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4 Jun 2008 : Column 848

Mr. O'Brien: I certainly do want to contest that statistic, because it distorts the poverty data and the EUROSTAT statistics. Because we are a wealthier country, our poverty level in the EUROSTAT statistics is set higher than that for most European countries. That is the way the EUROSTAT statistics are set. For example, the UK poverty line is 13 times higher than Bulgaria’s and seven times higher than Poland’s. Our pensioners are therefore much better off than those in most other countries. When we take into account the basic state pension, pension credit, free TV licences, winter fuel payments and private pensions, our pensioners are better off than those in, say, France, Sweden, Denmark and similar countries. Our pensioners are much better off than those in most other European countries. Indeed, we are about fifth in the league and have moved way up since the Government came to power. The hon. Gentleman needs to be aware of that.

Another issue that the hon. Gentleman raised was council tax, so let me say something about that. I know that pensioners are concerned about council tax increases—often, increases come from Conservative councils. We recognise that we need to help the most vulnerable, so this year is the 11th year in which we have increased local authority grants by more than the rate of inflation. By 2010-11, the increase in Government grant for local services since 1997 will be 45 per cent. higher than inflation. Council tax benefit is also important, because it goes to 2.5 million pensioner households.

I heard hon. Members’ comments on the difference between rural and urban areas. However, I represent a rural area in Warwickshire where, during the mid-90s, when John Major was Prime Minister, we had to join marches against school cuts. Teachers in Warwickshire were losing their jobs hand over fist as a result of cuts in local authority grant to that rural shire county. Under John Major, there was an 11 per cent. cut in policing. Today, police numbers are well up. There are no such marches or demonstrations at the moment, because we are funding local authorities better than the previous Conservative Government did, and if we had policies of the sort that they had, council tax would be even higher.

We seek to improve how we help pensioners who are paying council tax. Many of them are finding it difficult, which is why it is a priority for us to achieve take-up of council tax benefit. It is encouraging to note that pensioner take-up of council tax benefit increased by 2 per cent. in 2005-06—the first increase in a long time—but we need to get more take-up.

We think that about four out of 10 pensioners still fail to take up council tax benefit. That represents a massive £1.9 billion in unclaimed council tax benefit. The money is there and we are ready to provide it, but we cannot force people to take it. We want to encourage them to do so, and I note the suggestion that local authorities could write much more effectively to local people to achieve greater take-up.

I hope that the automaticity of payments that we plan for this October will boost take-up next year. It will mean that pensioners who claim pension credit by telephone can also claim council tax benefit and housing benefit automatically, with minimum form filling and fuss.

Let me say a quick word on the link. It always strikes me as odd when the Conservatives talk about the
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restoration of the earnings link. After all, they abolished it in 1983. This Government have enshrined in law their commitment to restoring the link. To make our position clear, we understand the desire for a specific date, but we have indicated that we would wish to restore it in 2012, or during the next Parliament, as the public finances and economy allow.

I have to say that this is not just something that we regard as desirable; it is fundamental to the package of reforms that we are taking forward. It is the foundation stone—the building block—for many other reforms, not only in the state sector under the Pensions Act 2007, but in the Bill that we are taking through Parliament. Restoring the link will mean lifting many more people out of pensioner poverty, and we will ensure that people are better off when they are saving on a private pension. That is a fundamental building block of our reform and it will be done—it is the key to our policies—but we need to take account of the wider fiscal and economic conditions.

The Conservatives also talked about other changes. I want to look at some of those. In the 1980s and 1990s, being old was the single biggest indicator of poverty, but under this Government pensioner poverty is down. Our record shows that, today, age is no longer a proxy for poverty.

In relation to pensioner poverty, there is a bigger issue that I want to touch on. We are committed to dealing with pensioner poverty—from Keir Hardie and Frederick Rogers, who led the campaign for the first state pension, to Clement Attlee, who extended the right of a pension to all, and Barbara Castle, who fought for better second pensions for older people—and we will continue to build on their legacy, targeting support on those most in need.

Today, the challenges of ageing stretch beyond financial poverty. I want to talk about how our ageing society presents us with new challenges. While it is still important that we address poverty—that must be the first priority—the challenges stretch wider than material well-being. The poverty of experience in old age and people’s lack of control over their own lives need to be addressed. We are developing a comprehensive strategy to ensure that old age is a time of opportunity and enjoyment, rather than merely struggle and endurance.

Through our public service agreement, we want all Departments and local authorities to ensure that their policies and services better meet the needs of older people. Just as Beveridge identified the five giants he wanted to slay, I shall identify the five giants of old age with which we as a society—not just the Government—must get to grips in the decades ahead.

