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Mr. Peter Bone (Wellingborough) (Con): It is a particular pleasure, Mr. Conway, to serve for the first time in a debate under your chairmanship. I thank Mr. Speaker for granting me the opportunity for a debate on what is a very important issue for pensioners in my constituency, the Minister for attending the debate and his Department for its kind inquiries prior to it. I also welcome my hon. Friend the Member for Kettering (Mr. Hollobone), whose constituency neighbours mine and who also has issues and concerns about pensioners.
Wellingborough is a constituency in the east midlands with a mix of urban and rural areas. More than one eighth of the adult population is retired, and many worked in the shoe and boot industry prior to their retirement. The constituency could not be considered a high-income area.
After the general election of 2001, I felt that many politicians of all political parties had become arrogant and out of touch. They were more than happy to preach to people, but were not prepared to listen. So I founded the "Listening to Wellingborough and Rushden" campaign, which aimed to seek the views of local people, groups and organisations and campaign for change on their behalf. I listened to local people at every opportunitythrough surveys and public meetings, and when I visited residents. People were crying out for someone to listen to their views and concerns and do something about them.
As part of my listening campaign, I was approached by a Mr. Martin Sterrow, a local pensioner who had never before been involved in any political activity. He had become outraged that year after year the small rise in his state pension had been swallowed up by massive increases in council tax. Mr. Sterrow approached me and his local councillor, Councillor Malcolm Waters, to arrange a public meeting. I was more than happy to do that as part of my listening campaign, but my experience of public meetings had been that very few people bothered to turn up. However, there must have been 100 people at Mr. Sterrow's public meeting, and there was real outrage from the pensioners who attended; some of them were prepared even to go to prison rather than have to pay the enormous increases in their council taxes.
The pensioners were concerned that their pension incomes were in decline in real terms, and made it clear that the listening campaign needed to take on board two issues. The first was the ever-increasing council tax with its double-digit increases year after year. They wanted those increases to be controlled. The second was the lack of a decent state pension, and they were adamant that the link between state pensions and earnings should be restored to give pensioners dignity and respect in their old age.
These people had worked hard all their lives, had not relied on the state and had saved through the years, putting money aside so that they could live comfortably during retirement. However, instead of that, they were being crippled by the amount of tax that they had to payfirst on their pensions, secondly through stealth taxes and thirdly through their council tax.
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After the public meeting, Mr. Sterrow agreed to organise a petition asking the Government to restore the link between the state pension and earnings and to change how local authorities were funded to ensure that excessive year-on-year rises in council tax would not swallow up the much smaller percentage rises in the state pension. Mr. Sterrow and one or two other pensioners went from door to door throughout Wellingborough gathering signatures for the petition. They received a huge amount of support from local people and gathered more than 200 signatures. I should like to pay tribute to Mr. Sterrow's work and his raising of a very important issue.
As part of my listening campaign, I organised a second public meeting for concerned residents to voice their views to local borough councillors and county councillors, including the leader of Wellingborough council. My hon. Friend the Member for South Suffolk (Mr. Yeo) was present to accept the petition and take it to Westminster to update the shadow Cabinet on the Wellingborough pensioners' campaign.
That campaign took place in 2002 and 2003 and highlighted the problems local pensioners faced long before the issue of pensioners and council tax became the important national issue that it is today. The listening survey, which regularly goes out to Wellingborough residents, highlighted the issue very early on, when pensions and council tax came top of local concerns. I have to say that I asked for the tallies to be recounted, because at that time I did not believe that pensions and council tax were the top local concern. It turned out that they were.
I am more than aware that the problem is not confined to my constituency, and that pensioners nationwide have been forced into hardship through inflation-busting council tax rises swallowing up very small rises in the state pension. However, Wellingborough has seen the biggest rise in council tax since council tax was brought in. Pensioners in my constituency have been hit the hardest and are crying out for a change in the method of local government funding so that it does not penalise those on fixed incomes. I am assured by Mr. Sterrow that on occasion, the rise in his council tax bill was higher than the rise in his state pension.
The Minister for Pensions Reform (Mr. Stephen Timms) : I am listening carefully to the points being made by the hon. Gentleman. I was not clear about the date of that very large council tax increase. Will he say what party controls Wellingborough council? This is a matter of local financial management as well as of Government funding.
Mr. Bone : I should make it clear that at the time, the local council and county council were Labour-controlled. However, I am not trying to make a party-political issue of that, because the county council and borough council were working within the difficulties that they had. Mr. Sterrow produced what I would call a rate bill and showed that in one particular year, the council tax increase was higher than the increase in his pension. That was surprising, although we bear in mind that we have seen the highest council tax increases in the country.
