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4 Mar 2009 : Column 287WH—continued
“This will lead inexorably to a ‘pensioners’ crisis, unless we make radical changes to pensions—and retirement.”
Let me put the obvious problems aside for a moment to thank the Government for what they have done and what they are doing. The cold weather payments have been very welcome, and the £60 that the Government recently gave was very well received. Also welcome is the intention to re-index pensions to earnings, so that we can start to rebuild a decent state pension. We need to do that in the longer run. Those moves, and much more, are not to be underestimated. I am sure that the Minister will tell us more about what the Government have been doing.
Mr. John Leech (Manchester, Withington) (LD): I congratulate the hon. Gentleman on securing the debate, and apologise that I cannot stay for the whole of it because I have to attend a Select Committee meeting this afternoon. As a co-sponsor of my early-day motion 301, on free TV licences for pensioners, does he agree that the Government could quickly and easily introduce free licences for all pensioners, not just those over 75? That would have a significant impact on pensioners’ money.
Bob Spink: I did co-sponsor that early-day motion. I was going to suggest eight measures to the Minister, but now I shall add that point and suggest nine. For the elderly, TV often is not just an optional add-on that improves their quality of life, but the only way for them to keep in touch with the real world. Giving pensioners free TV licences would be a relatively inexpensive measure and would generate an enormous amount of good will. I thank the hon. Gentleman for his intervention.
Now that I have mentioned the Minister, let me say how lucky we are to have such an excellent Minister here. She is energetic and formidable, and she brings a certain elegance and charm with her. Last night, she told me—in the Lobby, not in the bar—that she is excited about having the opportunity to push forward this debate and to set out Government thinking on policy for pensioners, and that is what we are here to do today. I know that she is unable to say much about what will come in the Budget, because of the Budget purdah weeks, but I am sure that she will take some ideas from the debate and talk to the Chancellor and the Prime Minister about them.
The Minister will find the Prime Minister’s door open on this subject. Two indomitable pensioner representatives of Age Concern—Dorothy Axford and Kath Daly, from my constituency—helped to focus the Prime Minister’s mind a few weeks ago when they met him face to face. As he remarked, neither of them seems old enough to be in Age Concern—he was quite charming. I was so proud of them because they did UK pensioners a great service by telling the Prime Minister what pensioners really need and are really thinking. They found him anxious to listen, receptive to what they were saying and keen to help. However, we all understand that the speed at which we can change policy and move forward is limited by resources.
My constituents explained that pensioners are suffering terribly under the economic crisis. It is not only bankers who are suffering. The elderly, particularly those on small, fixed incomes, are facing real difficulties. Inflation for them is far worse than it is for we hon. Members, who earn above-average incomes. Their households face completely different inflation figures from ours and massive, unfair council taxes such as those in Castle Point, which are, astoundingly, being increased by 5 per cent. this year by Castle Point borough council. Given the Government target of 2.5 per cent., and the average for the rest of the nation, that is indefensible.
Pensioners have to choose between trying to keep warm, buying food and paying for TV licences, and those decisions are becoming tougher in the current economic crisis. Dorothy and Kath thanked the Prime Minister for the excellent Warm Front initiative, and told him that it was excellent. One of them had benefited from it, but they both pointed out that it could deliver far more in value for public money if the contractor list were more flexible and local contractors could be used. Contractors could then be more competitive and could carry out a boiler change for £1,300 or £1,500, instead of £2,500. That would reduce the number of top-ups that are now being claimed, which has increased tremendously over the past three years. It would also reduce the size of the top-ups that poor people have to pay. Dorothy and Kath put that point to the Prime Minister, and he said that he would look at it. I know that that is a matter for the Department for Environment, Food and Rural Affairs, not the Minister, but I am sure that she will ensure that her DEFRA colleagues know about it.
The excellent and much-loved charities Help the Aged and Age Concern joined our delegation to the Prime Minister. They are doing magnificent work and are now combining their resources to form a single charity, or organisation, that will be totally focused and even more effective in putting the case for pensioners. I am sure that all hon. Members will wish sincerely to thank the charity’s staff, volunteers and members for all that they do. They are all stars, and they are all working to improve the quality of life of pensioners.
