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23 Feb 2010 : Column 7WH—continued
9.50 am
Mr. Andrew Pelling (Croydon, Central) (Ind): It is a great pleasure, Mr. Gale, to serve under your chairmanship.
I would very much like to congratulate the hon. Member for East Dunbartonshire (Jo Swinson), who has secured a number of important debates on social issues in Westminster Hall and the main Chamber. I would also like to place on record my thanks to Michael Knight of Croydon Retired Peoples Campaign-a group that I will address next week at Ruskin house-and Malcolm Felberg, who chairs the Croydon local involvement network. Both of them have made a significant input regarding our concerns in Croydon about the situation for the elderly, particularly those in pensioner poverty, and the approach that we must take to address those concerns.
We should place on record, however, the very good work that the Government have done in taking more than a million pensioners out of poverty, albeit against a background of significant deterioration in income and equality generally within society since 1997. As the hon. Lady said, the basic state pension of £95 a week is still-horrendously-below the official poverty measure of £165 a week. That particularly affects female pensioners, who tend to live longer than their spouses. They are especially affected if they have operated as single parents for a good deal of their working lives.
I am also interested in the experience that pensioners have when they encounter the NHS. The way in which ill health is treated can often have a very real effect on pensioners' income and wealth status. I am particularly exercised by the effect on people's standard of living when they have a fall on icy or uncleared pavements, and was pleased by the response from Lord Adonis, the Secretary of State for Transport, to the problem. In my local Mayday hospital, the number of fractures went up by a factor of five when pavements remained uncleared. There may well be a very good argument for moneys in the NHS being spent on clearing pavements, as they have been-I know that this is controversial-in Durham, because doing so has a substantial effect.
John Mason (Glasgow, East) (SNP): I had the impression that, when the pavements were bad, people were almost imprisoned in their houses, which meant that they either had to spend more on fuel or sit in the cold. Does the hon. Gentleman agree that that was the case?
Mr. Pelling:
The hon. Gentleman makes a very good point, because if people are imprisoned in that way, it has a very significant impact on their mental health. The general issue is one of quality of life for the elderly.
Perhaps it is the result of poor public transport-we are probably blessed with better public transport in Croydon than people are in the hon. Gentleman's constituency, although I know that Scotland invests a great deal in public transport-but it is an important concern.
The most significant illness affecting pensioners is dementia, yet the research funding for dementia is less than 2 per cent. of research funding for cancer. Obviously, I am not quarrelling with the amount that is spent on research funding for cancer, but with an ever ageing population and with more and more NHS funds being used to care for dementia sufferers, research funding for dementia is an issue worthy of consideration.
The hon. Lady and her right hon. and hon. Friends rightly emphasised the importance of the experience of the hardest winter for 30 years. It is estimated that the proportion of pensioners who have found themselves in fuel poverty has gone up from what might be described-rather sadly, perhaps-as the normal 25 per cent. to 40 per cent. this year. It is bad enough that many pensioners have to choose between heating and feeding themselves, while also giving consideration to the fact that they might have to use any spending money they have on care services. It is fair to say that in my local authority-and I am sure that this is true elsewhere-increases in care service prices, if pensioners are not otherwise supported by the public sector, are a matter of great concern.
Bob Spink: While we are discussing caring and care services, single women, instead of working, are often carers and they do a superb job-and a very worthwhile job for society at large-for those for whom they are caring. However, does the hon. Gentleman accept that, when they eventually become pensioners, they suffer particularly badly, so the Government must find better ways to reward carers and to recognise the contribution that they make to society before they become pensioners?
Mr. Pelling: I am very grateful for my hon. Friend's comments-I know that he has raised that issue in the House. To some extent, the Government are listening on this issue, but it is a very important concern.
Angela Eagle: I hope that all right hon. and hon. Members here today will recognise the changes to carer credits for national insurance contributions, which are due to be introduced in April. Weekly national insurance credits will be granted to those who care for other individuals for more than 20 hours a week. As for those who care for others for 20 to 34 hours a week, but who are not known to the benefits system, we are very anxious that they should apply for their credits, because doing so will ensure that they can make up their own basic state pension when they retire. We need help to identify those carers, and I hope that all right hon. and hon. Members who are here today will note that and go back and work in their own constituencies to help us to find them.
