburgh, West arguing to the contrary.
The Government hold up the pension credit as their flagship mechanism for tackling pensioner poverty. The latest information from the Department for Work and Pensions shows that more than 2.5 million pensioner households benefit from the pension credit. That figure is not to be sniffed at, but it stands short of the 2.8 million target set by the DWP for October 2004. The Minister will also know that the rate of increase in claims is falling off sharply. The September 2004 increase of just 15,000 new claims was the lowest monthly increase since the take-up campaign started. If the number of claimants is plateauing, as it appears to be, that raises the question of when, or indeed if, the Government will reach their target.
The latest pension credit progress report, which I obtained from the Vote Office, shows that some 2,700 pensioner households in my constituency benefit
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from the pension credit. However, a written parliamentary answer that I received last year from the Under-Secretary of State for Work and Pensions, the hon. Member for Liverpool, Garston (Maria Eagle), said that more than 1,400 people in Edinburgh, West were already benefiting from the minimum income guarantee. They would simply be transferred over to the guarantee element of the pension credit, so the figure for new pensioners in my constituency to benefit stands at about 1,300.
According to another parliamentary answer that I received from the DWP that uses the number of winter fuel payments as a guide, there are some 86,250 pensioner households across the six Edinburgh parliamentary constituencies. The Department admitted before introducing pension credit that it expected approximately 40 per cent. of pensioner households in Scotland to be eligible for it. For Edinburgh, that would mean about 34,500 households, but the latest progress report shows that only 18,148 pensioner households in the capital are claiming the credit—53 per cent of those eligible.
To the Government's credit, they have worked hard to promote the availability of pension credit before and since its introduction last year. Although I have taken issue with the Government over the emphasis on means-testing, I genuinely wanted to see the credit work and for eligible constituents to get the money that they deserve. As a result, I contacted each household in my constituency twice through newsletters about the credit, providing basic details and making it clear that any person who wanted further information or an application pack could contact my constituency office. I am glad to say that many pensioners did just that, and I put on record my thanks to those working in the Pension Service in Scotland who helped me with that campaign. I know that the Minister will agree that the considerable contribution made by those working in the Pension Service has been much appreciated by constituents. I have always found the team in Scotland to be helpful, friendly, accessible and professional in their work.
None the less, despite the promotions, the advertising, the work of the Department for Work and Pensions and the Pension Service, the home visits and the roadshows, many pensioners eligible for pension credit still do not claim it. That presents a new problem for the Minister. We are no longer talking about people being unaware of the existence of the credit—although I accept that some still are—but about people who know about it and are making a conscious decision not to make a claim for some reason.
During my local take-up campaign, I received a number of letters from pensioners who found the process of applying for the means-tested benefit complicated and degrading. One constituent from Drylaw in Edinburgh wrote to tell me how she felt "stripped of all dignity" by the questions asked and had decided not to proceed with her application. Another constituent from Queensferry told me that she did not want to
I have lost count of the number of times I have heard older people say something like, "I have never had to claim benefits in my life and I am not going to start
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now", or, "I have gone through my entire working life without asking for help, and I'm not going to ask the Government for help."
The fact is that we are talking about a proud section of society. Last Sunday, I was fortunate enough to attend two Remembrance day events in my constituency, in Corstorphine and Davidson's Mains. The immense pride that older people rightfully feel on such occasions illustrates the honour and dignity that they too should be granted. It is no wonder that so many of them do not want to go, as they describe it, "cap in hand" to the Government. They feel that the process is degrading and no amount of information will convince them otherwise. That shows one underlying problem with the Government's mass means-testing of pensioners—as a policy it is neither desirable nor effective.
My party and I believe that the only guaranteed way of getting more money to the poorest pensioners is by increasing the wholly inadequate basic state pension. The Minister will be well aware of the Liberal Democrats' pensions package, even if some members of his party have chosen deliberately to misrepresent it. He will know that pensioner poverty is particularly acute among women, because of the rules on national insurance contributions. Just a few days ago, the TUC pointed out that 70 per cent. of female pensioners are getting less than the full basic state pension, compared with just 15 per cent. of men. A system that assumes that a woman does not need a pension if she has a husband is grossly outdated.
