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That, for the purposes of any Act resulting from the Off-Road Vehicles (Registration) Bill, it is expedient to authorise the payment out of money provided by Parliament of—
(1) any expenses of the Secretary of State in consequence of the Act, and
(2) any increase attributable to the Act in the sums payable under any other Act out of money so provided.
DELEGATED LEGISLATION
Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),
That the draft Working Time (Amendment) Regulations 2007, which were laid before this House on 13th June, be approved. —[Mr. Watts.]
REGULATORY REFORM
Motion made, and Question put forthwith, pursuant to Standing Order No. 18(1)(Consideration of draft regulatory reform orders),
That the draft Regulatory Reform (Collaboration etc. between Ombudsmen) Order 2007, which was laid before this House on 9th May, be approved. —[Mr. Watts.]
EUROPEAN UNION DOCUMENTS
Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Standing Committees),
That this House takes note of European Union Documents No. 11816/06 and Addendum 1, Draft Directive on environmental quality standards in the field of water policy and amending Directive 2000/60/EC, and 11847/06, Commission Communication on integrated prevention and control of chemical pollution of surface waters in the European Union; and supports the Government’s aim of securing a proportionate, cost-effective and environmentally protective measure. —[Mr. Watts.]
Pensioners (Age Addition)
Motion made, and Question proposed, That this House do now adjourn. —[Mr. Watts.]
12.16 am
Jeff Ennis (Barnsley, East and Mexborough) (Lab): I am grateful for the opportunity to raise an extremely important issue, even in the wee small hours. The Minister for Pensions Reform will know that I recently tabled early-day motion 1463 on the 25p age addition for pensioners over 80, which reads:
“That this House believes that the 25 pence age addition for pensioners over 80 years old which was introduced at this level in 1971 should now be significantly raised; and further believes that, alternatively, the Government should give consideration to increasing the over 80 year olds’ winter fuel allowance by £25 per annum or more as compensation for abolishing the 25 pence age addition.”
I am pleased that the early-day motion has attracted 64 signatures from Members on both sides of the House. The Minister will also know that I recently raised the matter with my right hon. Friend the Prime Minister at Prime Minister’s questions.
I must admit that I have been concerned for some time about the fact that the 25p age addition has remained static since 1971, but matters were brought to a head on 4 April this year, when I attended the 80th birthday party of my father, Bill Ennis, in his back garden. It was a sunny day, unlike the weather that we have recently had in south Yorkshire. Without my prompting, my dad said to me: “Jeff, do you know what the Government have given me for my 80th birthday?” I knew the answer, but I thought I would go along with him and said, “No, what have they given you, Dad?” He said, “25p a week on my state pension. Isn’t that ridiculous?” That epitomises the reason why I called for this Adjournment debate. If that is my dad’s reaction to the 25p increase on his state pension, I am sure that most other 80-year-old pensioners will have a similar reaction.
When the 25p addition was introduced, it meant something. In those days, it was officially known as a crown, but we mostly called it five shillings and it was commonly known as five bob—that is the phraseology I recall. I am sure that the Minister’s recollections of 1971 are hazy compared with mine, because that was the year in which I started college in Bristol. I remember that at the student bar in Bristol in 1971, I could buy a pint of lager for 15p. Being a Yorkshireman, I remember that it was 15p, because I could buy a pint of lager in Brierley in my constituency for 12p, so there was a 3p differential, which was quite a substantial amount of money at the time. In 1971, for 25p, I could buy a pound of Cheddar cheese, but I would now have to pay £2.60. I could buy a dozen large eggs for 25p, but they now cost over £2. I could buy a pound of bacon for 24p, but it now costs over £3. I could buy four white loaves for 23p. That would now cost £3.44. Taking into account inflation, 25p in 1971 is worth £2.50 at today’s prices. There is quite a difference in the value of 25p in 1971 and in 2007.
I shall briefly examine the history of the 25p age addition and why it has never been increased. It was introduced in September 1971 through the national
insurance Bill 1971 by the Tory Government of the day. Sir Keith Joseph explained that it was intended to recognise
“albeit in a small way . . . the special claims of very elderly people who on the whole need help rather more than others . . . As they grow old their possessions wear out and they need help for necessary jobs which they used to do themselves”.
Sir Keith Joseph explained that as a result of the introduction of the age addition, a single person over 80 on the standard rate pension would get £6.25 a week.
In 1978 the Labour Government floated the idea of raising the age addition in their discussion document “A Happier Old Age”, which stated:
“The older generation of pensioners, most of whom are women, tend to be poorer and their savings have been eroded by inflation and time. For the over 80s an age addition to pensions of 25p a week was introduced in 1971. For many years ahead the very old will in general be unlikely to have substantial earnings-related pensions. In so far as resources permit, is there a case for a higher pension rate at a fixed age without regard to individual need, or would it be preferable to provide more services for the very old?”