Mr. Pelling: I am very grateful to the Minister for that intervention, and I think that that is a very good example of joined-up government. That approach, as long as we are in the happy situation of having that capacity and making it known to potential recipients, is a very cost-effective, caring and compassionate way of operating Government activity.
Nevertheless, I sometimes feel a sense of frustration-perhaps on behalf of the Minister-at the way in which British politics has progressed. In many ways, the Pensions Minister is not responsible for many pension issues, because of the arm's length approach that has been adopted. I went to see one of the Minister's predecessors to discuss my concern about how particular private sector pensioners have suffered as a result of the demise of Allders, the company for which they worked. The response that I received then was very much, "Well, these are not responsibilities for the Minister any longer-they are at arm's length and they are with the regulator." Going through that process can be very frustrating.
I wish to declare an interest, as my father recently turned 75, and faced the very difficult situation of having to deal with an annuity, particularly at a time when the financial markets were in serious difficulties. The hon. Member for East Dunbartonshire emphasised the interaction of benefits and the fact that that many pensioners just turn their minds against claiming benefits, because they feel that there is a stigma involved in doing so. I am concerned about constituents who have had to deal with the fact that the interaction of bereavement benefits-obviously that is something that very much affects pensioners-sometimes has an adverse impact on other benefits to which they are entitled.
Several Select Committees have emphasised the good practice demonstrated by Service Canada, which provides a single point for Canadian people to gain advice, and operates in a non-stigmatising way. We can take encouragement from that example. It is extremely difficult to provide such a service, but it is something to which we should aspire.
I mentioned at the outset Croydon's performance in this area. I am very concerned that a lot of provision for the elderly has been cut back. For example, the Foyer, which is in north Croydon, did a lot of work with senior citizens, but funding for that centre has unfortunately been cut. I suppose that that is a prospect that we will face generally, as public expenditure is reduced. Nevertheless, I congratulate Croydon council particularly for providing disabled pensioners with the AskSARA system, which does a great deal of good internet-based work-admittedly, it is only available in that medium, and I will make a point about that in a moment-that tries to offer a good understanding of their problems. The system is easy to use, and helps pensioners to identify the appropriate services and equipment that Croydon council provides for the frail and disabled. Of course, the internet is not available to all pensioners, so take-up is lower than it is in other groups. I was disquieted by the approach of Southern Railway, whose consultation on rail services is now built wholly around the internet. That is unfair to many pensioners, who are thus excluded.
I am mindful that other Members want to speak. I appreciate that the country faces significant financial difficulties in the coming months. However, in considering macro-economic policy, we must remember that pensioners are likely to spend 100 per cent. of their resources-or perhaps more, making it a dissaving. Money pumped into the economy through pension increases is likely to have a stimulating effect. We need seriously to consider increasing the basic state pension, so that it at least approaches the official poverty level, to £150 a week.
10 am
Jeremy Corbyn (Islington, North) (Lab): I congratulate the hon. Member for East Dunbartonshire (Jo Swinson) on securing this debate. I thank her for the information that she shared and the Minister for her interventions. It shows the value of having intelligent debates in Westminster Hall about issues such as pensioner poverty.
It is worth recording that the state pension came about just over 100 years ago after enormous campaigning and pressure by radical organisations, trade unions and Churches and was finally forced into being through Lloyd George's Budget. The pension had a mixed history for a long time. Although it was designed to alleviate the most appalling poverty, it never succeeded totally in doing so, as it tended to rise and fall depending on how successful or otherwise the economy was. During the deep recession of the 1930s, the pension did not go anywhere near meeting the needs of the poorest. It has always been a sticking plaster rather than a solution to the issue of pensioner poverty, as I am sure my professor colleague the hon. Member for Northavon (Steve Webb) would agree.
The great step forward in pensions came in 1975, with the late Barbara Castle's heroic legislation. In the teeth of an economic problem, massive inflation rates and huge demands on public spending, she managed through force of personality to persuade the Cabinet to pass groundbreaking pensions legislation that recognised pensioner poverty as well as discrimination against women and those not in any of the then big occupational industrial pension schemes. It introduced the state earnings-related pension scheme to accommodate those who were not in any other supplementary scheme and ensured that the state pension rose year on year in line with inflation or earnings, whichever was larger.