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In the Chancellor's 2005 Budget, the Government announced that pensioner households with residents over the age of 65 would receive a one-off £200 payment towards their council tax as long as they did not receive the guaranteed element of pension credit. They would also receive the annual winter fuel payment, and then there would be the pension credita hugely complicated system in which pensioners have to fill in numerous forms and give highly personal financial information to Government pen-pushers.
Pensioners are unsure about what they are and are not entitled to; one could not make the system more complicated even if one wanted to. To be administered, the system has to employ thousands of staff, all at a cost to the taxpayer. It now employs snoopers to cold-call pensioners to ask over the telephone or at the doorstep for details of their incomes. That is a most disturbing development. When will the Government understand that many pensioners do not want to tell them about their personal circumstances?
A pensioner recently contacted me because someone from the Government was coming to his house to ask about his income and other circumstances, and I attended the meeting with the pensioner. The Government official turned up on the doorstep and presented an identity card not much bigger than a business cardmost pensioners would have had difficulty in reading it. The official then started asking questions about the pensioner's income, savings and medical circumstances, and after all that told him that he was not entitled to any extra money. When I asked him, the official told me that he had made very many visits but that very few pension credits had been signed upso there is much intrusion for little reward.
That method of going to people's homes to ask them personal questions epitomises this Government's Big Brother obsession. Their need to micro-manage and control everything has hit pensioners the hardest. Pensioners have to go through the indignity of means-testing, filling out a long and complicated form, to claim back what they have spent years putting in. It is, after all, their moneythey have contributed to their national insurance stamp for yearsand they should get a decent pension as an automatic right.
I did not enter politics 30 years ago so that, in a matter of a few years, 75 per cent. of our pensioners will have to fill out forms to get a decent pension. The pension is their right; pensioners have the right to retire with dignity and to enjoy the last years of their lives without the hassle of Government bureaucracy and intrusion. I have seen elderly pensioners who have paid taxes and national insurance all their working lives, and who continue to pay tax on their pensions, handing over £10 and £20 notes to pay for private operations because they are not able to get them done quickly enough on the NHS.
The Government are failing our pensioners. People have retired, applied for their state pension and given their bank details with the presumption that the payment would automatically be credited each month. In one instance, a man had asked for his pension to be paid into his bank account. He did not look at his account in detail until a year later, when he found that he had received no state pension at all. When he contacted the Pension Service he was told to make a claim, although he could not receive all the pension
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owed to him since he retired because he had claimed it too late, even though his original claim was made on the day he retired and the Pension Service had misplaced it.
Mr. Philip Hollobone (Kettering) (Con): As the neighbouring Member of Parliament, I want to put on record how much local people appreciate my hon. Friend's interest in, and commitment to, his constituency concerns. On the last point that he made, I had a similar case in my constituency. An error had been made in the calculation of a constituent's pension entitlement and the Pension Service refused to refund all of the money. Will the Minister give us some encouragement that he will examine the rules, to ascertain whether appropriate reimbursement could be made more speedily, and in full, in future?
Mr. Bone : The situation is extremely strange. Where someone has paid into a pension all their life through their taxes, and then, because of an administrative error, they do not receive it, surely the amount should be backdated to them. That is common sense and fair play.
We are talking not about the rich and the better off, but about those who have paid into the state all their working lives, worked hard and saved a little for their retirement. Such people have been failed by this Government. My suggestion is that we give back dignity and respect to our pensioners. They have given so much to this country during their lives and deserve to spend their retirement comfortably, and to have dignity and respect.
We need just one system: one proper, decent state pension for all, regardless of how rich or poor people are. We should give pensioners one decent pension, and should scrap the pension credit, means-testing, the winter fuel allowance and living expenses. One proper, decent pension is needed so that pensioners can decide how to spend their money. It is not up to the Government to dictate how much money should go on what, and when and where it should go on it. Pensioners are not stupid; they know best how to spend their own money.
The Government might claim that my suggestion is just too expensive, but that is just an excuse. It is not because they cannot introduce a proper state pension, but because they will not do so. Savings can be made in hundreds of different areas. There are, for example, the millions of pounds left in the Government's coffers of unclaimed pension credit. So much remains that the Government need to employ snoopers and to spend millions on advertising campaigns. How can the pension credit system be working if so much money is not being claimed? It is not only a lack of awareness that prevents pensioners from applying, but the complex forms and the fact that pensioners are asked to disclose so much personal information. By far the most important reason is that pensioners hate the indignity of means-testing.
Millions of pounds are left in the Government coffers and thousands of staff are employed to administer the state pension, pension credit, winter fuel allowance and pensioners' living expenses. If there were just one system with one set of administrative staff, the financial savings would be huge. The Government might still give the
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excuse that one comprehensive pension system would be financially unviable, but what about all the money that they waste?
