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4 Mar 2009 : Column 293WH—continued
It is encouraging that we have strong organisations in Croydon, such as the Croydon Retired People’s Campaign and the Croydon Older People’s Network, which has a membership of 400 senior citizens. Those organisations have been conscientious in getting feedback on many of the good initiatives that the Government have taken, including “Putting People First”, which showed very good vision in its approach to the care needs of the
elderly. In the consultation on that initiative, it was interesting that the Government conceded that two thirds of senior citizens felt that they were not exactly getting a fair deal on their care needs. The responses from Croydon suggested that thousands of senior citizens felt that they were not getting fair access to services. As Members of Parliament, we often hear senior citizens express concerns about their different experiences of agency and permanent staff whom social services employ in adult services. Nevertheless, I do not want to give the impression that I am decrying the quality of services to senior citizens in Croydon.
The hon. Gentleman referred to the unfortunate 5 per cent. increase in council tax that his local authority is introducing, and council tax is an important issue for senior citizens. I have met many widows—as one does as a politician, knocking on doors—who live in properties with which they are reluctant to part because of the family memories they hold. Those women’s savings are often heavily eroded by significant increases in council tax and the transference of other taxes to council tax, and such developments hit them particularly hard.
John Mason: The hon. Gentleman mentions the way in which council tax hits people on low incomes. Does he accept that it is basically an unfair tax and that although it might be a good thing to freeze it, it would be much better to replace it with something such as local income tax?
Mr. Pelling: I thought that the hon. Gentleman was going to boast about the council tax freeze in Scotland. There is no doubt that his proposal would lead to a significant improvement in senior citizens’ circumstances. Governments have struggled—at least since the Layfield report on local government taxation—and a council tax freeze at this stage would be helpful.
On pensions generally, there are other considerations. Croydon council recently announced that in continuing to provide proper services to senior citizens it must meet the competing demands involved in keeping provision under its own pension fund up to scratch. The current financial crisis makes things extremely difficult for the local authority, and it has recently been suggested that its pension fund faces a £200 million shortfall. I know that that sounds like a large number, but I suspect that the situation is very similar in many local authorities, and that is a significant challenge. That said, Croydon council always pursued a rather extravagantly aggressive stance of investing its money only in equities, which does not work well in the current circumstances.
John Mason: On the point about local government pension funds, groups such as the Institute of Directors have suggested that we should get rid of such funds because they are unfair on the private sector. Does the hon. Gentleman agree, however, that they are better than nothing and that it is good to top them up a bit or help them in some way? The majority of people do not get a huge amount from them, and very few get a lot. The average worker in councils such as his and mine would not get a huge pension from these funds.
Mr. Pelling:
I agree entirely. I was somewhat perturbed by the suggestion that was made. It is a bit like what is happening in the Republic of Ireland. My local authority
has suggested that it lobby the Government to be allowed to increase employees’ contributions from 6 to 8 per cent. Going down that route would give rise to great consternation and great disruption to good industrial relations in local authorities.
I am, however, allowing myself to drift far too far from the issue of fair access to care. I am interested in the response from senior citizens in Croydon on this issue, because they tend to find that fair access to care is complicated, convoluted and sometimes lacking in compassion, despite the fact that the Government have the very best intentions. Indeed, the Croydon Older People’s Network said:
“Older people in Croydon feel too many are missing out on essential services and are experiencing ill health and isolation because their needs are not being met”.
It is fair to say that despite the local authority’s best intentions, it tends to concentrate its support on pensioners with the most chronic needs.
We need to remember that many carers are pensioners or are about to become pensioners. Like many colleagues, I have come across people who have sacrificed almost all of their career, right up to becoming a pensioner. They have stayed in social housing with their mother or father, who has then passed away. Having made that caring commitment, and saved the nation a great deal of money, they find that they are unable to continue with the tenancy. I am currently dealing with the case of a gentleman who looked after both his ailing mother and his father. He lived in the property for 46 years, but now faces the prospect of being turfed out.