The state pension as a proportion of average earnings rose considerably during the next five years while that link was maintained, despite all the economic problems that this country faced during that period. We should pause for a moment to recognise Barbara Castle's great work and the heroism surrounding it. It must have been extremely difficult to get such legislation through the Cabinet at the time.
Steve Webb (Northavon) (LD): Does the hon. Gentleman share my dismay that this year's pensions uprating adds 2.5 per cent. to the basic pension but freezes state earnings-related pensions? Will he consider-I will not ask him for a commitment now-joining us in the Division Lobby next Monday when we vote against the decision to freeze the SERPS uprating? We believe that pensioners should not bear the brunt of the cuts.
Jeremy Corbyn: I am always reluctant to vote independently of my Whip, but I will consider the situation-
Mr. Pelling: After consultation.
Jeremy Corbyn After due consultation.
I accept the point made by the hon. Member for Northavon about the current uprating. To return to the link with earnings, we must place responsibility where it is due. The 1980 Conservative Government broke that link, which was a monstrous thing to do. They then
moved on to the Social Security Act 1986, on whose Standing Committee I had the misfortune to sit. The Act put into law a continual reduction in the value of the state pension, abolished the state earnings-related pension scheme and set up the principle of a market for private pensions in this country, which is rather at variance with the European tradition and is still playing out today in the level of the state pension. Many people suffered grievously from the mis-selling of pensions and corrupt private pension schemes.
We are still in that bind and cannot seem to get the idea that in a welfare state it is the state's responsibility to ensure the elimination of poverty among everyone in retirement. That must be a primary responsibility. We accept the welfare state in terms of universal health care and education provision; we should also ensure that we accept the state's major responsibility to ensure the elimination of all poverty in retirement. However, it would be ridiculous to say that there have not been huge changes over the past 10 years. There was a big debate before the 1997 election, particularly in the Labour party, about whether we should re-link pensions to earnings and make the state pension the basic motor for the provision of income on retirement or go for what has turned out to be pension credits, pension top-ups or whatever nomenclature is put to them. Essentially, that debate was lost by those of us who wanted an immediate restoration of the link between pension and earnings and therefore a much higher basic state pension.
Of course I welcome pension credits in that they put money into the pockets and handbags of people who would not otherwise have it. I regularly attend meetings of the Islington Pensioners Forum, and I always say, "Claim every single thing you can." However, I recognise, as I am sure does everyone in this Chamber, that under a means-tested system involving a complicated application process, no matter how nice, supportive and helpful the people are on the other end of the phone line or in the local office, many people simply will not claim. Either they feel that they should not, or they are put off by the bureaucratic procedure involved. We must recognise that as one big problem.
The other-I will return to it in a moment-is that occupational pension schemes are disappearing quickly as company after company tries to close final salary schemes to new members and move to earned savings schemes, which are not as beneficial. Such schemes, of course, become less sustainable anyway. A pension system that relies heavily on stock market prices gives a pretty grim outlook for an awful lot of people in work at present. Although they would not thank me for saying so, many among the present pensioner generation are better off than those further down the line are likely to be under the current system. We must think seriously and carefully about that.
Mr. David Drew (Stroud) (Lab/Co-op): My hon. Friend will know and, I am sure, accept that that situation was made much worse by the mania for early retirement during the 1980s, when people were bought off, which put pressure on the funds later. It was also made worse by pension holidays. With the benefit of hindsight, allowing and encouraging them were one of the most disreputable acts of any Government. I am sure that he will agree.
Jeremy Corbyn: One of the most depressing experiences that I have had in the House was serving on the Select Committee on Social Security in the mid-1990s and investigating the Maxwell pension fund. Robert Maxwell appeared to be on a permanent holiday as far as pension contributions were concerned. Like all permanent holidays, it disappeared, taking the funds with it. My hon. Friend is absolutely right that inequity in the running of pension funds is crucial. I realise that things have moved on a lot since then, but there are still reasons for concern.