The so-called citizen's pension, which my party proposes, is the kind of basic reform that the UK pension system needs, because it would be linked to residency and uprated in line with earnings. The citizen's pension would make an enormous contribution to alleviating pensioner poverty, especially among women. An extra £100 a month for over-75s would lift 1 million people out of means-testing overnight.
There are a few other issues that I would like to touch on and I hope that the Minister will find time to comment on them, too. Another major problem facing pensioners in my constituency is the cost of council tax. Nationally, pensioner incomes have risen, in percentage terms, by less than half the increase in council tax bills. In Edinburgh, the average council tax bill has risen by 22 per cent. in four years. The £100 offered to older pensioners in my constituency was welcome, but it ignores the underlying root of the problem. Also, because it was targeted at older pensioners, it left no help for many younger pensioners who are struggling to make ends meet because of their council tax bill. Council tax remains one of the most regressive and unfair taxes. It hits disproportionately those on fixed incomes and low incomes, including pensioners. The result has been that pensioners in my constituency are spending a huge chunk of their pension on council tax; that is money that they should be spending on heating their homes and on food for their meals. Just as with pension credit, too many pensioners—almost a third—are not claiming the council tax benefits to which they are entitled. Estimates given to me by Help the Aged suggest that some £2.5 billion worth of benefits, including council tax benefit, is going unclaimed by pensioners.
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Thankfully, in Scotland, the Scottish Executive is undertaking a review into local government finance, and the Liberal Democrats will argue strongly for council tax to be abolished and for a new, fairer, local income tax to be introduced. The system would be based on income, not property values. Thousands of pensioners in my constituency and throughout Scotland would benefit. As fairness would be built into the system, we would also remove the need for council tax benefit and resolve the take-up problems.
Turning to poverty among disabled pensioners, the Minister will be aware of the strong and widespread feeling among Members about the discrimination in relation to disability benefits. Early-day motion 953, which concerns the Mobilise campaign to allow over-65s to claim disability living allowance, now stands out as one of the most popular EDMs this Session. Almost 250 MPs from all parties have backed it. The main support for the Mobilise campaign has come about because of the in-built injustice that it seeks to end. Surely it cannot be right that under-65s are entitled to help with their mobility costs while the under-65s are not? The allowance of £41 a week would go a long way in helping elderly people who suffer from mobility problems and who have to use their pension to pay for help. Such a move would also have other positive effects. DLA acts as a gateway allowance; entitlement to it also means access to other benefits, such as the Motability scheme and exemption from car tax. The 20 charities that formed the Mobilise campaign have done a power of work on raising awareness of the issue, both inside and outside Parliament. I hope that, at some point, the Minister will confirm that their work has not been in vain, and that changes to the rules will be introduced as soon as possible.
I remember when the Prime Minister promised to learn from what he described as a mistake—the 75p increase in the state pension, which many pensioners found insulting. That was one of the big mistakes of Labour's first term, and one of the big mistakes of their second term has been the abolition of pension books. Although that has not added to pensioner poverty, it has added to the general anger and frustration felt by many pensioners. It comes down to the attitude of the Government—an attitude that has led to their setting a target to end child poverty by 2020, but setting no such target and making no such commitment for older people. That attitude has fostered feelings of injustice and unfairness among the pensioners whom I represent. After all their contributions to society, they are only asking for what is fair. The Government should offer no less.
4.39 pm
The Minister for Pensions (Malcolm Wicks): I thank the hon. Member for Edinburgh, West (John Barrett) for the way in which he approached the debate. We will not agree on everything, but I would like to thank him for his tribute to our local Pension Service. It is the first time that we in these countries have had a dedicated Pension Service, and its work at local level is quite outstanding. It is particularly helpful when it can link up with a local Member of Parliament. I am pleased with the way in which the hon. Gentleman is approaching that work in his constituency.
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Whatever the difference between us about policies, such as pension credit, it is our duty as Members of Parliament to play our role in ensuring that all our constituents claim their entitlements. I thank the hon. Gentleman for his approach.
I am hoping that, in the next day or two, the Pensions Bill will become the Pensions Act, although there are still some discussions to be held about it. It would bring much-needed security in the future to those people with final salary pension schemes ending the scandal whereby, when a company goes bust and a scheme does not have enough money, pension rights are, in fact, not rights. We are making sure that the pension promise will be kept in the future.
