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10 Dec 2009 : Column 154WHcontinued
Had we not broken the pensions-earnings link, we would have solved much of the problem already, but the NPC suggests that to make sure that no pensioner lives below the poverty line we need a basic state pension of £165 a week, which is an enormous increase. Of course, I have suggestions about how we would achieve that. It would mean much greater contributions. However, for the future we must think about radical reforms. With the gradual-even rapid-demise of occupational and private schemes, we must look towards a compulsory state scheme for the long-term future, if people like my children and grandchildren are to have any kind of decent living in old age, assuming that they do not have enormous incomes from which they can save vast amounts.
For an adequate state pension, the NCP talks about £165 a week, and that is a fine place to start. One way in which we could achieve that would be, first, to roll up all the payments that are made at the moment-pension credit and the winter fuel allowance-and build them all into the basic state pension, so that there are not means-tested bits and little add-ons. The winter fuel allowance, much as I welcome it-it is very useful-is said to be targeted on the poor; but actually it is a benefit that is not even taxed, so the rich get it as much as the poor. It is regressive in that sense.
If the winter fuel allowance were to be built into the basic state pension, which, with total income, would be taxed, what was taken from the rich could be recycled to be built into the system at the bottom and help the less well-off. A taxed system is much better than one that is either means-tested or, indeed, not taxed or means-tested at all. I suggest a 54-week year for the payment of the basic state pension, with a double payment in January and December, which would have the same effect of extra income in the winter, when it was needed to help people. Instead of the winter fuel allowance, people would get that double payment in December and January, to overcome the problem, and pensioners would get the extra lump sum that they enjoy so much.
Such an approach to the basic state pension would, however, still mean a fairly basic standard of living for many people. I defy any Member of Parliament to sustain the standard of living to which they are accustomed on £165 a week; nevertheless, a lot of poor pensioners would think it a good start. Still, many people would want to save beyond that. Voluntary saving in the end does not work for many people. The only system that would work would be a compulsory one-a compulsory universal state earnings-related pensions saving system. That is the only way forward.
There would be two elements-the basic state pension and a compulsory state earnings-related pension scheme for everyone. The contributions would be substantial and people would know what they would receive in the end; it would not be subject to economic conditions, the stock market, interest rates or whatever. That is the way forward: voluntarism will not work. People live for today and there are pressures in daily living which mean that they do not save. The amounts that must be saved to provide a serious pension are enormous. People might say, "I'll put away £50 a week." That would not give very much over a lifetime; it would give something, but not enough. Many forecasts have been made about the kind of money that must be paid. Private schemes are inefficient, anyway. The great advantage of a national scheme is that it is easy to administer and very efficient,
and we could have a large national savings fund, which could be used for investment purposes and would generate its own income, particularly in public infrastructure, for example. It would be a comprehensive state scheme, with a large fund that would mean that people's pensions were secure for the long term. That is the only serious way forward.
I do not believe that we have yet addressed the problem at all seriously, although I welcome the marginal changes that have been made, and the worthwhile suggestions in the report. We must be much more radical if our children and grandchildren are not to suffer poverty in old age.
Miss Anne Begg (Aberdeen, South) (Lab): I apologise for being late to the debate, Mr. Williams. I am happy to be here to add to what has been said by other members of the Committee who put together the report, and I congratulate the Government on having done a huge amount in the policy area of pensioner poverty. Often when a Government achieve some successes, we pocket them and say, "Thank you very much," and then add, "And what are you going to do for us now?" My remarks this afternoon will be in that mould as well; there are other things that the Government may want to look at.
I endorse the comments made by my hon. Friend the Member for Blackpool, North and Fleetwood (Mrs. Humble), who covered much of the meat of the report. I do not want to repeat all that she said, but there is no doubt that the incomes and lives of women pensioners in particular have been transformed by the Labour Government, especially by the introduction of the pension credit. They are much better off than they were under any previous Government. That is partly because many of them did not qualify for the basic state pension, or had gone through a marriage break-up and so no longer had their husband's contributions to their basic state pension. Also, women live longer, and there is an ageing population of women who, before the Labour Government were elected in 1997, were living on very modest means. I still find, particularly when I visit sheltered housing in my constituency, women who say that they have never been so well off, and that they are very pleased with what the Government have done.