To quote some statistics on the current scale of pensioner poverty in Britain, the number of people living in severe poverty-on less than 40 per cent. of the median population income-has increased by 600,000. The incomes of the poorest quarter of pensioner households rose by less than 1 per cent. last year, and the real incomes of the poorest single pensioners dropped by 4 per cent. At least 15 per cent. of pensioners, or more than 1.5 million people, live in persistent poverty, having lived on less than 60 per cent. of the median population income for three of the last four years. We have to recognise that there are significant pockets of pensioner poverty and deprivation.
As a proportion of average working pay, the state pension in Greece is the highest in Europe at 95.7 per cent. and that in the UK is among the lowest at 30.8 per cent. Those are headline figures that do not necessarily include other sources of income from state benefits, but one can see the scale of the issue and the effectiveness and efficiency of a non-means-tested, high-value state pension, compared with any other form of benefit. I think everyone now recognises that means-tested benefits tend to end up with low take-up and with a lot of people missing out.
There are two huge areas of even worse poverty. The hon. Lady rightly drew attention to the problem of the general low level of pensioner income among women. As a union organiser in the 1970s and 1980s, most of the members I represented were women working part time in school meal or school cleaning jobs. Unfortunately-I say unfortunately because of the consequences-they were offered the right to pay a lower rate of national insurance contributions. Understandably, offered the choice between paying A or B, where B is lower than A, most people chose to pay B without much thought for the long-term consequence of smaller pensions. That was a main contributory factor to poverty.
Another major contributory factor was the lack of job security for many women workers. Most men at the time tended to be in occupational pension schemes, whereas women did not. That was what the Barbara Castle legislation tried to fix and what the Conservative Government of the 1980s tried to destroy. The median income for women on retirement is only 57 per cent. of that of men. Only 30 per cent. of women who reach state pension age are entitled to a full basic state pension, compared with 85 per cent. of men. One in five single women pensioners risk being in poverty in retirement. Almost 63 per cent. of divorced and separated older women have no private pension income.
Angela Eagle:
My hon. Friend's analysis of the gender difference in access to pensions is spot on. I hope he acknowledges that in April there will be an historic change in access to the basic state pension. We are
reducing the required number of national insurance contribution years from 39 for women and 44 for men to 30 for everybody. At a stroke, that will mean that 75 per cent. of women qualify by their own right. By the end of the decade, that will eliminate the gap in the access to the basic state pension between men and women.
Jeremy Corbyn: I welcome that and the fact that the Government recognise the huge problem, in particular the problem of broken careers among women, which usually occur because they have children and stay at home to bring them up. We must recognise that there is a big improvement on the way and I welcome that.
The other area of enormous pensioner poverty is among ethnic minority people. The number of ethnic minority pensioners is small, but it will rise rapidly over the next 10 or 20 years. We are all aware of that from our constituency work. The proportion of ethnic minority elderly people who are in great poverty is much higher than for any other group. They make up only 3 per cent. of people above state pension age, but they are often in considerable poverty because of discrimination in the workplace, for example in promotions and the inability to get a permanent job, particularly, in the past, one that had a pension attached to it. That is another pocket of high levels of poverty that we must recognise and do something about.
I will be brief, Mr. Gale, because I know that other hon. Members wish to speak. I just want to mention other areas of support for pensioner households that tend, unfortunately, to be patchy and sporadic. The travel permit and travel pass systems are welcome if pensioners get free travel on all public transport. London paved the way with the Greater London council bus pass, which was introduced in the early 1970s. That morphed into the freedom pass, which is now universally available across London, and I welcome that. The Government have done a great deal to extend the concept of supported or free bus and rail travel across the country. We must recognise that these are important things and that in this time of recession and pressure on Government spending, they should not even be considered for a cut, but should be fully supported because they provide freedom of movement.
Mr. Pelling: I will be brief because other hon. Members wish to speak. It is important for politicians to defend the freedom pass because many local London councils that are upset about changes in funding and about money being taken away from London and put elsewhere talk rather darkly of compromising the provision of the freedom pass.
Jeremy Corbyn: I hope that they will not compromise the provision of the freedom pass. There is no threat to the freedom pass in London as long as the local authorities ensure it is provided. Under the Conservative Government of the 1980s, we saved the pass in London only through a consortium of local authorities and last minute changes in the legislation. The freedom pass is important.
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