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Kevin Brennan (Cardiff, West) (Lab): Before my right hon. Friend entirely leaves the issue of the financial assistance scheme, may I ask him a question? He said in reply to my hon. Friend the Member for Ayr (Sandra Osborne) that it would benefit 15,000 pensioners who are three years away from receiving their pensions. Does he agree that 15,000 people will benefit, who would have received nothing without the financial assistance scheme? Does he acknowledge that many of us would like that sort of substantial assistance to be made available after the three-yearly review to people who are coming through to retirement at that time?
Alan Johnson: I agree that this is good news for people who thought that they would receive no assistance whatever from 1 January 1997. What we are doing is in tune with many other achievements in government that had seemed to drift past, such as trawlermen's compensation. That was sought for 25 years; the men received nothing from the Conservative Government, but we provided it. Coal miners who had vibration white finger provide another example of a case in which we awarded compensation for the first time. Still another example is the Aberfan fund. The Coal Board took money from Aberfan families to clear the tips that killed their children, and nothing was done in 18 years, but we restored it after just three months in government. We have a good track record in dealing with these claims. [Interruption.] Conservative Members should know which Government provided financial assistance and compensation. Those groups received nothing but a closed door and a shake of the head from the Conservative Government.
I pay tribute to my hon. Friend the Member for Cardiff, West (Kevin Brennan) for his work, particularly in respect of Allied Steel and Wire. He played an important role in ensuring that this scheme was established and that a certain level of assistance was made available. As soon as we know the full position, and once the regulations have been laid, we will allow six months for this group of people to make their claims. We can then move on to extending the scheme to people beyond the current group. At that stage, when the full information is before us, we can have a useful further exchange.
Since 2000, pensioners have seen a 7 per cent. real terms increase in their retirement pension as a result of our above inflation increases. Overall, between 1996–97 and 2002–03, average net pensioner incomes grew by 19 per cent., while average net earnings grew by 12 per cent. The poorest pensioners have seen their incomes grow at similar rates to those of the richest
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pensioners. For example, incomes of the poorest fifth of pensioner couples have grown by 14 per cent. compared with the incomes of the richest fifth, which have grown by 11 per cent.
David Taylor: The Government's achievements in tackling pensioner poverty have been remarkable and laudable, but is not most pensioner poverty focused on older women? Is it not the case that more than nine out of 10 men eventually become entitled to the full basic state pension in their own right, based on their own contributions, while fewer than one in eight women are so entitled? Would it not be a good idea to extend the full basic pension to everyone of pensionable age by extending the contribution credit system to allow for those who have had part-time or low-paid jobs, or caring and other domestic responsibilities?
Alan Johnson: My hon. Friend is probably aware that of the 2.7 million pensioners living in abject poverty when we came into government, two thirds were women. That is reflected in the figures on pension credit. Of 3.2 million individuals receiving pension credit, 2.1 million are women. He is right that this issue must be resolved. Various ways have been proposed to achieve that, including the patching up system that he suggests. We are determined to tackle the problem, which cannot be allowed to continue. It is a scandalous situation, and we need to look further into which proposals to adopt in order best to tackle the problem.
Both next year and in the spending round to 2008, the pension credit will rise by average earnings. By 2008, there will be 600,000 fewer pensioners in poverty than there would have been if we had followed the policy of the Conservative party and only uprated the guarantee in line with prices. The guarantee credit will rise so that no single pensioner need live on less than £109.45 a week and no couple on less than £167.05 a week. More than 3.2 million pensioners are now in receipt of pension credit, with take-up strongest among the very poorest.
Mr. Michael Weir (Angus) (SNP): In view of the Minister's figures on pension credit, what is his estimate of the take-up among those entitled to it in the coming financial year? One of the main problems with it is that a significant number of people do not take up their entitlement.
Alan Johnson: I was about to make the point that the guarantee take-up rates are running at 80 per cent., and for single women in this group, the take-up could be as high as 90 per cent. What we have done until now is publish the take-up figures for all the different elements—guarantee credit, savings credit and the combination of the two—in one figure. We are all keen to ensure that the poorest pensioners receive this money to lift them out of poverty, so we are concentrating on that particular element. There is every indication that we are being extremely successful, and are ahead of our own aspirations for attracting the poorest pensioners to pension credit.