However, the Government have also gone beyond what is in the report in considering the future of women as they reach retirement age. I am very pleased about what was done in the Pensions Act 2007 to ensure that the women pensioners of the future would not be in the same position as those of today-that they will be able to build up national insurance contributions and qualify for the national state pension, and will have an income in their own right. Society has changed and it is no longer good enough for a woman to depend on her husband's pension contributions so that she will have an income. Those practices led to the issue that has never been properly resolved-I do not think that there is a resolution-of married women who paid the small stamp in the mistaken belief that it would not affect the pension they received. Of course, it did not affect them in terms of the 60 per cent. that they received through their husband's contributions, but it did affect their contributions to a pension in their own right.
Those women feel particularly aggrieved when they get a letter from the Pension, Disability and Carers Service telling them that their basic state pension will be 12p a week. They cannot understand it; they have worked all their life and that is what they get-or rather, they get more, because they get the 60 per cent. from their husband's contributions and the 12p, but it still rankles. That was often sold on a false prospectus. Hopefully, the Government's more recent legislation will mean that future generations of women will not face that and will manage, even though they might still have roles as carers. I am glad that the Chancellor announced in this year's Budget that grandparents who look after their grandchildren would qualify for the carers element of national insurance credits. Those provisions are all really important.
I do not intend to speak for long, but I would like draw Members' attention to the personal expenses allowance, which my hon. Friend the Member for Blackpool, North and Fleetwood mentioned in passing. I appreciate that it is not the direct responsibility of DWP and that the Department of Health makes decisions on that, but our Committee recommended in another report that the allowance should be doubled. The Government did not quite say no in their response to that report, but they did say that doubling the allowance from £20 to £40 would cost £150 million.
I want to make another plea for an increase in that allowance, not just because my mother is now in a care home so I am slightly more attuned to it, but because there are other people, not just pensioners, who get caught. Some people who live in supported accommodation, who might now be pensioners, are disabled. Where local authorities have cut back on transport, entertainment or day centres, for example, the pensioners and disabled people who live in care homes are now expected to pay for all of their social life, all their clothes, all their toiletries, any presents, hair-dos or anything else out of £20 a week. That really is not enough. It does not give them the dignity to have an independent life.
We must remember that people are living longer and so are sometimes fitter when they go into homes than people in homes have traditionally been, so they expect to go out for a Sunday lunch with their family, for example, but they cannot pay for it. They cannot take their grandchildren out on their birthday because they only have £20 a week to spend. In any case, they could not afford the taxi if they lived in an area controlled by a council like Aberdeen city council, which has taken away their taxi as well. There is a need to address that issue. It is not a huge amount of money, but it could make a big difference to people who have worked all their lives and who are paying high costs for their care. It would be nice if they could hold on to a bit more to spend themselves.
Finally, I would like to ask about council tax benefit. We know that a large number of pensioners are put off claiming because it is a benefit. Those who probably need it most are owner-occupiers, and to them claiming any kind of benefit is anathema. In fact, it is a badge of pride that they have never claimed anything in their life. Sometimes they complain that they get nothing. On that point, I must pay tribute to the Government,
because at least we can now say to those pensioners who say they get nothing, "At least you get your winter fuel allowance and your free bus travel."
It is perhaps a slightly different point from that made by my hon. Friend the Member for Luton, North (Kelvin Hopkins), because sometimes we have to ensure that the middle classes feel that they are getting something for their money in order for them to pay the tax and help sustain our welfare state. I ask the Minister, when are we going to change the name of council tax benefit? It is almost as simple as that. I understand that the Government are already minded to change the name to council tax rebate, but when will that happen?
Thank you, once again, Mr. Williams, for allowing me to speak in the debate. The Committee members work extremely well together, which is why we have successfully produced a very good report, and I am happy to support it.
Mr. David Drew (Stroud) (Lab/Co-op): I am delighted to take part in this debate on the excellent treatise from the Work and Pensions Committee. I apologise that I have to leave earlier than I had anticipated, because I wish to speak in the debate in the main Chamber, but I will make some brief comments.