Age Concern in my constituency has many members—hundreds, actually. They get together for lunch on Tuesdays and Thursdays and have trips out and about. I went to a Thursday lunch just before Christmas and got heavily slagged off because the Tuesday people wanted me to go to one of their lunches, so I am going to one of those at Easter. By the way, they take no prisoners, and when I visit them they bend my ear. I know that they will be pushing for a bus service from Canvey town to Morrisons supermarket, and that they also want to keep wardens in our local residential homes as the borough council are threatening to withdraw the service. In addition, they want the council to keep the streets cleaner and safer, so that they can enjoy their environment, and they desperately want councillors to consult them properly and stop the overdevelopment that is destroying their quality of life and community. They are right on all those issues and I am fighting shoulder to shoulder with them on that. However, today is not about local issues. Thank you, Mr. Jones, for allowing me to mention my patch, but I will now move on to the economic crisis, which has hit pensioners harder than other groups.
With profits investments have collapsed and savings income has literally been decimated. Pensioners with, for example, £15,000 of savings, which provides just a few extra pounds to help them pay their bills, have seen their weekly income fall by £12 a week as a result of an interest rate cut from 5 to 1 per cent. That £12 a week does not mean much to us, I suppose, in this Chamber, but it means a lot to my constituents and pensioners. It will help them not to have to choose between food and heating, and it will allow them to have a little treat, such as a takeaway or a glass of beer. Why should they not be able to do that? Pensioners with savings of £15,000 are not rich.
Pensioners’ lack of spending ability is hitting the general economy because, compared with other groups, the UK’s 12 million pensioners generally have low debts and tend to spend more of their net disposable income. As Dr. Altmann states:
“Cutting rates is like a tax increase that will reduce their spending.”
That damages the rest of the economy. If we want to get money out into the economy and for people to start spending again, putting it through pensioners is probably the most reliable way of doing it.
Mr. Andrew Pelling (Croydon, Central) (Ind): I am sorry to distract the hon. Gentleman slightly from his macro approach and from talking about the economy, but in dealing with this shortfall, I understand that he is active in his constituency in trying to encourage pensioners to have full access to their benefits. What approach does he take to that, and does he not think that a better take-up of benefits would solve some of these issues and be more of a stimulant to the economy, as he was trying to suggest in his comments?
Bob Spink: I am grateful to the hon. Gentleman for that intervention. I assure you, Mr. Jones, that it was not planted and that I was not expecting it. I will come on to benefit take-up in one of my eight suggestions. The hon. Gentleman is right: about one in three pensioners lose an average of £1,477 a year because they do not take up, for example, pension credit. We have debated that matter in this Chamber, and I have run a local campaign on it using my local newspaper the Yellow Advertiser. I have taken a full-page advert that explains to pensioners that the pension credit is theirs by right and that they should claim it. I have explained to them how they can claim it and that they can come to my surgery and let me claim it for them if they feel challenged by picking up the phone. Of course, the means test is one of the reasons why people are not encouraged to claim pension credit and find it difficult to do so. Many pensioners fail to do so. The hon. Gentleman makes an extremely good point, and I thank him.
Mr. Paul Truswell (Pudsey) (Lab):
I, too, congratulate the hon. Gentleman on securing the debate. I also apologise for the fact that, because of the short notice of it that we had, I will be unable to stay for the entire debate. Does he share the concern of one of my constituents who recently wrote to me to say that, when he reached the tender age of 65, he was not told where and when to pick up his pension; he was not informed about what
benefits he might be entitled to; and he was not even given any information about age-related tax allowances? Is it any wonder that so many pensioners do not claim what they are entitled to and, in some cases, end up paying more tax than they should?
Bob Spink: That is an extremely good point, and I am grateful to the hon. Gentleman for making it. The Minister will, I am sure, address benefit take-up. When someone reaches a certain age, they should automatically receive not only the pension that they have paid into all their life, but clear and easy-to-read information about what benefits are available, so that they can take advantage of them. I am astounded that the Government have not done more, although they have got their act together to set up programmes—I suspect that we will hear about them from the Minister.
There are many different types of pension. There is that based to an extent on social insurance—the state pension—and that based on long-term savings by the individual, employer, or both.
John Mason (Glasgow, East) (SNP): I, too, congratulate the hon. Gentleman on securing the debate. He has just mentioned the issue that I was waiting for: employers contributing to pensions. Does he agree that we cannot have a purely public sector answer and that there must be a bit of private sector and individual thinking as well? One option would be to make it compulsory for all employers to contribute to all employees’ pension funds, because if we could push up the amount that people get out of a pension fund, the public sector could target the people who really need help.