As a result of all the tax and benefit measures introduced since 1997, the average pensioner household will be £1,350 per year better off in 2005–06 than it
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would have been under the 1997 system, while the poorest third will be £1,900 per year better off. In total, an extra £10 billion will be spent on pensioners in 2005–06 compared with the 1997 system—£7 billion more than an earnings link would have given them, with almost half of the £10 billion extra spending going to the poorest third of pensioners.
As well as targeting our help at the poorest, we have also done more for all pensioners than an earnings link would allow. We have made remarkable strides in tacking the pernicious pensioner poverty that we inherited in 1997, and we will continue to make it our priority until we have eradicated it. We reject proposals that would see the poorest pensioners fall back into penury.
By supporting people in work and providing financial security for those who cannot work, we have lifted 2.1 million children and 1.8 million pensioners out of absolute poverty since 1997. Our uprating measures continue our commitment and progress towards a fair and inclusive society of opportunity and independence for all. I commend the orders to the House.
3.7 pm
Mr. David Willetts (Havant) (Con): I welcome the debate and I am grateful to the Secretary of State for setting out the Government's proposals on the uprating of benefits, which we will not oppose. We always wait to see whether the Liberal Democrats decide to oppose the increase in the value of the pension, but perhaps they are not going to repeat that mistake this year—[Interruption.] I am being urged not to provoke the Liberal Democrats to carrying out such a perverse act.
We welcome the extra benefits and there is added drama to today's debate. The Secretary of State has chosen to debate the pension uprating on the day that the Conservatives launch the pensioners chapter of our manifesto. Of course I realise, Madam Deputy Speaker, that it would be out of order to take the House through all the imaginative proposals in that document—[Hon. Members: "Go on."]. I am being tempted, but must resist. I would, however, like to question the Secretary of State on some of the points that he raised. As the hon. Member for Northavon (Mr. Webb) rightly said, we have an opportunity to find out the strategy behind the various specific announcements.
It is frustrating when the Secretary of State makes grand and sometimes refreshing statements outside the House about how everything needs to be changed because matters cannot carry on as they are, yet comes before the House with a wholly conventional uprating statement in which it is difficult to detect any movement towards the necessary reform.
Of the pension credit, the Secretary of State said that
"we should not talk in euphemisms. It is a means test."—[Official Report, 13 October 2004; Vol. 425, c. 302.]
He also said that it would be "crazy" to say that it did not act as a disincentive to some people. He has also said:
Those reflections show that the Secretary of State realised that there was a problem with mass means-testing. The Government are taking the benefit system in that direction, so it is sad that none of those reservations could be detected in his statement today.
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New estimates for benefit take-up rates were issued recently. Does the Secretary of State agree that it is unacceptable for the rates to remain so low? The figures go only as far as 2002–03, but they show a take-up range among pensioner couples for the minimum income guarantee, as it then was, of between 55 and 70 per cent. Does he accept that that is very low indeed? He often tells us not to worry because the poorest pensioners are claiming, but does he also accept that the figures for the eligible non-recipients are very worrying too? In 2002–03, 62 per cent. of ENRs—that is, pensioners entitled to means-tested benefits but not claiming them—were below the poverty line of 60 per cent. of medium income, as set by the Government. The problem is that poor pensioners do not claim the benefits to which they are entitled.
In light of recent remarks by the Deputy Prime Minister, will the Secretary of State—or the Minister for Pensions, when he winds up the debate—comment on the extraordinarily low figures for the take-up of council tax benefit? Does he realise that one reason why pensioners in particular feel the burden of council tax so badly is that many do not claim the council tax benefit to which they are entitled? The take-up range of that benefit among pensioners is, according to the Government's latest estimates, between 56 and 62 per cent. That is shockingly low.
For owner-occupiers, many of whom are pensioners, the council tax benefit take-up is in the range of 37 to 42 per cent. I should be happy to be corrected, but I believe that that is the lowest take-up rate for any known benefit. It is very poor indeed, so what are the Government going to do to improve people's access to that benefit? One reason behind our proposal for a council tax rebate is that it is clear that means-tested benefits are not getting through to many of the pensioners and others who need them. There was no fresh thinking this afternoon in respect of the problem of take-up.
Outside the House, the Secretary of State has also said:
"We have to bite the bullet and look at the state pension system, certainly for the longer term, so that if you do a lifetime's work it will deliver a pension above the basic level of means-tested support."
Again, today's announcement on the uprating of benefits does nothing to achieve that strategic objective. There is a general consensus in many parts of the pensions debate that people should have a pension above the basic level of means-tested support, but nothing that the Secretary of State said today takes us any way towards that.
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