We need to bear in mind the fact that carers in employment, who benefit from the Government’s generous carer’s allowance, face difficulties if they want to leave employment and take up other benefits, because they will lose the carer’s allowance. Rather perversely, the system encourages people to stay in employment who would perhaps save the state additional moneys by acting as full-time carers. I see many such problems as a director of Croydon Carers Centre. True independence is a distant dream for many older and disabled people, and charging and means-testing dictate that many older and disabled people are living their life in poverty or struggling to cope. The Government recognised that in their “Care, support, independence” consultation, and should be supported on the issue. However, pensioner poverty is so widespread—in the past year it has risen by perhaps 300,000—that it may take the total number living in poverty, when that is defined as being on less than 60 per cent. of the median population income before housing costs, to 2.5 million.
Many Members of Parliament often come across women pensioners living in poverty, because those women are not entitled to the full basic state pension. Many of them have paid not paid full attention to the matter in the past, or they may have been badly advised about the small stamp and been unable to pay their national insurance contributions, because of the need to care for their families. I know that the Government are concerned about that and want to deal with it, but it does not look good for our country that a recent European Union survey found that only pensioners in Latvia, Spain and Cyprus are more likely than those in the UK to fall into poverty. The Institute for Fiscal Studies concluded that the proportion of pensioners below the poverty threshold
will remain at its current level at least into the next decade, despite the best intentions of the Government to reform the process.
For all of us who have benefited from saving for our pensions, the financial crisis offers a very bleak prospect, but there may be things that the Government can do to deal with some effects of the reduced interest rates, which can significantly affect pensioners, as the hon. Member for Castle Point mentioned. Age Concern takes the view that income from savings provides a modest but important top-up to the pension and benefits of many low-income pensioners, but the average gross savings rate on an instant access account fell from 4 per cent. to 1.6 per cent. over the year to January 2009. That can greatly affect the likelihood of a pensioner having a reasonable standard of living. For a pensioner couple with savings between them of £10,000, which is a substantial sum, the fall represents a reduction in income accrued from interest from £400 to £160 over a year—a loss of £4.62 a week. Perhaps it is possible for the Government to give consideration to the £16,000 upper capital limit for receiving housing benefit and council tax benefit. The rate has been frozen for several years, which is another source of frustration for older people, who feel penalised for saving. It is appropriate for the lower capital limit for income-related benefits to be increased to £10,000. The assumed rate of income for people with savings above the lower limit could be reduced to £1 in every £1,000, and the upper capital limit for housing benefit and council tax benefit could be increased.
I accept that it is easy for me to come to the Chamber and make suggestions about how things might be treated to deal with pensions needs, when the demands on the Government’s finances are severe in the economic downturn. However, to repeat the point that I made earlier, if we want to stimulate the economy, we could do so by putting more money in the hands of pensioners, which is much more likely be spent locally in communities than it would if we took other economic initiatives. Despite the demands on the Government’s finances, that might be justifiable from a macro point of view. From a micro point of view, I have spoken about Croydon, but I think that something can be said about the positive responses to the consultation carried out by Croydon Older People’s Network and Croydon Retired People’s Campaign: the Government’s action is appreciated by Croydon people, but nevertheless the shortfall in standards of living affecting many Croydon pensioners suggests that further urgent reforms are required.
3.25 pm
Paul Rowen (Rochdale) (LD): It is a pleasure to serve under your chairmanship, Mr. Jones. I congratulate the hon. Member for Castle Point (Bob Spink) on securing the debate, and other hon. Members, including the hon. Member for Croydon, Central (Mr. Pelling), on taking part. It is a timely debate. In the run-up to the Budget it is important to discuss issues affecting pensioners, and pensioner poverty. As the hon. Member for Castle Point said, it is a huge issue, but I want to focus on some practical steps that I believe the Government should take.