I will start with two points of congratulation. One of them is addressed in part to the Department for Work and Pensions and in part to the Treasury. We would have many more pensioners living in poverty had the Government not bitten the bullet and introduced the financial assistance scheme and, latterly, the Pension Protection Fund. We had our arguments when that went through Parliament, but the scheme's benefit is shown when we talk to people who are now receiving moneys after funds to which they had contributed over their whole lives went into administration through no fault of their own. The sums are not necessarily as high as some of us would like, as we believe that they should be fully compensated, but as far as I can tell they are receiving money automatically-I do not like the word "automaticity". That particularly vulnerable group would have every reason to feel let down, principally by their employers, secondly by their trust fund administrator, and thirdly by the Government, potentially, had we not done something about it. That is something the Government ought to be proud of, because it is good news that it seems to be working, and that pride ought to be shared between the DWP and the Treasury, as they overlap on that.
My second point of congratulation, which I have mentioned on other occasions, is for the DWP directly, and I only wish that it would say more about it and take some congratulations. It is about the village agent scheme, which was pioneered in Gloucestershire. The DWP employed people in village areas to go out and proselytise-the aim being to find out whether people were fully taking all that they were entitled to in pension credit and various benefits. Despite criticism in the early days from some people in the localities who thought that those involved were interfering busy bodies, the scheme, which has now been taken on by Gloucestershire county council, because sadly the funding ended, has been an unalloyed success.
I hear nothing but good about what has happened as a result of the scheme. People who had no reason to believe that they were entitled to claim now do so just because someone came round, sat down with them and helped them fill in the forms, asking, "Are you sure you are not entitled to carer's allowance?" For the first time they are receiving benefits that make a great deal of difference. I say to the DWP that when it gets it right it ought to be out there shouting it from the rooftops.
There is the argument about the £5 billion that is not claimed, as my hon. Friend the Member for Luton, North (Kelvin Hopkins) mentioned. That is why we are going out to try to get people to claim and going the extra mile in rural areas, because the people there are too old or incapacitated to ever go to a citizens advice bureau. Where we have done it, and done it right, let us say so. It might be a relatively small number of people, but they are eternally grateful-I know because I have met them. They are also shocked because they had not realised how poorly off they were. That is often the way-they often do not claim because they do not see themselves as particularly poor, even though they are struggling from day to day.
My third point is not one of congratulation, but of realism. We need to look far closer at the relationship between pensioner poverty and the low quality of life of many of our older residents, particularly in rural areas. The evidence, if Stroud is anything to go by, is that the oldest residents live in the oldest property and, sadly, face the most immense problems with heating and just with the daily grind of getting to the shops and so on. As much as that is to do with quality of life, rather than something we would necessarily term poverty, it is really about what many of our older people face day in, day out.
Kelvin Hopkins: Recent reports suggest that because of fuel price increases, several thousand more pensioners died last year than would have died if the prices had not gone up. We have to do more about fuel poverty in particular. Would my hon. Friend agree?
Mr. Drew: My hon. Friend makes the point only too clearly. I would argue that we have to get much smarter in ensuring that we are targeting not just benefits and credits but help with insulation grants and the boiler replacement scheme announced yesterday, if nothing else. I do not know exactly how that would work; I know that the budget is limited. We are now into a new scrappage scheme. I would like that to go principally to our older people because they are the very people who will not do it-they cannot necessarily afford to do it, but they really need to do it.
I have just a few other comments, although I do not want to speak for long. I entirely support my hon. Friend the Member for Luton, North-I am sure that he will be completely unshocked to hear that-on retying the state pension to average earnings. I go along entirely with what he says. I have a question for my hon. Friend the Minister. We are only two and a bit years away from when this is supposed to come in-it is supposed to happen in 2012. The parties are all agreed, although we can argue for perhaps a year either way. One presumes that an immense amount of work is being done to make it happen, yet I have seen relatively little published by the Government about the mechanism for moving to
retying, and the effect on pension credits and other benefits. I go along with what my hon. Friend said, but I believe that it will have to be done incrementally, to some extent. In effect, we are trying to turn back the clock how many years? It has been a great many years since the terrible decision was taken to break the earnings link.