The first is, of course, poverty. Our second challenge is to tackle the problems of frailty, both physical and mental, so that the onset of dementia or the loss of mobility does not mean that an older person becomes detached from society; rather, their life should be lived with some dignity and some respect. Thirdly, we must tackle discrimination, so that the 70-year-old who is still bursting with energy can continue to work and perhaps re-train in order to volunteer or contribute in some other way as an active member of the community.
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I echo what was said by the Prime Minister during Prime Minister’s Question Time: I, too, look forward to the new equalities Bill.

The fourth challenge is to tackle fear, so that older people feel confident in their homes and free to walk in their local streets, taking advantage of the public space that encourages interaction with others of all ages. The recent report by the World Health Organisation on age-friendly cities made particularly good points about that. The fifth challenge is perhaps the most difficult, and relates directly to pensioner poverty. We must tackle loneliness, so that the pensioner who lives alone, often isolated in a flat—talking to no one for a week, watching television—can find out where to go to make some friends, and can be encouraged to socialise or help in the local community.

We need progress on those new challenges to our ageing society, and we will build on our record of tackling poverty to ensure that we deal with them as well. Our Government are committed to tackling poverty and improving the lives of older people. Our achievements since 1997 are in sharp contrast to the empty rhetoric and cheap soundbites of Opposition Members, and my commitment today is that we will not rest here. In 1997 we spent £62 billion on pensioners; in 2008 the figure has risen to £90 billion, and is projected to rise to £264 billion as a result of our reforms. We are the party with the belief, the energy and the passion to do more for our pensioners. We will continue to champion social justice, so that we can continue to build a society based on fairness and opportunity for both the young and the old.

5.2 pm

Jenny Willott (Cardiff, Central) (LD): A Labour Back-Bencher told me yesterday that pensioners had never had it so good. While that may well be the case for some middle-class pensioners who bought their houses in the 1950s, 1960s, 1970s or 1980s—although they may be starting to get a little worried now—many pensioners are living close to, if not on, the poverty line. Many others are not below the poverty line only because they have undergone a complicated and intrusive process in order to claim means-tested benefits.

I agree with all the points made in the motion, although there is an important omission. It is the one thing on which the Conservatives are holding back: an immediate restoration of the link between pensions and earnings. I shall say more about that later.

When Labour came to power 11 years ago, they promised so much for pensioners. For some pensioners, life has improved. A huge 4 per cent. fewer of them live in poverty than in 1997, which represents progress, albeit a small amount. On the whole, however, pensioner poverty has remained fairly stagnant under Labour. According to the Government’s own figures, 2.2 million pensioners are living in poverty after housing costs, compared with 2.4 million in 1997. The Minister looks confused, but those are the Government’s figures. That equates to 21 per cent. of pensioners compared with 25 per cent. in 1997. However, given that in 1908, when the state pension was first introduced, 1.3 million people were considered to be paupers, the fact that 2.2 million pensioners in the same age category are now living in poverty strikes me as a slightly worrying trend.

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There has been some improvement in one area. Because the minimum income guarantee and pension credit are uprated in line with earnings, unlike the basic state pension, fewer pensioners have slipped into poverty. However, the absence of a larger problem is not necessarily much cause for celebration.

A big problem with Labour’s approach to pensioner poverty is its reliance on means-testing, which has been mentioned by several hon. Members today. The 2005-06 figures for the take-up of pension credit showed a rate of 65 per cent., or 2.6 million households. The Government estimate that 1.7 million people are missing out, and they are giving up on them by not pushing any further to increase take-up. The Government accept that they are not achieving that public service agreement target.

The Department’s annual report, which I am sure all hon. Members would agree makes gripping reading, said that in November 2007, 2.73 million households were receiving pension credit. That is positive, because it was a slight increase on the figure for 2005-06, but it prompts a question about information. Clearly, more data are available to the Department than have been published, and it is disappointing that that information was not made available for scrutiny as soon as possible. It would be interesting to know what other data the Department holds that have not been published.

John Barrett (Edinburgh, West) (LD): Does my hon. Friend agree that on the several occasions when the Minister has said that those who are most in need are receiving pension credit, he has omitted to say that those who are most in need are those who are entitled to pension credit but are not getting it?

Jenny Willott: Absolutely; that is a valid point, and I thank my hon. Friend for making it.

It is not just the take-up of pension credit that we should be concerned about. Several hon. Members have mentioned the take-up of housing benefit and council tax benefit, although I think we all accept that housing benefit is less of an issue than council tax benefit. According to the 2005-06 figures, the take-up of housing benefit was about 85 per cent., which still left more than 300,000 people who were eligible to claim it but did not. Indeed, the figures were worse in 2005-06 than under the last Conservative Government. The worst of the lot was council tax benefit, for which the take-up among pensioners was about 57 per cent. Therefore, about 2.1 million people in pensioner households were eligible for that benefit but did not claim it. Again, the figure was worse than that under the last Conservative Government.