In 1995 Lord Mackay of Ardbrecknish, a Conservative Minister in the Department of Social Security, said:
“My Lords, we have no plans to up-rate the 25 pence age addition which is paid to all pensioners from the age of 80. We believe that help should be targeted at pensioners on low incomes, and we have concentrated resources on the higher pensioner premium in income support for those aged 80 or over.”—[ Official Report, House of Lords, 27 April 1995; Vol. 563, c. 1021.]
In 2003, the present Minister for Trade, my right hon. Friend the Member for Makerfield (Mr. McCartney), who was the Minister for Pensions at the time, said:
“The 25 pence age addition for state pensioners aged 80 and over was introduced by the Conservative Government in 1971.
The age addition will be maintained, but on its own it is not the most cost-effective way to help elderly pensioners. We have gone much further.
We have introduced measures which, from October 2003, will mean that the poorest third of pensioner households will have gained over £1,500 a year in real terms.
We have introduced free TV licences from age 75 worth over £100 a year, winter fuel payments of £200 per year for eligible households paid to some 11 million people in 8 million households, and the minimum income guarantee which means that no single pensioner has to live on less than £102.10 and no couple on less than £155.80 from April.
We are going further still with the introduction of pension credit from October 2003.
We have therefore found better and more effective ways to help pensioners with the lowest incomes.”—[ Official Report, 25 March 2003; Vol. 402, c. 167W.]
There is no doubt that the Labour Government have done more than any previous Government to improve pensioner incomes. I am proud to be associated with what the Government have achieved. The Minister might think that I am having a bit of a whinge, but many OAPs resent the fact that the issue leaves a nasty taste in their mouths. We need to consider how best to deal with that. I understand the Government’s reluctance to consider raising the 25p age addition in its present form because of all the other initiatives that we have brought in. My view, as I suggest in the
early-day motion, is that we should scrap the 25p age addition and, by way of compensation, raise the winter fuel allowance for the over-80s by a minimum of £25 a year.That policy change would find favour with pensioners, who undoubtedly like the winter fuel allowance.
The current winter fuel allowance standard rate of £200 for a household containing at least one person aged 60 or over was first paid in the winter of 2000-01. Households including a person aged 80 or over have received an additional £100 since the winter of 2003-04. Announcing the introduction of that higher rate for people aged 80 and over, the Chancellor said:
“At the age of 80, pensioners receive an addition of just 25p a week to cover the costs that getting older involves. At just 25p extra per week, it has rightly been criticised as inadequate, and I have had many representations from MPs on all sides of the House. To double or quadruple such a small allowance would not be a sufficient recognition of the needs of the very elderly over 80, or of the contribution that they have made to the life of our country and its success. The winter fuel payment of £200 has not, I regret, been supported by all parties in this House. But I hope that there will now be all-party support for my proposal that for every household where a pensioner reaches the age of 80, or is over 80, we will add to the winter allowance of £200 an extra payment of £100—a total of £300 that will be paid each and every year to almost 2 million elderly men and women over 80.”—[ Official Report, 9 April 2003; Vol. 403, c. 287.]
In the 2005 pre-Budget report, the Chancellor announced that winter fuel payments would continue to be paid at those rates for the duration of the current Parliament. Around 2 million households benefited from the 80-plus payment in the winter of 2003-2004 at a total cost of more than £208 million. The reply to a question that I recently tabled showed that the estimated annual cost of raising the winter fuel payment by £25 for people aged 80 or over in 2007-08 was around £50 million. For the winter of 2007-08, the total expenditure on winter fuel payments is forecast to be £2,059 million. That switch would be very popular, because it would automatically benefit every pensioner aged over 80.
The 25p weekly age addition is subject to income tax. Some 830,000 older pensioners currently pay income tax, which is roughly one third of older pensioners—we currently have just more than 2.5 million pensioners aged over 80. After their income tax has been deducted, 830,000 older pensioners only get 20p a week allowance after tax. By switching to an annual increase of 25p or more on the winter fuel allowance, every older pensioner would get the full £25. A two-pensioner household containing two pensioners aged over 80 currently gets 50p a week—25p each—and £25 a year roughly equates to 50p a week for a double household.
As I have mentioned, the cost to the Exchequer of increasing the winter fuel allowance by £25 has been estimated at £50 million. In my opinion, that would be £50 million well spent. That sum would, of course, be reduced by the current cost of paying out the 25p age addition. Perhaps the Minister will inform the House of that cost, because I have not found that information—the total cost would be £50 million minus that particular sum of money.
