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John Bercow: If the Government believe, as they claim, that selection within schools through grouping and setting can be a spur to improved economic performance, why are Ministers not prepared to invest some political capital into the process by issuing proper guidance?

Mr. Jenkin: We know why. This Government are paralysed by their internal splits and needed the votes of Conservative MPs to secure a majority to get their Education and Inspections Bill through.

We know the scale of competition that we will face in coming decades. The Chancellor pretends that he knows. People should be increasingly alarmed by the prospect, for years to come, of this Government implementing the sort of policies that are in the Budget, which fail to tackle the problems that need to be addressed.

7.32 pm

Mr. Stephen Byers (North Tyneside) (Lab): I draw the House's attention to my declaration in the Register of Members' Interests.

The Chancellor's statement last week demonstrated the extent to which economic stability has now been embedded in our country, in stark contrast to the situation that constituents such as mine witnessed in the 1980s and early 1990s. From that position of economic strength, we can plan ahead with confidence for the challenges that this country faces—and we face several new challenges. I want to deal with the pensions challenge, which will need to be considered in the near future. In my view, it is perhaps the biggest challenge that we face as a country. Two distinct but linked issues must be considered. First, how can we come up with a set of proposals that will offer security and dignity for
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today's pensioners; and, secondly, how can we construct a new regime that is fair, affordable and sustainable for the pensioners of the future?

The Government already have a good record with regard to pensioners. When we came into office in 1997, we were acutely aware of the way in which pensioners had been let down by the Conservative Government. In 1997, one in four pensioners—2.8 million—were in poverty. It was therefore right that a top priority for an incoming Labour Government had to be how to get money quickly to those pensioners to lift them out of poverty. We used the minimum income guarantee and, more recently, the pension credit to target resources and ensure that those pensioners were taken out of poverty. We were successful. As a result of those policies, nearly 2 million pensioners have been lifted out of poverty.

Of course, all pensioners benefit from and welcome some of the universal provision that we have exceptionally made available—free television licences for the over-75s and the winter fuel payment, well regarded by pensioners throughout the country—[Interruption.] I will come to the council tax rebate in a minute. The challenge now is to achieve a national consensus on the way forward for tomorrow's pensioners and, at the same time, to give today's pensioners the security that they deserve, which, in my view, this Government should continue to deliver. Affordability and sustainability must be at the heart of our consideration.

We must also be aware, however, that because of the way in which pensions policy has developed, with which I agree, and because the benefits that we provide are means-tested, a large amount of money is unclaimed by pensioners—money to which they are entitled and which the Government have allocated for pensions. The Department for Work and Pensions produces a useful example of the levels of take-up across a range of income-related benefits. The latest figures relate to 2003–04. I want to take the lowest estimate of unclaimed benefits—some estimates would be even higher. A minimum of 210,000 pensioners do not claim housing benefit to which they are entitled, which amounts to some £310 million. A minimum of 1,600,000 pensioners who are entitled to council tax benefit do not claim it, which means that at least £870 million of council tax benefit is unclaimed by pensioners. On the lowest estimate, 1,200,000 pensioners do not claim pension credit and the minimum income guarantee, which amounts to £1.6 billion.

That is money that the Government have put aside for pensioners. If we take those three benefits together, £2.8 billion is unclaimed by pensioners. In terms of affordability, that money could be made available to pensioners. The total cost of the £200 council tax rebate is £800 million, and we should use some of the unclaimed money to support a continuation of that rebate for pensioners.

Mr. Jenkin: I am listening carefully to the right hon. Gentleman's speech. I question whether the Chancellor does not budget for a shortfall in the number of claimants of means-tested benefits. However, has not the right hon. Gentleman made the strongest arguments possible against the continued extension of means-
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testing, for which his Government have been responsible, and in favour of the application of universal benefits for pensioners, which they very much prefer?

Mr. Byers: That relates to what will be my next point, on a fair deal for the pensioners of tomorrow.

We must do all that we can to make sure that pensioners claim unclaimed benefits. We all know the nature of pensioners, however—they are reluctant to go through a means-tested process, so those sums are unavailable to them. If we can make them available for universal provision—of which the £200 rebate is a good example—we should do so. However, almost £2.8 billion is unclaimed, so we should also consider those pensioners aged over 75, many of them women, who do not get the basic state pension. We all know that the age group with which we are concerned will have been at home and will not have paid their national insurance contributions—the pensioners in poverty today. If we can extend universal provision to them, at a net cost of £1.4 billion, we will tackle what is left of pensioner poverty in our country. We can do both of those within the amount of money unclaimed at present.

I accept that there is real concern about the nature of means-tested provisions. I approve of the approach that we have adopted since 1997, which ensures that money goes quickly into the pockets of pensioners in greatest need. However, it was never a long-term solution to the problem of establishing a fair pensions regime. Some of my friends here will be surprised to hear that I agree with Brendan Barber, general secretary of the Trades Union Congress, who said:

I do not think that, when we come to consider a new regime for pensions, we can continue as we have since 1997. There cannot be minor adjustments to the present regime, or incremental change. We need to think fundamentally about the sort of pensions system that we want for the future.

I think that the tests set out by the Secretary of State for Work and Pensions are the right ones. Does the new system promote personal responsibility? Will it be fair? Is it affordable? Is it simple? Is it sustainable? I believe that, along with the recommendations of the Turner commission, those tests strike the right balance between the respective responsibilities of the Government, employers and employees. That is why I approve of the package produced by Adair Turner.

I hope that when the Government produce their White Paper, they will be prepared to embrace the thrust of Turner's recommendations. In my view, the Turner report provides the blueprint—the package of measures that can deliver fairness and justice for pensioners long into the future, which is what we should be seeking.

Mr. Andrew Love (Edmonton) (Lab/Co-op) rose—

David Taylor (North-West Leicestershire) (Lab/Co-op) rose—

Mr. Byers: I will give way only once, to my hon. Friend the Member for Edmonton (Mr. Love).
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Mr. Love: One of the issues sidestepped by the Turner commission was that of the subsidy given to pensions, which is concentrated massively at the top of the pension range. Has my right hon. Friend any view on how it could be redistributed to help those in need?

Mr. Byers: I take my hon. Friend's point, and I have some sympathy with it. I hope that the Government will not duck that issue, among others, when the White Paper is published. I hope that they will take it on and that when we talk about a fair and just system for the future that is affordable and sustainable, they will consider issues such as tax relief. That is one way in which we can secure a system that is grounded in fairness, which is what we must try to achieve.

I raised this subject today because I believe that the Labour party, in particular, cannot compromise on its duty to pensioners. We owe them a responsibility—a responsibility grounded in the traditional values of the Labour party. The Labour party is about ensuring, and recognising, that we can achieve far more when we act together than we ever can as individuals. Pensions present a good example of the way in which the people of today who create the wealth should look after those who, in years gone by, have provided for our country in good as well as more difficult times. It is for the Labour party to repay its debts, and I believe that a pensions policy based on the thrust of the Turner proposals represents a very positive solution.

Let me make a final comment on the Budget. I was delighted that the Chancellor reaffirmed the commitment to the eradication of child poverty by 2020, and the commitment to halve the number of young people in poverty by 2010–11. He proposed increases in child benefit and more help to get single parents into work, lifting another 300,000 children out of poverty. That will make an important contribution, but we need to do more. We can build on that proposal, but the important message of the proposal and, indeed, the Budget is that we cannot have a strong economy if we have a weak and divided society.

This Budget and this Government are committed to social justice and wealth creation working alongside each other. Long may that continue.

7.45 pm

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