Bob Spink: That is an extremely valid point. Of course, the Pensions Act 2007, which the Government recently put through Parliament, moves a long way to achieving that. I think that that Act received all-party support in the House; it is a good Act. The problem with relying too much on employers is that the returns on equities and employers’ ability to fund pension schemes have been greatly challenged in the past year. We must develop public policy to address that and fill that gap.
In the 1980s and 1990s, with rising equity markets and a falling state pension that was driven down by Government social policy—or, as some might say in relation to the ’80s, lack of social policy—employers took the lead from Governments and started to provide decent pensions. That was a good thing—God bless them. However, with people thankfully living longer and the sudden fall in investment and stock market returns, private pensions are no longer able to provide sufficient income alone. The state must therefore step back up to the plate and do more. What the state has done so far has meant wide, extensive and demeaning means-testing, which is a problem, as I have already discussed.
Let us try to plough new ground in relation to the problem. The state has long encouraged pension savings, but opting out costs the Exchequer £10 billion a year. Pension savings tax relief costs us £30 billion a year, and half of that—£15 billion a year—goes to a few, rich people who are top rate taxpayers. That situation is like the Pareto rule. I am not even going to go anywhere near the 50-year-old banker’s pension this afternoon—we have heard enough about that over the past week or
two—so let us focus on how effective and efficient the use of that £15 billion really is. Could it be used to help poorer pensioners, rather than being spent on yet another tax break for often tax-avoiding rich people?
I am talking more like a socialist than a Tory, but so be it. The answer is clearly that, yes, a major policy rethink is necessary, so I would like to set out eight specific responsible and workable suggestions to add to the one on TV licences that was made earlier. Some of them were suggested by Dr. Altmann, and I am grateful to her for her paper.
First, we should make computers talk to each other to automate pension credit awards. My campaign in Castle Point has already been discussed. I believe that many more people in Castle Point are now claiming their pension credit—I hope so, anyway. I used my communications allowance to run that advertising campaign and several others. It is absolutely right and proper that MPs should use the allowance to do good work in their constituencies and to inform constituents about things such as pensions, benefits, planning issues and so on. I try to do that, and I encourage other Members to do it.
Secondly, we should change the pension credit rule that assumes, in this day and age, an utterly ridiculous 10 per cent. return on savings. That is highway robbery. Thirdly, we should end the £5 a week earnings disregard. Fourthly, the Government should simply say “sorry” again and reinstate the 10p tax rate for pensioners and the lowest paid. Fifthly, we should change annuity rules in the coming Budget, so that we can give people who have to buy annuities over the next few months and years more flexibility. They are being badly stuffed at the moment, but the situation is not their fault. We should help them.
My sixth suggestion is that we should now end the interest rate cuts. It was right to cut them, and I congratulate the Government on their policy of action to try to work our way out of the world economic crisis, but we have gone far enough on interest rate cuts, and I hope that they will now stop.
My seventh point is that we should pay £140 per week to all those aged 75 and over. That would end savings disincentives and provide fair and equal treatment of women, which is something that I have argued for in the House. I voted against the Tory Whip on the issue a year ago. That policy would remove means-testing for almost all the elderly, which would be a good thing. Dr. Altmann estimates that it would cost less than £3 billion a year—not a lot of money when one considers the £15 billion a year that we waste on tax relief on wealthy people’s pensions, which does not go a long way towards changing their quality of life.
My eighth and final recommendation is that we should issue specific pension and annuity gilts to take advantage of current low yields in the market and to help pensioners and the pensions industry.
The question is whether we want a fairer society. Those polices would be fair, and they would be popular. I draw attention, if I need to—I probably do not—to the much greater propensity of elderly people to vote. I ask the Conservative and Labour parties to say today that they will consider my suggestions. I hope that they will and that they will not simply slag me and each other off and fail to address the needs of vulnerable people and pensioners.
I am so lucky to be an independent MP. I have to read the Order Paper for myself, of course, but I am free of party Whips. Martin Bell, God bless him, once quipped that his party conferences were all party and no conference. Joking aside, the fact is that, as an independent, I can be terribly open and honest. I can say what I truly believe needs saying, and I try to do so. In a hung Parliament or one with a small Government majority, either of which is very likely after the next general election, an independent would have great influence, so I hope to return after the election to fight for pensioners, for people and for fair play in politics.