I repeat that I hope that the Minister does not think that I am having a go at the Government. I am proud
of what we have achieved so far for pensioners. The announcement earlier this year about once again tying pension increases into average earnings from 2012 is yet further evidence of this Government’s commitment to the nation’s pensioners. However, my philosophy on this matter is this: why spoil the barrel for a hap’orth of tar? That is exactly how pensioners regard the 25p age addition. After all, these days 25p cannot even buy a second class stamp. I should like the Minister and his Department, and indeed the Treasury, to give very serious consideration to this important matter.
12.30 am
The Minister for Pensions Reform (James Purnell): It is a pleasure to be here to respond to this important debate. I should like to start by congratulating my hon. Friend the Member for Barnsley, East and Mexborough (Jeff Ennis) not only on securing the debate but on the case that he has made and the eloquent way in which he did it. I know that he has already managed to convince the Government on two of his campaigns to date, and he was assuring me earlier today that my likely resistance to his proposal would probably be a pyrrhic victory. I look forward to seeing whether he is proved right about that.
I recognise the point that my hon. Friend makes, not least because I receive a number of letters from people who have just turned 80 and who make exactly the same point—and, indeed, who thank me for having paid for some of the cost of the stamp that enabled them to send me the letter in the first place. The Government will certainly continue to look at the arguments that my hon. Friend makes but, as he anticipated, we will not support his proposal.
I also congratulate my hon. Friend on the fact that he will be the last Member of this House to obtain an Adjournment debate, certainly in this Chamber, under the current Prime Minister. It is an historic moment and it is worth reflecting on the fact that 10 years on, as he said, pensioners are significantly better off as a consequence of the changes that have been brought in by this Government. That is why we continue to believe that the best way to address the genuine needs of older people is through policies other than increasing the age addition, although I recognise that that is not my hon. Friend’s central proposal.
When the age addition was introduced, 25p was more money in people’s pockets than it is now. Then, it was about 4 per cent. of the basic state pension, whereas now it is less than 0.3 per cent. In 1971, only a small minority of people reached the age of 80, whereas now there are nearly 3 million people over 80. However, the problem with increasing the age addition is that it would not be a well targeted measure. As, in effect, an increase in the basic state pension, it would be taxed for people who pay tax and means-tested away for those who are on pension credit—and those who are on the guaranteed credit only would gain nothing at all from the increase.
That is why the Government, in trying to recognise the needs of older people, have focused on other ways of achieving the same goal. About 3.5 million households with someone aged 75 now benefit from the free television licence—that is worth £135.50 a year and in 2007-08 costs about £500 million. It is already
making a big difference. Pension credit makes a particularly significant difference to older people; indeed, more than a third of those entitled to pension credit are over the age of 80. Pension credit has particularly benefited older women, especially widowed women, who have seen a significant difference in the amount that they receive from it.
Most notably, as my hon. Friend said, we have not only introduced the winter fuel payment but increased it to £200 for pensioners under the age of 80 and to £300 for pensioners over the age of 80. I recently replied to a parliamentary question, which asked how much was being spent on the extra fuel costs of pensioners in 1996, and the answer was £60 million. As my hon. Friend eloquently said, the figure for the winter fuel allowance is now more than £2 billion. That is another example of difference.
Overall, pensioners over the age of 75 are much better off through the measures that I have outlined than if we had increased the age addition allowance in line with inflation—and, indeed, better off even than if we had backdated it. As my hon. Friend said, it would be approximately £2.50 if it was backdated in line with prices to 1971. The consequence of our reforms is that pensioner households with at least one pensioner over 75 are better off by £34 a week. That dwarfs the figure of £2.44.
My hon. Friend asked what the cost of the current 25p age addition allowance is. The answer is £35 million in this year’s money. I hope that that is helpful, though he will doubtless argue that that makes his case stronger rather than weaker. However, in the spirit of
openness at this late hour, I thought that I would give him that figure. The changes that we have made mean that households with pensioners who are over 75 are £34 a week better off. That is significantly more than would be gained even by backdating the age addition allowance to 1971. I understand my hon. Friend’s point but, if one has any contact with the social security system, one realises that there are strange byways in it, and we are considering one of them.
We are united on the point that the Government have done much to help pensioners in the category that we are discussing.
Jeff Ennis: My hon. Friend has been kind to me at this late hour and I am pleased about that. He obviously realises that my main point is not about increasing the age addition allowance but switching it so that the income tax element falls away. I know that I am meeting some resistance. I met the same the resistance from Ministers about raising the age for smoking from 16 to 18, but it crumbled after two years of trying. Will my hon. Friend facilitate a meeting involving him, me and a Treasury Minister to discuss the matter further?
James Purnell: I shall endeavour to do that. My hon. Friend has uttered chilling words, which will stand in Hansard as a warning to anyone who dares oppose him. With that, I shall take my leave of the House.
Adjourned accordingly at twenty-three minutes to One o’clock.
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