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The Government’s main response to pensioner poverty has been to increase means-testing massively. Nearly half of all pensioners now retire subject to means-tested benefits. Surely even Ministers realise by
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now that they have tested to destruction the ability of means-testing to deliver help reliably to those who need it most.

Mr. Brooks Newmark (Braintree) (Con): Is my hon. Friend aware that many elderly people find the problem with means-testing is that the forms that they must fill in are incredibly complicated and even frightening? That has the result that many pensioners do not claim what they are perfectly entitled to.

Mr. Waterson: My hon. Friend makes a good point. Despite the sterling efforts of the Pension Service—I have visited my local branch in Eastbourne—which goes to extraordinary lengths to be helpful, many older people are put off by the complexity of the process, the form-filling and the long telephone call that is usually involved. There are other reasons, such as pride and not wanting to go cap in hand to the state. Many people assume that they are not entitled, and it is clear from the statistics that that is especially true for council tax benefit, because some elderly people who own their homes cannot believe for a moment that they would be qualified to claim.

Geraldine Smith (Morecambe and Lunesdale) (Lab): The pension credit has helped pensioners in my constituency, and the targeting of resources has meant that the poorest pensioners can be £30 or £40 a week better off. Would the hon. Gentleman scrap that?

Mr. Waterson: I am not saying that at all— [ Interruption. ] If the hon. Lady will allow me, I am saying that that is fine for those who make a claim. It is the duty of every Member to encourage people to claim—and, in some cases, to help them to claim, as we have probably all done—when they are entitled to do so. However, some 1.7 million people who are entitled to claim pension credit do not do so. There will always be some means-testing in the system—that is unavoidable—but we have mass means-testing for half of pensioners.

Bob Spink: Will the hon. Gentleman give way on means-testing?

Mr. Waterson: The prediction is that unless something is done—something is happening, so hopefully this will not occur—about 70 per cent. of pensioners will be subject to means-tested benefits by the middle of the century.

Bob Spink: Will the hon. Gentleman give way?

Mr. Waterson: The current Prime Minister—

Bob Spink: On a point of order, Mr. Deputy Speaker. The hon. Gentleman has taken interventions from every single Member in the Chamber, but he has refused to give way to me on five different occasions. Is it right that he discriminates against—

Mr. Deputy Speaker: Order. The hon. Gentleman knows that it is entirely for the Member who has the floor to decide whether to give way and take an intervention. That is certainly not a matter of order for the Chair.

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Mr. Waterson: Thank you, Mr. Deputy Speaker.

When the Prime Minister was in opposition, he said:

another broken promise.

As I have said, up to 1.7 million people who are entitled to pension credit do not claim it, despite any number of advertising campaigns and other attempts to boost take-up. The Secretary of State for Work and Pensions confirmed on Monday that the Government have dropped their original target for maximising take-up of pension credit.

Angela Watkinson (Upminster) (Con): The complexity of the forms often leads elderly people to seek the help of family or friends in completing them. If it is not done absolutely accurately—if an error on the form leads to the claim being refused—it is extremely difficult to put things right after they have gone wrong, so there is a serious case for making the process of claiming much simpler and easier to understand.

Mr. Waterson: I am grateful for that. In fairness, Ministers have attempted to make the process easier, and to bring in other benefits if people are claiming pension credit. We may hear a bit about that in the speech of the Minister for Pensions Reform. As my hon. Friend the Member for Upminster (Angela Watkinson) says, there is still some way to go in that regard.

The result of all the problems that I outlined is that nearly £5 billion a year in benefits goes unclaimed by older people and remains in the Treasury. The Institute for Fiscal Studies estimates that if all those benefits were claimed, it would lift 500,000 pensioners out of poverty at a stroke. The report’s authors pointed out the effect that higher pension income among new retirees has had on relative poverty levels—that is, if it was not for the massive success, under previous Conservative Governments, of encouraging private and occupational pension saving, the poverty figures would be even worse. [Interruption.] The IFS concluded:

Did the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) wish to intervene?

Sir Gerald Kaufman: No, I was just interested. [Hon. Members: “Go on!”] The hon. Gentleman’s speech is extremely interesting, as I would expect a speech of his to be. On the other hand, it is perforated, as I shall show in my speech, if I catch Mr. Deputy Speaker’s eye.

Mr. Waterson: I am not sure what the right hon. Gentleman means by “perforated”. No doubt we will find out. As he and I were taught by the same English teacher, albeit many years apart, I have no doubt that he will expand on that point with some eloquence later.