As a cricketer, I must congratulate the Government on reaching a century. Unfortunately, it is not a century of which they should be too proud. By my calculation, since 1997, under this Government, British taxpayers have paid £100 billion to the European Union. If just a fraction of that had been spent on British pensioners rather than on French farmers, we would not be having this debate. Assuming that the Government continue to be too cowardly to stand up for British interests in Europe, there are plenty of other places from which money could pay for a decent income for pensioners. What about the enormous amount of money that the Government waste each year in Britain?
The TaxPayers Alliance is about to publish a report stating that the Government waste £80 billion a year. On what do they waste that? Some £225,000 was spent on a scheme to advise people not to wear ill-fitting slippers. Some £40,000 was spent on coming up with a 46-word definition relating to patients' experience of the national health service. That works out at roughly at £1,000 a word. The Home Office has employed 142 consultants at a cost of £74 million. My favourite example is the £10,000 being spent by the Office of the Deputy Prime Minister on examining whether fire engines should remain red.
Let us have no rot from the Minister that the Government could not afford to pay pensioners a decent pension without means-testing. They choose not to do so, because they want to control everyone and to know everything about everyone. Most importantly, the Government believe that they know best. I urge them to trust our pensioners, to give them a decent pension and to give pensioners and the other people in Wellingborough what they deserve.
The Minister for Pensions Reform (Mr. Stephen Timms) : I welcome the opportunity to air the important matters on which this debate touches. It is refreshing to hear some good old-fashioned Conservative tub thumping from the hon. Member for Wellingborough (Mr. Bone), at a time when his party is moving in the opposite direction.
Over the past couple of decades pensioner incomes have risen almost twice as fast as earnings; between 199697 and 200304 pensioner incomes increased by about 21 per cent. compared with 13 per cent. for earnings. In the 1980s, the big increase in average pensioner incomes was mainly driven by increases in private pensions. That was excellent for those with an occupational pension, but not everyone was included. The result was that a large minority were left behind by the general improvement in pensioner incomes. Between 1979 and 1997 the income of the most well-off fifth of pensioners grew roughly twice as fast as that of the least well-off fifth.
In 1997, we were left with many pensioners, particularly older women, on desperately low incomes. There were hundreds of thousands of single pensioners in 1997 whose total income, means-tested through income support, was £69 a week. Tackling that dreadful legacy was our No. 1 priority when we were elected. We
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needed to boost the incomes of the least well-off pensioners. That was done first through the introduction of the minimum income guarantee.
In 2003, that was followed by the successful introduction of pension credit, which focuses help on the least well-off through its guaranteecurrently £109 a week for a single pensioner rather than the £69 of just eight years ago. That level is being uprated in line with earnings and will rise to £114 from April. In addition, the pension credit provides a reward for those who have managed to save a modest amount towards their retirement incomeincome which was deducted pound for pound under the old income support regime.
Currently, some 2.7 million households in the country benefit through pension credit. In Wellingborough, more than 6,000 individuals in some 4,900 households receive pension credit; the average weekly payment is £39. Abolishing pension credit as the hon. Gentleman suggestshis position is rather different from his party'swould leave every one of those 6,000 Wellingborough residents worse off. Pension credit is therefore having an immense impact in Wellingborough and throughout the country, and it is particularly helping womenincluding the 3,200 women who receive it in Wellingboroughto improve their retirement incomes.
Among the other improvements that have helped are winter fuel payments. This morning, my right hon. Friend the Chancellor has been spelling out how the £300 million that he announced in December will be used to improve heating and insulation for pensioners. There have also been above-inflation increases in the basic state pension, the level of which has increased by 8 per cent. in real terms since 1997. Under the Conservative Government, of course, there was no real increase for many years. There are also free television licences for over-75s. The hon. Gentleman wants all those things scrapped, but if he goes to meetings such as those that he described, he will find that those who have benefited from that extra help, including the winter fuel payments, very much appreciate it.
The result of all that has been a dramatic rise in pensioner incomes and, in particular, a proportionately much larger increase in the incomes of the least well-off pensioners. Pension credit and the other measures that we have implemented since 1997 mean that pensioners are £19 a week better off on average than if we had increased the state pension in line with earnings since 1997 and left other things unchanged. The least well-off third of pensioners are £30 a week better off. That is a remarkably effective response to the problem of pensioner poverty that existed in 1997.
I am certainly aware of the concerns that the hon. Gentleman voiced about council taxes, which are felt by many, and particularly by those on low incomes. We have taken action to address those concerns. Less well-off pensioners who face increases in their bills can continue to get help through council tax benefit. In addition this year, households with somebody aged 65 or over who does not receive the guaranteed element of pension creditpensioner households that pay at least some council taxare receiving £200.