The financial sector has gone from the extreme of embracing risk to the opposite extreme of being utterly averse to it and thereby harming individuals and businesses alike. In short, it is now strangling the economy. It messed up, and now it is making businesses, pensioners and individuals pay. The stock market collapse has wiped billions off the value of investments and stripped massive sums out of pension funds, including those of charities. The credit crunch has hit the third sector like a steamroller, and it is not only limiting the sector’s ability to raise money but leaving it with a big hole in its pension funds and massive problems as a result.
The Parliamentary Secretary, Cabinet Office, the hon. Member for Cardiff, West (Kevin Brennan), who has responsibility for third sector, recently announced improvements to the grassroots grants programme for building capacity, and I am grateful for that. He is a good man. Nevertheless, many charities face large deficits. The debate on the third sector may be for another day, but I put down a marker on it. We must return to it, probably in this Chamber.
Policy for pensioners is most important. There are many issues that I have not been able to cover today, such as incentivising people to work beyond 60 or 65, so that they do not fall off the cliff edge of retirement but get those bonus years and phase out of full-time work by doing part-time, third sector or voluntary work and continue to contribute their wisdom, reliability and application. They have so much to offer.
I have not mentioned health care or the charging and care regimes in residential homes. Those are all important matters for pensioners. I am sure that the debate will develop over the coming months. Again, I sincerely thank all the hon. Members who turned out for this debate and you, Mr. Jones, for your latitude.
3.6 pm
Mr. Andrew Pelling (Croydon, Central) (Ind): I, too, very much thank Mr. Speaker for the opportunity to hold this debate on policy on pensioners. The terms of the debate are drawn quite widely to allow us not only to discuss the recent developments in the financial markets, as the hon. Member for Castle Point (Bob Spink) has done, but also to look at the experience of senior citizens in terms of services for the elderly that are provided by local authorities.
I congratulate the hon. Gentleman on securing this debate. As I implied in the question that I posed to him, he has been a strong campaigner for the benefit rights of senior citizens in his constituency. It was good of him to spend some of his communication allowance on that important issue. He referred liberally to Dr. Altmann, and I have attended some of the meetings that she has
addressed in the House. I would like to contribute to this debate by discussing the experience in my constituency, and perhaps to draw some lessons from it. I am particularly grateful to the Croydon Older People’s Network and to the Croydon Retired People’s Campaign for the advice that they have given me, both in recent years and for this debate.
It is helpful to consider the experience of senior citizens in Croydon, bearing in mind that Croydon is a top-class local authority for adult services, or, to use another term, social services. Indeed, it was up for a nomination for a beacon award only yesterday evening for the good work that it does. It is a three-star authority for social services, which is the comprehensive performance assessment equivalent of a four-star rating. Although it did not secure the award yesterday—[Interruption.] I was under the impression that it had not, and am grateful to be corrected. I heard from the authority that it had not secured the award, but it has, which is excellent. It is recognition that, despite some difficult financial circumstances, an additional £6 million is being provided for adult services this year, including support for the elderly.
There are very real challenges in Croydon. I was grateful for advice from a Croydon voluntary action official who advised me that because of the adverse weather conditions in particular, as well as the current level of fuel poverty benefits, the Mayday, our local hospital, has had more elderly residents attending accident and emergency with chronic cold-related illnesses. I have not had the chance to check that with the Mayday. When I last called the chief executive’s office for information, I was referred to the press department, which suggests that I was not going to get far—being referred to the press department normally means being supplied with very limited information, rather than extra information. Clearly, however, senior citizens have been put under stress by having to face higher fuel bills this winter, and Age Concern has said that one in three pensioners now face fuel poverty.
It is interesting that Croydon Retired People’s Campaign estimates that 10,000 senior citizens in Croydon—the borough is quite large and has more than 350,000 residents—are living in poverty, defined as having an income of less than £7,850 per annum. In the context of the discussions ahead of this year’s Budget, it is interesting to consider the point made by the hon. Member for Castle Point. Pushing extra money in pensioners’ direction is an attractive option, because they are likely to have a high propensity to spend it. Their incomes can be very limited, so those moneys would be likely to find their way back into the economy. The past financial year was stressful for pensioners, because the impact of the high rate of inflation fell particularly on them. A high percentage of their expenditure goes on food and fuel, so they were particularly disadvantaged.
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