Mr. Gummer: I would not like my hon. Friend’s speech to be perforated as a result of his failing to say that poor pensioners are paying council tax to put back the money that the former Chancellor of the Exchequer, now the Prime Minister, stole from everybody’s pensions.
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Public servants, particularly local authority servants, are being paid for by my poor pensioners.

Mr. Waterson: My right hon. Friend is absolutely right. There are other examples of massive unfairness, too. Approximately a third of state pension increases made since the Government came to power have been taken up by council tax bill increases, which is incredibly unfair.

Pete Wishart (Perth and North Perthshire) (SNP): Will the hon. Gentleman accept that council tax is one of the biggest contributory factors to pensioner poverty? In Scotland, 110,000 pensioners spend more than 10 per cent. of their disposable income on council tax. The Conservatives introduced the council tax, following the even more disastrous poll tax. Even after that experience, surely we should address the issue in order to tackle pensioner poverty, and base the tax on ability to pay, for goodness’ sake.

Mr. Waterson: That is another debate, and one that I would find fascinating. I assume that the hon. Gentleman is not advocating a return to the poll tax. I do not know whether he has the same experience in his constituency, but I have come across constituents who use their winter fuel allowance to pay their council tax. That is completely bonkers. When Ministers go on about the winter fuel allowance, they have to realise that, for some pensioners, it is a way of paying their council tax bill.

Rob Marris (Wolverhampton, South-West) (Lab): The hon. Gentleman says that he wants a fair share for pensioners, and he rightly decries pensioner poverty. He also decries means-testing. Will he tell the House by how much his party would raise non-means-tested benefits, and what percentage of gross domestic product he thinks a Government ought to spend on pensioners? He ought to tell the House how much more his party would offer pensioners; otherwise, it is a rather empty debate.

Mr. Waterson: Yes, I will tell the hon. Gentleman, but not today. There are about two years for the Government to limp on, and I think they will do so. We need to see just how bad things have got and how dreadful the public finances are. I am always grateful for the hon. Gentleman’s interventions. I do not know whether he is still a member of the Government. I shall set out the principles that we will use to approach the matters of policy in due course.

Albert Owen: One of the serious issues is that the poorest pensioners are not claiming council tax benefit, and one of the reasons is that local authorities do not encourage it. Does the hon. Gentleman agree that local authorities should send out, with council tax bills, a form so that the poorest pensioners and others entitled to it can claim council tax benefit?

Mr. Waterson: That is a fair point. My understanding is that there are moves afoot to tackle the issue. I think I am right in saying that council tax benefit has the worst take-up rate of any means-tested benefit, and I have tried to explain why. Anything that we can do to improve
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that, especially as council tax levels rise so much, would be welcomed in all parts of the House. The hon. Gentleman makes a good point.

In opposition, the present Prime Minister spent much of his time telling the Labour party that it could not promise to restore the link between the basic state pension and average earnings. The Government are the Johnny-come-latelys to the issue. We were the ones who promised to restore the link in our last manifesto. There is a great deal of mythology about the link and the scrapping of it, which we have gone into before and no doubt can again.

As I understand it, the Government’s current position is that they intend to restore the link in 2012 or 2015, or possibly not even then if it is unaffordable. We have already legislated in the Pensions Act 2007 to do that. What we need is the trigger to be pulled by the Government. [Hon. Members: “You abolished it.”] I personally did not, but I know what hon. Members mean.

A couple of weeks ago, the Government had the opportunity to tell the House and the wider public precisely when they intend to redeem that promise. They ducked that opportunity and whipped their Members to vote the amendment down—another example of dithering by the Government. No wonder Age Concern concluded that

What an indictment.

There is another problem, linked directly to means-testing. It is the corrosive effect that that has on saving for retirement. Why should people put money aside now when they cannot be sure that they will be better off in retirement? No wonder the savings ratio has dropped to an historic low. The Government are storing up more potential poverty for the future because of the decline in pension saving. The current poverty statistics, as I explained, are significantly flattered by the success of previous Conservative Governments in encouraging private and occupational pensions.

As part of their attempt to repair the ravages of private pension saving since they came to power, the Government are setting up personal accounts. As the official Opposition, we have broadly supported the Turner package of reforms, but we want to ensure that personal accounts are indeed targeted on low and middle earners who have no pension savings. We have argued long and hard that personal accounts could well fail if the level of means-testing is not much reduced from present levels. The Pensions Policy Institute in particular has done a great deal of work to identify the at-risk groups who may be no better off or even worse off by being auto-enrolled into personal accounts. I am delighted that Ministers are now taking the matter seriously and have embarked on a programme of work with us, among others, to tackle the issue.