The hon. Gentleman referred briefly to the Pensions Commission. We will consider its recommendations when they are published in the commission's second report next year and examine some of the fundamental issues about which any Government need to decide.
Understandably, the hon. Gentleman spoke much about the situation facing today's pensioners. It was certainly the case that, when the Government came to power in 1997, one of the great challenges facing us was pensioner poverty. Under the previous Government's income support system, a single pensioner was being asked to live on an income as low as £69 a week. Moreover, under income support, any extra money that the pensioner had, such as savings or a small works pension, was deducted pound for pound from the person's entitlement to income support. Poverty was certainly blighting the lives of many of our senior citizens in our countries. That is why we focused not all but much of the additional money that we can spend on pensioners.
I accept that there is always the argument that we should be spending more, but we will be spending £10 billion a year more on pensioners in 2004–05 than was spent under the old system. Of that £10 billion, about half—nearly £5 billion—is going to the poorest one third of pensioners. The hon. Gentleman talked about means-testing but, whether or not he agrees with our approach, we are proud of the fact that, through such measures as pension credit, we are enabling many additional resources to go to the poorest. Indeed, average pensioner households are receiving £1,350 more a year—£26 a week—while the poorest third receives £1,800 a year more, which is about £35 a week. It goes directly into the pockets and the purses of the poorest pensioners. That is important.
I do not want this to be a single-issue debate, but I feel obliged to make several points about pension credit. We have moved away from the intrusive, punitive means test of the past that put many people off taking up what was rightfully theirs. In the past, taking up entitlements meant perhaps a visit to an uninviting social security office and the daunting prospect of filling out a 40-page claim form. As the hon. Gentleman and I acknowledged, we have established a dedicated Pension Service that is tailored to our customers' needs, with a simple free phone application process that includes a local service in the community, which works jointly with our partners in the statutory and voluntary sectors, to provide not only pension credit but housing benefit, council tax benefit and other social care entitlements.
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Members need not take my word for it, although I am sure the hon. Gentleman would want to: a recent survey undertaken by our partners, Age Concern, found that about 70 per cent. of people who had applied for pension credit considered that the application process was easy, while 85 per cent. said that they would recommend it to someone else. Pension credit is designed to provide extra money to those pensioners with modest savings for their retirement. Before it was introduced, many people who had managed to save a little were often left no better off than people who had not saved at all. That is the importance of the savings element of pension credit.
In Edinburgh, West, the hon. Gentleman's constituency, the average pension credit is just over £38 a week. I am pleased that, on the latest count, 3,206 individuals in his constituency are receiving pension credit. That extra money enables many of our older citizens to lead more independent and dignified lives—which they deserve and which we would wish for them.
One group that benefits from pension credit is women pensioners. There has been an uneven distribution of caring responsibilities. For example, many of the hon. Gentleman's older constituents—those in their 80s—might have brought up a number of children. They may also have been responsible as the main carer for elderly relatives within the extended family. As a result, they would have had less time to pursue a career and therefore less access to a decent occupational pension scheme. As the hon. Gentleman remarked, such women were less likely to have a full national insurance contribution record and therefore less likely to have a full basic state pension. That gender issue will need to be addressed in future, but we must also address it now. It is no coincidence that two-thirds of people getting pension credit are women—partly because they are older and partly because of the other caring responsibilities that I mentioned.
It is not only pension credit that can make the difference: for the first time, about 2 million pensioner households now quality for more help with council tax and/or housing benefit. The number qualifying for those benefits has increased because pension credit recipients can now claim those benefits.
On the issue of council tax benefit, which the hon. Gentleman highlighted, I should note also that, as part of the winter fuel payment, an extra £100 will be paid to those households in which one or more members are over the age of 70. It is being paid this year only in order to take a bit of the sting out of the council tax increases—increases that concern us all.
I recognise that the take-up of council tax benefit has often been appalling. It has been a grey area, not a highlighted benefit. We are trying to change that, working with local authorities in Scotland and across England and Wales. The winter fuel payments that are now going to our constituents include a special leaflet about council tax benefit, urging people who think that they might be eligible to apply. They must apply to the local authority, which is very important.