Miss Anne Begg (Aberdeen, South) (Lab): How do the Liberal Democrats aim to end pensioner poverty if they are setting their face against targeting help at the poorest pensioners? I might be wrong, of course; perhaps they are not setting their face against it. The only way to target help at the poorest pensioners is through means-testing.

Jenny Willott: I shall come to that point later, and I shall explain exactly what the Liberal Democrats would do that would make a difference.

Given that Labour’s reliance on means-testing is a fundamental part of its targeting, as my hon. Friend
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the Member for Edinburgh, West (John Barrett) has said, it must be disappointed by the number of people who, by its own definition, should be claiming the benefit but are not, and who therefore are not getting the money that they need.

In July 2006, the National Audit Office published a report on Labour’s progress on improving the take-up rate of benefits among pensioners in which it said that the PSA target on pension credit would not be met. Why has it taken the Government two years to reach the same conclusion? The same report suggested that the Government should improve the range of data that they collect on who is not claiming the benefit, and should share those data with the Pension Service and local services so that people in need can be better targeted. The report also said that the Government should allow more local autonomy so that local service providers could better target pockets of low take-up.

Mr. Mike O'Brien: May I begin by welcoming the hon. Lady to her new position? I hope that we will work closely on pension issues in the coming months.

On the report from which the hon. Lady quoted and her suggestion that information on the PSA target has not been in the public realm for two years, she should be aware that the then Secretary of State, my right hon. Friend who is now the Secretary of State for Business, Enterprise and Regulatory Reform, told the Select Committee on Work and Pensions in July 2006 that the target was not expected to be met.

Jenny Willott: If the Minister will allow me to say so, I think that he has confused two different issues that I have raised. One related to the information that the Department holds that is not in the public domain. I also referred specifically to the statistics in the annual report relating to November 2007. On the question whether the target was going to be met or dropped, there is a world of difference between a Minister telling a Select Committee that the target is likely to be missed and the Department actually acknowledging that and dropping the target. Those are two separate things.

Mr. O'Brien: If the hon. Lady checks the record—I say this gently to her—she will find that there was a ministerial statement at the time.

Jenny Willott: I will indeed go and have a look at that.

Mr. Waterson: I join the Minister in welcoming the hon. Lady to her new position. Does she agree that none of this is terribly important when compared with the reality that this is indeed a target that the Government have abandoned? There are still 1.7 million people who are not getting the pension credit to which they are entitled. Indeed, when the Government introduced the pension credit, the Treasury calculated that 1.4 million people would never claim it. The Government have therefore always cynically assumed that large numbers of people would never get round to claiming it.

Jenny Willott: Indeed; that is a valid point. Perhaps it is because the initial estimate was that 1.4 million people would not claim pension credit that the Government
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have assumed that 1.7 million is close enough to that figure for them to let the target quietly drop.

Will the Minister tell us, when he winds up the debate later, whether the suggestions made by the National Audit Office in 2006 were looked at and attempted before it was decided to drop the PSA target? The Government appear instead to have focused on gimmicks such as the pensioner Christmas bonus—a generous £10, I believe—which will not do very much to help, with food inflation at its present rate.

One of the major reasons pensioners are falling behind the rest of the population is that, since the Conservative Government broke the link with earnings in the 1980s, the basic state pension is uprated only in relation to prices. I concur with the Minister that that is a fundamental cause of many of the problems that pensioners now have with poverty. If they do not qualify for pension credit, they can get poorer in relation to the rest of the population as they get older, as the value of their pension diminishes. The Tories did a huge amount of damage between 1979 and 1997, reducing the basic state pension from 26 per cent. of average earnings to 17 per cent. That represents a huge drop over 18 years. Unfortunately, it has dropped even further under Labour, and it is now just 15 per cent. of average earnings.

Different European countries have already been mentioned, and I shall now throw another one into the mix. The value of our basic state pension, at 15 per cent. of average earnings, is worse than in the overwhelming majority of European countries—and not just the ones that we might expect, such as Sweden and Norway. That proportion is also worse than in the Czech Republic, Hungary, Italy and Portugal. Our basic state pension is worth less in relation to wages now than it was in 1978, 1958 or even 1908.

Miss Begg: It was remiss of me not to congratulate the hon. Lady, my ex-Select Committee colleague, on her promotion when I last intervened on her. Perhaps she is being disingenuous in making these comparisons. She says that the basic state pension in Britain is worse than that of Italy, but I am sure that she knows—as I do, having met some Italian politicians—that there is very little second pension provision in Italy. Almost all pensioners there depend almost wholly on the state pension. The relative wealth of pensioners in the two countries is therefore quite different, and in Britain our pensioners are much better off.

Jenny Willott: I was making a specific point about the basic state pension because, as the hon. Lady points out, there are different systems in the different European countries. In the UK, we rely significantly more on private provision than is the case in some other European countries. I was commenting not on the overall income that pensioners receive, but specifically on the basic state pension.

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