Of course, central Government do not set the level of council tax, although we have invested substantial amounts to ensure that local authorities have sufficient
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resources. Since 1997, total grant to local authorities has increased by a third in real terms . We have also added an extra £408 million in formula grant above what is in the published plans for local government, plus £200 million in unfenced specific grants. Given that substantial investment, as well as the scope for efficiency improvements, which I hope that the hon. Gentleman is urging his local authority to make, there is no excuse for excessive council tax rises. In fact, 200506 saw the lowest average council tax increase in more than a decade. My understanding is that the hon. Gentleman's local authority is now Conservative controlledindeed, I can confirm that that is now the case, although he was a little coy about making that point in his speech. However, I hope that he is pressing his authority to improve efficiency in its organisation.
Mr. Bone : I hope that the Minister will make it clear that Wellingborough council, which is now Conservative controlled, is rated as excellent by the Government. I hope also that he will deal with the crux of my comments. I hear what he says about all those freebies, but do the Government object in principle to giving everyone a decent pension and getting rid of all those funny little bits?
Mr. Timms : The point that I am making to the hon. Gentleman is that we have managed to break the historic link between old age and poverty through the policies that I have described. In the past, people in retirement were almost invariably significantly more likely than those in work to be poor relative to others, but that is no longer the case, because of the changes that I described. Andrew Dilnot, the former director of the Institute for Fiscal Studies, has saidthere is a good deal of substance to his pointthat the virtual eradication of abject pensioner poverty is the most significant of all the major social changes since 1997, and we must certainly not put it into reverse.
The hon. Gentleman mentioned pension credit take-up, but I was disappointed by his rather disparaging comments about the staff of the Pension Service, who work hard to ensure that people can take up the benefit due to them. I can give him the recent example of a pensioner couple in Northamptonshire who were helped during a visit to complete a pension credit application. They received not only pension credit, which, in their case, was worth £106 a week in backdated arrears of more than £1,000, but an increased award of attendance allowance, plus a full council tax rebate. If we are to ensure that people receive the benefit to which they are entitled, we need to work hard. Such visits are extremely effective in helping people to obtain what Parliament has decided is their due.
The Pension Service is working with the public, private and voluntary sectors to ensure that everyone has access to the help to which they are entitled and to the services that they need to stay well and lead independent lives. If a local authority representative is present during those visits, or the person doing the visiting works with the local authority, they can ensure that people receive the help to which they are entitled from the local social services department. There are more than 70 joint teams, in which local service staff, local authority staff and, in some cases, voluntary sector
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staff work together in a joined-up approach, and we are seeing a great array of benefits and improvements as a result.
The disability and carers' service is taking steps to improve the receipt of disability benefits, too. In some instances, that requires it to obtain information about people's circumstances, and rightly so. That is part and parcel of ensuring that people receive their due and maximise their income in retirement.
The pressing problems of inadequate incomes that faced us in 1997 have been effectively addressed. There is certainly more to do, but we have seen substantial improvements, which have given us a sound foundation on which to build an enduring pensions settlement for the UKone that can handle the dramatic increases in life expectancy that we have seen over the past 25 years and that seem to be set to continue. The improvements that we have introduced benefit us all, and I hope that that pensions settlement will be based on as broad a consensus as possible between the parties throughout the country.
There is certainly more to be done, which is why we asked Lord Turner and the members of the Pensions Commission to produce their report, which was published last November. In it, they called for a national debate, and we shall undertake a major consultation exercise in the coming months to engage with the public and with everyone who has an interest in the issue. We shall want ideas and proposals from political parties, employers, trade unions, local authorities and everyone with an interest in the future of our pensions system.
The hon. Gentleman argued for an earnings link in the basic state pension, and that is, of course, one of the proposals in the Pensions Commission report, along with a pretty comprehensive package of changes. We shall want to explore those ideas thoroughly in debate in the House and in the country and to examine the commission's proposals for reform in detail. We want to debate them and test them against principles of reform to give people every chance to consider the options and to build the broad consensus that we believe is crucial to securing the long-term confidence that we need. I have asked the commission to continue its involvement in the debate over the next few months, as we move from diagnosis and analysis to proposition and decision. I want the debate to involve every section of our community as we work towards the publication of a White Paper in the spring.
We have seen substantial improvements in pensioner incomes over the past eight years, and particularly large increases in the incomes of those who were the least well-off and who needed help most urgently. I can tell the hon. Gentleman with confidence that that was the right thing to do. In 1997, far too many people had a tiny weekly income of £69. The priority was to increase that. We have done so effectively through pension credit, and it is important that we do not go backwards.
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