Inflation has hit pensioners much harder than most other people, because their spending on fixed costs such as food, fuel or council tax takes up a much higher proportion of their income than is the case for most
other people. Figures provided by Age Concern show that in August last year, while the rest of us were dealing with an inflation rate of about 5.4 per cent., for pensioners it was 9 per cent. That is why in the past 12 months the number of pensioners in poverty has risen from 1.8 million to 2.1 million. This winter approximately one in four elderly people is opting to stay in bed because they cannot pay their fuel bills, and one in 10 must cut back on what they spend on food, or at least buy cheaper types of food, because they cannot afford not to. It is not a mark of a civilised society when pensioners, who have given so much for us, are forced into such choices.
I hope that the Government will recognise such concerns in the Budget and deal with the issues, such as fuel poverty. Fuel bills have increased by more than 40 per cent. in the past 12 months; yet in the pre-Budget statement the maximum increase in support for someone over 80 is only 25 per cent. The average fuel bill now is £900 and the maximum that any pensioner can get is only £400. There is a huge disparity. The Government’s flagship policy is of course pension credit, but it has been dogged, despite all the Government advertising, by the stubborn refusal of a huge number of pensioners to claim what they are entitled to. The Committee considering the Welfare Reform Bill reported yesterday, and I welcome the fact that the Government are introducing a pilot programme to auto-enrol people and pay them the benefit to which they are entitled. That goes some way, but not far enough.
The poorest pensioners are those over 75, which is logical, because anyone who retired at 60 or 65 with any savings would, over a period, exhaust them because the state pension is inadequate. That is why it was regrettable that, when the Government changed the rules on backdating benefit claims, cutting the time to three months, they did not take account of information provided by Citizens Advice. The information showed that people over 75 would be worst affected by the change in backdating, because most older folk are very proud, quite independent and do not rush to claim something to which they are entitled. By the time they do make a claim, they usually have a large number of debts, so I regret that policy. It is why we would move to a citizens pension—£124.05 a week for a single pensioner and £189.35 for a couple—over two Parliaments. Immediately, however, we would grant it to all pensioners over 75, because they are the people who currently have the greatest need.
The Government have an opportunity with the Budget to demonstrate that they are concerned about pensioner poverty and its effects. As the hon. Member for Castle Point rightly said, the Government can introduce several measures to help those people. It is quite wrong that the notional interest for people’s savings is still 10 per cent., because the amount of money to which a person is entitled when they apply for pension credit is eroded. The loss of the 10p tax band has also adversely affected a considerable number of pensioners. I do not argue for its reintroduction, because we believe in the principle of simplification, but it is important to raise the threshold to ensure that pensioners’ income is sufficient, and to take account of the cut.
The Government have not tackled fuel poverty. Yes, the fuel allowance has been increased, but the Secretary of State for Energy and Climate Change, despite promising that he would legislate if necessary to do something
with the fuel companies, has gone down the Ofcom route of trying to persuade people instead. The changes that have been made still mean that people who have card meters pay £51 a year more than those who are able to pay by quarterly instalments, and that is neither fair nor right. Those are some of the issues that the Government must tackle.
The earnings link must also be restored. I accept that the link with prices is right at the moment, but we have always said that the link should be with prices or incomes. The long-term change would more than make up for the losses. Although the prices link is currently more advantageous, in the longer term the earnings link must be restored.
During the passage of the last Pensions Bill, my noble Friend Lord Oakeshott tabled an amendment to make flexible the period pensioners have in which to purchase annuities. Sticking to the rigid age rule of 75 simply does not make sense in the current market. I know that the Minister cannot tell us what is going to be in the Budget, but I hope that she appreciates just how hard done by many pensioners feel due to the rigidity of that rule. The changes that Baroness Hollis secured for women are likely to benefit only a small fraction of those who are entitled to backdated payments, and that issue must be looked at. One change that the Government are introducing is a carer’s allowance. It will go some way towards helping, but, for those women who have lost out because of what they have done in the past, payments must be made up.
