Examination of Witnesses (Questions 160-162)
MR JOE
HARRIS, MR
TONY LYNES
AND MR
NEIL DUNCAN-JORDAN
10 NOVEMBER 2004
Q160 Mr Waterson: Gentlemen, I enjoyed
addressing the Parliament in Blackpool. I want to ask a question
about uprating. The Chancellor said very clearly in his speech
to the CBI yesterday that he was set against restoring the earnings
link for pensions. The new Secretary of State has recently made
it clear that he thinks the pension credit will not continue indefinitely
but it seems we are stuck with it for the foreseeable future.
There is a dilemma which will face any government, which is if
it uprates pension credit in line with earnings more and more
people are drawn into means testing which makes reforming it ever
more expensive; but if they do not then pension credit begins
to fall behind again. On the basis that for the immediate future
pension credit is here to stay, it appears, what sort of commitment
do you think the Government should be making on uprating pension
credit in future?
Mr Lynes: The £105 guarantee
credit level must continue to rise in line with average earnings,
not just in line with prices because if it does not this does
mean that the poorest pensioners, or at least the poorest pensioners
who get round to claiming pension credit, will fall further and
further behind the incomes of the rest of the population. It seems
to me unthinkable that the Government should go back on the existing
policy of raising the guarantee credit level in line with average
earnings. That is not the only determinant in the number of people
qualifying for pension credit and obviously if the Government
acceded to our demands and raised the basic pension to the guarantee
credit level pension credit would virtually cease to exist anyway,
but even short of doing that it is not just the guarantee credit
level that gets uprated; it is also the savings credit threshold
which at the moment is the same as the existing basic pension
level. You get your savings credit based on your income above
that level. Logically, it seems to me that that level should also
go up in line with earnings. If it did, then of course you would
not have a steady increase in the number of people qualifying.
That is not the policy that we are advocating because we want
to get rid of it altogether.
Q161 Mr Waterson: And your views on what
the Chancellor said yesterday?
Mr Lynes: I have not read what
the Chancellor said.
Q162 Mr Waterson: He said he would not
restore the earnings link. It was imprudent.
Mr Lynes: He is in a rapidly diminishing
minority because practically every reputable organisation that
has looked at pensions policy in recent months has said that the
basic pension should be raised to the guarantee level and linked
to earnings.
Chairman: Gentlemen, thank you for your
written evidence and your appearance here this morning. It has
been very helpful.
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