I now turn specifically to the situation in Scotland—indeed, the majority of Members here this afternoon represent Scottish seats. As at the end of September,
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more than 273,000 pensioner households had already taken up their entitlement to pension credit, and that number is growing. As I said, by the end of September more than 2,700 households—about 3,206 individuals—in Edinburgh, West will receive pension credit. We believe that there should be a simple income test. The forms are shorter, home visits can be made and people can visit the local surgery.
I have one good news story about the local service. Staff recently visited a couple in Edinburgh, West to help them with a pension credit application. Although the couple were in receipt of a state pension and had been awarded attendance allowance, they had not yet applied for the pension credit. As a result of our approach, they are now receiving more than £49 a week, with a backdated payment of more than £1,300. That is just one example of the difference that pension credit can make to pensioners across our countries. The backdating is important because anyone claiming pension credit can now have it backdated for 12 months, so people could receive considerable lump sums.
We are determined to strengthen our joint working arrangements in Scotland, in order to reach more pensioners who have yet to take up pension credit. That is why the Pension Service in Scotland is working in partnership with the health and care group and the older people's unit within the Scottish Executive. Our approach is not limited to the poorest pensioners alone. It was vital that we got more money to them as quickly as possible. That is what pension credit is all about.
In response to the question of non-take-up, I have always acknowledged that there are both advantages and disadvantages to any pension strategy. The advantage of pension credit, which is income tested, is that by definition it is designed for the poorest, and we have an especial duty to reach the poorest. The challenge is always to maximise the take-up, but I am never sure that hon. Members are right when they say that we should simply do away with means-testing. It is a difficult issue.
As Minister for Pensions, my aspiration is that more people in the younger cohorts should be enabled to retire on incomes based on a combination of state pensions and state second pensions or occupational pensions that put them significantly above the means-tested level. That has to be our long-term aspiration. However, we have a group of people already retired who are poor—often women and often the older elderly. Would it really be right to say to such an 80-year-old constituent, jogging along on £60 or £70 a week when we came into power, that we will give them the same pension increase as someone with a big investment income or an occupational pension, who is earning £50,000 a year in retirement?
Should we treat everyone the same? It would be simpler administratively and there would not be a take-up problem, but would it be fair and just? That is the question, and that is why we believe that, in the short to medium term, pension credit is the right approach to righting the injustice that many of those constituents face during their lives. They have done the right thing in bringing up their children and caring for elderly relatives, but then they pay the pension penalty: they do not get the full basic state pension but they have not accrued rights to occupational pensions. Pension credit
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is designed to help that group. It is controversial, but I am convinced that it is the right strategy and that we all need to put a lot of effort into boosting take-up.
That is our strategy. We are doing what we can for all pensioners by raising the basic state pension, always at least in line with prices and often more. There are winter fuel payments, which, we should remember, are now worth £300 for our constituents over 80 and £200 for the over-60s. They take a lot of the sting out of the arrival of the electricity and gas bill, and I am proud of that.
John Barrett : Before the Minister finishes, will he address the issue of disabled pensioners?
Malcolm Wicks : I will reflect on the hon. Gentleman's thoughtful speech, and I will write to him on any points that I cannot cover now. I shall also bring his remarks to the attention of the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Liverpool, Garston (Maria Eagle), who has responsibility for disability issues.
We have in place a range of disability benefits and, through social work departments in Scotland and social services departments in England, measures to try to help people with disabilities. We always want to do more—
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the Disability Discrimination Act 1995 is an indication of our intent in that regard. However, we hope that the disability benefits and the carer's allowance will provide ways of tackling some of the financial hardship faced by both the person with the disability and their carer. I will reflect on the hon. Gentleman's remarks, and my ministerial colleague may write to him if I have missed any points.
I hope that I have addressed many, if not all, the issues that the hon. Gentleman raised. I am pleased that, on this busy day, we have managed to fit in such an important debate. I congratulate him on securing it and on the measured way in which he has approached the subject.
Mr. Deputy Speaker: I thank the hon. Members for Edinburgh, West (John Barrett) and for Greenock and Inverclyde (David Cairns) and the Minister for their assistance in achieving a proper Adjournment debate on the one day in the year on which it is almost impossible to do so. The test of the elasticity of the relatively new Standing Orders was interesting for me in a technical sense.
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