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10 Dec 2009 : Column 161WHcontinued
We are all from the north. As the hon. Member for Luton, North (Kelvin Hopkins) said, 2.1 million pensioners, or 18 per cent. of the pensioner population, are still in poverty. The figure rises to 25 per cent. for the over-85s. It is clear in paragraph 17 that, from 1988-89 through to 2004-05, the Government's measures considerably reduced the numbers of pensioners in poverty. In 1998-99, 29 per cent. of all pensioners were in poverty, taking the 60 per cent. median, and by 2004 the figure was down to 18 per cent. It is also clear that in 2007-08, the figure is still 18 per cent. The other
figure, which is often taken to be the real poverty line-those who are below 50 per cent. of median income-has not changed as much: it has only gone down from 13 per cent. of all pensioners to 10 per cent. That brings me back to the point that the hon. Member for Luton, North made about means-tested benefits, because those people comprising the 10 per cent.-Age Concern says that it is 11 per cent.-of all pensioners who have been in persistent poverty, below the poverty line, in the past three years are reluctant for one reason or another to claim the benefits to which they are entitled.
The submissions in the report mention many of the reasons for that. For example, pensioners may have a lack of knowledge, may not have contact with the benefits system and may have no history of being in that system. They may believe that they are ineligible for benefits. The hon. Member for Stroud (Mr. Drew) mentioned that in respect of his constituency, where people in a particular area did not know that they could claim. There is a general
"Reluctance to claim a benefit...Reluctance to give out personal information"
"Difficulty or perceived difficulty in claiming".
People often feel that they lack support negotiating the labyrinth.
Kelvin Hopkins: Another major factor is that 20 per cent. of our fellow citizens are functionally illiterate, will use all sorts of strategies to disguise that, and would fear being discovered by having to fill in forms.
Paul Rowen: I agree. That is a clear issue, particularly for many older people.
The issues that I have mentioned also affect people applying for housing and council tax benefit. I welcome the proposal in the report that there should be a single phone line and that the Pension, Disability and Carers Service should work much more closely with local authorities. I also welcome the "automaticity" in the Welfare Reform Act 2009, which the hon. Member for Blackpool, North and Fleetwood mentioned-I cannot say that word, never mind that I do not particularly like it, but she made a good point. Despite 10 years of pension credit, 11 per cent. of people who are entitled to the benefit still have not claimed it, and the sooner we get such a measure up and running, the better.
Age Concern makes a clear, important point. This week in the House we passed the Child Poverty Bill, which sets clear targets and guidelines by which poverty for young people will be eliminated. I have to ask the Minister why can we not do exactly the same for pensioners? Why are they different? There is clearly a lot of merit in making such provision. We know what the problem is. The report answers and deals with some of the things that can be done to go about seriously eradicating that issue. Why are we not setting ourselves the same sorts of targets for older people that we think are appropriate for young people?
On other aspects of the state pension, hon. Members who were involved in consideration of the Pensions Bill will remember that, during its passage, some of us voted to support the principle of having a tie to income by 2012. Again, I agree with what other hon. Members
said. I hope that the Minister gives us a clear commitment: the tie should be not just to average earnings, but to average earnings or the retail prices index. There is an opportunity for pensioners to benefit, depending on inflation and earnings. I would not want to see a shift in that commitment beyond 2005. As Age Concern rightly says, the sums saved by that delay are relatively small: only £200 million a year. Although, in the current financial position, such a sum is relevant, it is not a large sum, given the amounts that the Government are spending. I hope that the Minister will commit to sticking to the deadline. My party is discussing its manifesto today and that matter is on its agenda: we want to be clear that that should happen.
I think that the hon. Member for Luton, North mentioned the National Pensioners Convention's commitment to a citizens' pension. The hon. Member for Eastbourne (Mr. Waterson), the then Pensions Minister the right hon. Member for Doncaster, Central (Ms Winterton) and I had the pleasure of attending that convention in the Winter gardens in Blackpool earlier this year. I have never been in a cage of lions before, but it certainly felt like that. We know-the hon. Member for Luton, North mentioned it-how angry pensioners feel about the fact that they have not received such a commitment. In the current economic circumstances, I will not say that that can happen right away. However, moves must be made, and certain moves can be made.
Mr. Rooney: This should be an academic debate, because in reality the change to restoring the earnings link is being paid for by equalisation of the pension age. That is the reality of it. So the start date should not really be an issue.
Paul Rowen: I agree. Again, I pay tribute to the Government for reducing the number of years' national insurance contributions that people need to get their entitlement. Last year, only 30 per cent. of women reaching retirement age were entitled to the full state pension. The Government's proposals in the previous two pensions Bills will eliminate many of those problems and ensure that people get what they are entitled to.
The Committee rightly raises the issue of the national default retirement age. It is an anachronism that people are forced to retire at a certain age, whether they want to or not. I cannot see how that national default retirement age can stand alongside an Equality Bill that would treat everyone as equal. It is right that people should have the opportunity to retire at a certain age, but that should not be forced on them.