When it comes to pensions, confidence is a vital ingredient in getting people into the pension saving habit. Nothing has done more to undermine confidence than the Government’s shameful dithering for more than four years about giving proper compensation to the 160,000 pension victims who lost their pensions through no fault of their own. The Government got there in the end, and should be commended for that, but they should not have taken so long or fought so hard against the move.

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The issue of fuel poverty was raised earlier, and it is at the top of everyone’s list of concerns at the moment. On the most recent figures, some 2.25 million older households are in the fuel poverty trap, and no doubt that figure is spiralling upwards almost daily. Indeed, the Government’s own energy White Paper makes it clear that there is no prospect of their hitting their target of removing all vulnerable households from fuel poverty by 2010. The issue matters a lot, not just because it causes anxiety and stress for older people, but because last year there were 22,300 unnecessary winter deaths among older people in this country.

In the face of those unprecedented challenges, what do the Government do? They have cut spending on the Warm Front scheme over the next three years by 25 per cent. in real terms, and have done so in the teeth of advice from the Fuel Poverty Advisory Group that the bare minimum required was to maintain spending at current levels. It is no wonder the Government are now being taken to court over their fuel poverty strategy by Help the Aged and Friends of the Earth. What do we hear from Ministers? We hear a lot of rhetoric, empty gestures and announcements, designed to get them out of a problem today rather than to afford a long-term solution.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): The hon. Gentleman is making an important point about fuel poverty. The Government strategy relied so much on cheap energy coming from competition, but that energy was not going to stay cheap for ever. The permanent solution relies on producing proper housing stock with proper efficient heating systems so that people can afford to heat their homes again.

Mr. Waterson: I am grateful to the hon. Gentleman, who is absolutely right. This is not a debate on energy policy, so I shall limit myself to saying that the primary duty of Government is to ensure energy supply at a reasonable price. As they have taken so long trying to develop any kind of rational energy policy, there is now a big gap—and a rising bill to go with it.

Mr. Winnick: Will the hon. Gentleman give way?

Mr. Waterson: If the hon. Gentleman will allow me, I shall make a little more progress; I have given way quite a lot.

Ministers’ desperate pleas to energy companies have largely fallen on deaf ears. Their idea of monitoring fuel bills smacks more of Big Brother than of a serious attempt to tackle the problem. The so-called “extra” £225 million is not new money at all—it was first announced in April. Age Concern has described it as

It goes on:

When we look at the figures, we see that the extra money will help only 100,000—just 2 per cent.—of the 4.5 million people in fuel poverty. Just the other day, there was another panic announcement from the Minister, on the issue of emergency vouchers to benefit claimants older than 70, to help with energy bills. We of course welcome any help for hard-pressed pensioners,
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but what was announced looks like another one-year-only, short-term fix. It is difficult not to agree with Help the Aged, which said:

That sounds to me like new Labour’s epitaph.

Mr. Winnick: I have never previously seen a Front-Bench spokesman persistently refuse to give way. Be that as it may, are the Tories now making a commitment to keep the winter fuel allowance if they win the election?

Mr. Waterson: First, I shall deal with the hon. Gentleman’s initial remarks, which were rather churlish if I may say so. I have given way pretty promiscuously—including to him, on at least one occasion.

I will not make any commitments two years from an election about what we are going to do; the hon. Gentleman is old enough and experienced enough to know that that is an unlikely scenario. When the election comes, we will have a detailed, thought-out and costed suite of policies designed to help pensioners, who will by then presumably be in even worse straits than they are now after a further two years of this disastrous, dithering and incompetent Government.

In debating this important subject, we should not allow ourselves to get bogged down in dry statistics. These are flesh-and-blood issues. Poverty has a cancerous effect on our older citizens. It can affect their health, mental as well as physical; it can bring isolation and loneliness. In short, it can totally blight those later years of life when we all have some right to be free from unnecessary worry and stress. In its 1997 manifesto, Labour said:

Surely, after 11 years in government, and with perhaps another two to go, it is high time to start living up to that promise. I commend the motion to the House.

4.30 pm

The Minister for Pensions Reform (Mr. Mike O'Brien): I beg to move, To leave out from “House” to the end of the Question, and to add instead thereof:

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