I just want to be assured that we will not get to 2012 and then suddenly be told that the work is not done, the computer system is not ready or it is all too expensive, because if there is one thing that will detach pensioners from the voting population, given that they tend to vote in greater numbers than any other group, it is total disillusion over something that they have been promised and have fought for through the National Pensioners Convention and so on. It is now being realised after the political parties have agreed to it, but where is the mechanism by which it will happen?
Much as I agree with what my hon. Friends and the hon. Member for Henley (John Howell) said on specific issues, I want to raise what I think is still a great unfairness: the failure to allow disability living allowance to be paid to pensioners who did not claim it when they were of working age. We discussed this during the proceedings on the Equality Bill, and there are hon. Members present who will remember some of those discussions.
We have to come up with a valid reason why we are doing what we are. My hon. Friend the Member for Aberdeen, South (Miss Begg) spoke about explaining to pensioners who have not made full contributions why what is happening is happening. The most difficult letters I get are from people who may be slightly over retirement age who have not claimed beforehand but suddenly feel that their disability is such that they need to claim. They are told, "Oh, no, you are entitled to attendance allowance only, and it is always at the lower rate," and so on. We need to see that as an issue.
The most important thing, of course, is mobility. The one thing that pensioners have really benefited from, as my hon. Friend the Member for Blackpool, North and Fleetwood (Mrs. Humble) said, is free bus travel, yet if one is in any way incapacitated and unable to get a mobility allowance, that is a somewhat pyrrhic victory as they cannot actually get places. We need to look at that carefully.
My last point is about the retirement age. This is difficult, because we all know that it will probably be increased further by current financial difficulties, but there is great unfairness around the operation of early retirement. I have always argued that there is a fundamental difference between the social classes because people of lower income, unless they go on early retirement for sickness reasons, are highly unlikely ever to be able to retire on such a scheme, whereas all manner of professional classes, whether in the private or public sector, have come up with advantageous packages and are able to go young.
I use my own cousin as an example. I hope that he does not read this. He was a head of department in a secondary school and retired at 50 because of a merger-one of them had to go. In effect, for ever and a day, he is on half his teaching salary with an enhancement. I am sure that nowadays we will have to get much tougher, but there is a hell of a disparity between people who
retired in the past and who have managed to do quite nicely out of it, compared with people who have had to go on.
We would welcome people going on, given how we attacked the matter in the Equality Bill. We would want to prevent people from not being allowed to go on post-state retirement age, whether it is 65, 66 or whatever. We allow and encourage that, but, for some people, it is not a choice but a reality. They have little or no pension, and they are not able to call on early retirement schemes.
I know the nuclear industry very well. We talk about its liabilities as though they are all to do with horrible stuff that we have to stick in the ground at some time, but they are not all that. Some are human liabilities incurred when the industry had a massive enhancement programme to allow people to go early-to get them off the books, which was considered to be helpful. Compare that with someone who has been in a low-paid job all their life who has to keep going because they have little or no pension.
That is a great unfairness, and the Government should do anything that they can to eradicate the gap, to address the poverty of those who have no choice but to keep going and to make sure that they do not do it when it is completely unfair. We should look at that and do something about it.
Paul Rowen (Rochdale) (LD): It is a pleasure to serve under your chairmanship, Mr. Williams. I congratulate the Chairman of the Work and Pensions Committee, the hon. Member for Bradford, North (Mr. Rooney), and the members of the Committee, who have produced an excellent report. It contains a great deal of information and many recommendations that I believe we can all support and accept.
I accept the point made by the Select Committee Chairman at the start of this debate that when one deals with pensions, one inevitably deals with issues that affect different people at different times, depending on where they are in the cycle. Nevertheless, the report mainly deals with pensioner poverty, and, although it deals with other aspects, it deals in particular with those people who are pensioners now.
The hon. Member for Blackpool, North and Fleetwood (Mrs. Humble) referred to the table on page 11 of the report. I believe that there is broad agreement on where we are in terms of pensioner poverty. As the hon. Member for Luton, South said-
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