Kelvin Hopkins: As a younger person I taught in further education. I was under 30, but I taught on a course called "Preparation for retirement". What did I know about retirement? The hon. Gentleman is right. Some people on that course had had hard physical jobs all their lives and they could not wait for 65. However, on the same course there was a legal secretary, a spinster lady, who was in tears because she was going to be forced to retire at 60.
I agree. In my constituency, a head teacher who is 74 years of age is still working because the governors of the school, a Church of England
school, have agreed that she can do so. But she has had many problems with the teachers' pension scheme in terms of what she is entitled to do. The rules do not allow people like her to work for as long as they want to and are able to. She should be able to defer her pension and take a larger lump sum when she retires. However, that will not be permitted, which is completely wrong.
The Government, with all-party agreement, have set a policy of gradually raising the retirement age over a period to enable those who are currently working, but planning for retirement, to make the necessary provision. I do not want, and my party will not support, an earlier date for that raising of the retirement age. That might be Conservative party policy, but it is certainly not one to which I can subscribe. It would be totally wrong, after agreeing a pensions policy across the political divide, to break it now and to put at a disadvantage people who have made arrangements for their retirement based on what was agreed after the Freud report was accepted.
I want to refer to a couple of other issues that hon. Members raised about entitlements. The disability living allowance is important. If someone is disabled and is given an allowance to take account of the extra costs associated with their disability-Cancer UK is conducting an excellent campaign on extra heating costs-why should they suddenly, at the age of 65, become ineligible for DLA because they have a retirement pension? That is nonsense. I agree with the point that was made about splitting the components, so that the living component is not age-related, and I also accept the point that was made about the Equality Bill. How can someone who is disabled have different needs depending on their age? They either have those needs, or they do not, and they either receive support for those needs, or they do not. Support should not be, as it is at the moment, dependent on eligibility for a pension. Someone who is working would be entitled to DLA, so what is the difference?
Another issue is the attendance allowance. The Green Paper refers to dealing with that as part of the care and support system. Again, we need clarity from the Government, and no doubt there will be an opportunity to pursue the issues when discussing the Bill that is going through the House. That, and the issue to which the hon. Member for Blackpool, North and Fleetwood referred about carers, is important. The Committee's report makes excellent recommendations that I and my party can support.
Mr. Nigel Waterson (Eastbourne) (Con): It is a pleasure to serve under your chairmanship, Mr. Williams. It is always a pleasure to follow the hon. Member for Rochdale (Paul Rowen). We are all excited to hear that the Liberal Democrats are finalising their manifesto. I look forward to reading it, and picking out the undoubted huge contradictions.
I pay tribute to the Select Committee, which has clearly worked hard in a spirit of great amity to produce two excellent volumes. The Committee's distinguished Chairman made an excellent speech with a tour d'horizon of many of the issues, and I apologise if I do not touch on every recommendation-if I did, we would be here for a very long time.
I single out the hon. Member for Aberdeen, South (Miss Begg), who talked about women. With cross-party support, we have gone some way in recent legislation to tackle the historic outrage that less than one third of women receive a full state pension, but we are still left with some cliff edges and so on. However, I will not deal with that in great detail, but not because it is not important.
The debate is taking place against a dark background for pensioners. We have heard that 2.6 million live in official poverty, and 11 per cent. live in persistent poverty. Several speakers touched on the take-up of benefits, and it is tragic that, according to the latest figures, some £5.4 billion of means-tested benefits that are rightfully the entitlement of older people are not claimed. That money is left in the Treasury and does not benefit pensioners. Some estimates are that if all that money were claimed, up to one third of pensioners would be lifted out of poverty. The hon. Member for Blackpool, North and Fleetwood (Mrs. Humble) spoke about means-tested benefits and take-up, and I cannot improve on what she said. The overall answer is that, as Age Concern and Help the Aged said,
"reductions in pensioner poverty have ground to a halt in recent years. It is shameful that, in one of the richest countries in the world, one in five pensioners continue to live in poverty."
That is a challenge not just for the current Government, but for a future Government.
One problem is that the Government do not treat the matter sufficiently seriously. Ministers have a habit of claiming-I have a shrewd suspicion that the Minister here will be no exception-that they are curing the problem of poverty. I shall not take the line of the hon. Member for Rochdale, because I do not believe that a law to abolish poverty, any more than a law to abolish the deficit, is the way forward, because that is just a politician's response to a problem. I hope that he will not be too tearful when I say that I do not agree with what he said about introducing a Bill on pensioner poverty.
Paul Rowen: I accept that, but the point is that there should be targets. Does the hon. Gentleman accept that, and would a Conservative Government have clear targets to eradicate poverty?
Mr. Waterson: I certainly think we should have some clear policies on how we will reduce poverty. I totally agree with that, but legislation is not the answer. Legislation on child poverty seems to be merely a reaction to the fact that the Government are clearly missing their existing targets. Targets are one thing, but hitting them is entirely different.