There are 12 million pensioners in this country and they have given their best to serve it. The Government are helping them to some extent, but more needs to be done. If we can afford to pay for ex-bankers’ huge pension increases, whether approved by the Government or not, we ought to consider the ordinary man in the street. I hope that the Minister will take account of that point.
3.35 pm
Mr. Nigel Waterson (Eastbourne) (Con): It is a great pleasure to serve under your chairmanship, Mr. Jones. I congratulate the hon. Member for Castle Point (Bob Spink) on securing the debate, and I thank the hon. Members for Croydon, Central (Mr. Pelling) and for Rochdale (Paul Rowen), who, in their different ways, made very helpful contributions.
It is helpful that the hon. Member for Castle Point has chosen this subject to tell us what his party might do. However, I saw only a couple of days ago that there was something of a distraction involving his colleague, Mr. Robin Page, who spoke about
“accusations of rigged internal elections, tales of extravagance and high living in Brussels”.
Bob Spink: On a point of order, Mr. Jones. I am an independent MP who does not belong to any political party. I do not know what the hon. Gentleman is talking about, and he should really get his facts right.
Mr. Martyn Jones (in the Chair): Order. Can we keep to the subject of pensioners?
Mr. Waterson: I may have missed it, but if the hon. Gentleman has now joined the general exodus from the UK Independence party, I commend his common sense. I just wonder where his attentions will alight next. I wonder whether he has tried the Liberal Democrats.
In all fairness, although the hon. Gentleman’s own one-man party may not be in government, he has given us all a chance to look at the current Government’s policy and, perhaps, those of the next Government. I join him—I think it was him—in what he said about the two organisations, Age Concern and Help the Aged. We have all enjoyed huge assistance from them over the years, and it is great that they are about to embark on a joint life together under the provisional name of Age UK. Indeed, we have all benefited from the organisations’ extremely informative briefing for this debate, in which they primarily talk about three different issues: first, rising pensioner poverty, much of it due to low take-up of benefits; secondly, the impact of interest rate cuts on savings, which has already come up in this debate; and thirdly, the plight of older workers in the economic downturn.
I shall focus on the Government’s disastrous policies in respect of pensioners over a number of years. We could start with the decision on corporation tax in the Government’s early days—the policy that they kept secret during the 1997 election campaign—going right the way through to the current economic turmoil, which is affecting pensioners so much. Back in 1997, the now Prime Minister said in his party’s manifesto:
“We believe that all pensioners should share fairly in the increasing prosperity of the nation.”
That is a very fair aspiration for a political party but, in recent times, there has been a double whammy: the Government not only failed to match that pledge while the nation’s prosperity increased, but now seem to be ensuring that pensioners bear the brunt of the recession and of the nation’s declining prosperity, both of which are due at least in part to the Government’s own policies.
There are 2.5 million pensioners officially living in poverty—a figure that, by now, I am sure is well out of date—and one in three pensioner households live in fuel poverty. Many pensioners face huge problems and, as Age Concern said in its research last year:
“60 per cent of low income pensioners were struggling to get by... Two-thirds were cutting back on gas and electricity”.
All those factors have got worse rather than better. More than one Member has today raised the issue of the inflation rate that affects pensioners. Owing to the fact that such a high proportion of their fixed income is spent on food, utility bills, heating and so on, they face an inflation rate in the real world of something like 9 per cent. Going round my constituency, which has more than its share of pensioner households, I find that many pensioners fear utility bills or the council tax demand arriving on the doormat. We have seen huge council tax rises under this Government. Our policy of a two-year freeze on council tax would be extremely popular.
On the earnings link, we could have theological discussions about what happened in 1980—when the hon. Member for Castle Point was a loyal Conservative, I am sure, and probably a Thatcherite—but in the here and now the Government are saying, “Yes, we will restore the link, but not yet.” I understand that their current policy is that they will do it sometime in the life of the next Parliament. I think it unlikely that they would have that opportunity, but it would be good to hear from the Minister whether that thinking has moved on at all.
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