The Minister for Pensions and the Ageing Society, said only the other day on the Floor of the House that this is
"the first Government ever to end the link between poverty and old age."-[Official Report, 7 December 2009; Vol. 502, c. 12.]
I shall demonstrate why that is a ludicrous claim, particularly as well over 2 million pensioners still live in poverty.
The fact is that it all depends, as with so many things connected with the Department for Work and Pensions, and the Government, on which statistics are used. Let us
be precise. Ministers said at one time that under them pensioners were no more likely than any other part of the population to fall into poverty, but I think the current mantra is that pensioners are less likely than other members of the population to fall into poverty. One might be able to argue that if one set of statistics were used, but using the before-housing-costs income measure the figures are that 23 per cent. of pensioners and 18 per cent. of the population as a whole are in poverty according to the latest figures. So that claim is simply inaccurate, and I hope that it will not be repeated today.
Yesterday was a particularly grim day for pensioners, current and future. First, we had the pre-election con of an increase in benefits next year, to be followed by a cut the following year. The Government have put Tory benefit cuts into their own projections in the pre-Budget report, and it has not taken long for most commentators and most pensioners to see through a blatantly cynical manoeuvre.
Another issue is the yet further delay that was announced yesterday, rather diffidently and quietly, in implementing personal accounts. I shall return to that in more detail in a moment.
The third thing is the dog that did not bark, and the fact that we are still here with no firm commitment on when the Government intend to restore the link with earnings for the basic state pension. That point was touched on by the hon. Member for Rochdale.
I have already spoken in some detail about the pre-Budget report, but let me reiterate that the Government are committed to increasing benefits-which are normally uprated by the RPI-by 1.5 per cent. in April 2010. However, to help pay for that, benefits in 2011 will be uprated by 1.5 per cent. less than the RPI, which is a real-terms cut. That is extraordinary. We are now effectively in an election campaign in which the Government predict, using their own projections and figures, that the next Government will cut benefits and pensions in real terms.
I return to the issue of personal accounts, which are about trying to establish a solution to a problem that we all agree on-those millions of people, mainly middle and low-income earners, who have no existing pension provision. The Government have been talking about the issue since 1998, and the Turner review worked on the basis that the new system would start in 2010. A few weeks ago, an announcement came out of the blue stating that the implementation period for personal accounts would be extended from 18 months to three years. Many low-paid workers, particularly those who work in smaller firms which are at the end of the queue under the present plan, will not get their full employer contribution, or the full benefits of being auto-enrolled into personal accounts, until 2016.
That is bad enough. However, in an interview a couple of days ago, the Minister for Pensions and the Ageing Society said that as far as the Government were concerned, it was "full steam ahead" on personal accounts. From that, I assume that she was wholly unsighted of the fact that the Chancellor was about to announce a further delay in the implementation of personal accounts. As we know, a significant delay was announced yesterday. The delay is not in the commencement-personal accounts will still commence in 2012, but quite what will happen is a bit of a mystery. I suppose that one person might be auto-enrolled into personal accounts by 31 December
2012. Who knows? Something will happen in 2012, but it will be 2017 before employers are required to pay the full rate of contribution. Until then, the rate of contribution will be 1 per cent.
All sorts of problems are associated with that. It is bad news for Turner's target audience-those on low or medium incomes-who need to save for their retirement. It means several years at least of a sort of planning blight, during which people will not be making or receiving full contributions, or making any other arrangements for their retirement. It will be a period of contributions and benefits that they will never be able to make up over their working lives.
The Association of British Insurers said that the Government admit that
"this delay will save £2.4 billion".
The delay has nothing to do with the efficient introduction of personal accounts, or trying to avoid what has been called "a terminal 5 moment" in introducing them. We have always accepted that there should be no big bang in introducing such a measure, and we always accepted a period of around 18 months for its introduction. However, this has nothing to do with that; it is about saving the Treasury £2.4 billion.
"This money will be saved at the expense of getting the low-paid into long-term pension saving which is absolutely vital for the future welfare in retirement of the workers of today. The Government's changes to the timetable will mean that employers joining the scheme in 2012 will be able to pay just 1 per cent. contribution for a full four years with Government backing. This will create a dangerous incentive for employers to join the Government's scheme and level down from the typical private sector Defined Contribution scheme of over 6 per cent. This will lead to a fall in overall savings levels for the employees affected."
We are looking at potential pensioner poverty in the future as a result of this measure.
Tom McPhail, from the financial advisers Hargreaves Lansdown, has said:
"This move is all about sacrificing the long-term interests of people's retirement plans for the sake of digging themselves"
"out of a hole the economy has got into."
Our position is clear: this is yet another setback to rebuilding savings and pensions in this country. The Government have already been forced to delay the scheme's implementation, by phasing it in over several years. Now, we find out that the 3 per cent. employer contribution will not be reached until October 2017. Yet again, it is low and middle-income earners who will pay the price for Labour's debt crisis, with the delays taking £2.4 billion out of the pension pot.
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