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We must also look at caring and nursing costs. The provision of care arrangements is often inadequate. The use of agency staff by local authorities for the care of frail elderly people in the home means that there is often a lack of continuity in care. We must look at the
quality of care that is provided because it is patchy. There is nothing better than a publicly employed person with a secure job whose responsibility is to look after an elderly person in their home. The same person should go everyday so that a good relationship is built up. That is good support for the community. If that work is done by contractors and agencies with different people going in every day, it is distressing and disturbing for the elderly people and we end up with a less harmonious and less happy society.
I will conclude with the suggestions put forward by the National Pensioners Convention to the Work and Pensions Committee on tackling pensioner poverty in Britain. It outlined many issues concerning the level of the state pension. We should recognise the great work of the National Pensioners Convention, which is an effective campaigning body, in not only mobilising large numbers of elderly people across the country, but bringing to the attention of younger and middle-aged people in work that it is their responsibility to campaign for decent pension provision and to ensure the elimination of poverty in retirement.
"The National Insurance Fund remains the most secure way of funding decent pensions in retirement, but its status is being undermined by the government's policy of using the excessive balance held in the Fund for public expenditure other than that of pensions and benefits for which it is intended".
"The basic state pension provides the most obvious and effective method of tackling pensioner poverty, both now and in the future. It should be set above the officially recognised poverty level and paid universally to all pensioners. This could be easily afforded by introducing a number of changes to the national insurance and taxation systems".
Essentially, the point is that it is the responsibility of us all, through national insurance and taxation systems, to ensure that pensioners receive enough money to live on decently and safely in retirement. It is simply not right that people go through the disfigurements of poverty, borrowing from children or just trying to scrape by. As I said, the welfare state should apply to pensioner income as much as it applies to health and education.
John Mason (Glasgow, East) (SNP): I will try to be reasonably brief and not raise points made already. I congratulate the hon. Member for East Dunbartonshire (Jo Swinson) on obtaining the debate and on being brief in her opening speech. As we are the only two non-Labour MPs in the Greater Glasgow area, I think we have a certain affinity.
The complexity of the benefits system and people not claiming has already been covered, so I shall not spend time on that. However, I wish to underline that it is a huge problem. I recognise-as all hon. Members who have spoken have-that if the system is too complex and uptake is significantly short of where it should be,
something is wrong and we need to consider the need to have a much more universal provision, whether that is a citizen's pension or whatever.
Another area on which I would like to touch is the gap between the rich and poor in our society generally. Clearly that issue does not affect only pensioners, but it certainly includes them. When people reach pension age, how much they have, how much they owe and what their wealth is are key factors. A recent report said that the top 10 per cent. in our society have at least £853,000 of wealth and the bottom 10 per cent. have a maximum of £8,800. So the top 10 per cent. have at least 96 times as much as the bottom 10 per cent. I accept that we cannot all be exactly the same, but it seems that 96 times as much is rather too large a figure. Another comparison on the income side is that since 2000, the ratio of FTSE top 100 bosses' income compared with that of an employee has risen from 47:1 to 128:1. That has happened under the Government's regime and shows that there is something seriously wrong. Income during working life clearly has a major impact on one's income as a pensioner.
That leads me to my next point about company pension schemes, which has already been mentioned, particularly by the hon. Member for Croydon, Central (Mr. Pelling). Almost every day, we hear about the closure of final salary schemes and, as he suggested, such a situation is surely storing up problems for the future. It might be cheaper for people not to save in the short term-that is obviously the case for employers-but, in the longer term, we will be left with more of a problem.
We read complaints in the press and from the private sector that the public sector is far too generous in its pension provision, but the reality is that many ordinary public sector workers get a very modest pension when they retire. It is very much the exception rather than the rule that there are huge pensions either in the public or private sector.
Angela Eagle: Does the hon. Gentleman agree that in relation to the public sector pension, the average payment is currently around £5,000? It is extremely peculiar to describe that as a gold-plated pension, yet that is what we hear from those who wish to attack public sector provision. Does he agree that the public sector provision needs to be defended?
I completely agree with the Minister on that point. In a constituency such as mine, where people are probably earning a bit less than average, they are possibly getting even less than that. The matter is very important to those people and such a pension is certainly not gold-plated. We should surely bring the private sector up to the public sector, rather than the other way around. I wonder whether employers are getting off too lightly and if there should be much more compulsion regarding employers contributing to employees' pension schemes. The reality is that that is often why the private sector can undercut the public sector when it comes to contracts in the local authority or elsewhere. The private sector has lower pension costs and is able to win contracts, but, in the long term, such a situation is causing a problem. I accept that it is unlikely we can return all employees to defined benefit schemes and that putting
all the risk on employers is perhaps unfair, but to switch to the other extreme of putting all the risk on employees is also unfair. It should be possible to come to some kind of compromise where risk is shared.
There is also clearly an issue regarding spending priorities. When we face tight financial times, we have to choose priorities. We have to choose between nuclear submarines or going around the world fighting wars as if we were still an empire, and putting money into helping pensioners and other vulnerable groups. Surely the reason why Sweden, the Netherlands and such countries have a level of pensioner poverty that is a third of that of the UK is that they are not spending so much on defence and other priorities. Even if the UK has those priorities, can Scotland not be allowed to have a bit more freedom to set its own priorities? I believe that most people in Scotland would want to put more money into pensions and less into nuclear weapons. If we could have fiscal autonomy or accept at least some of Calman's proposals, we would be moving in the right direction.
I wanted to intervene on the hon. Member for East Dunbartonshire to point out that she had not talked a lot about council tax, but I did not get the chance. I believe that her party-mine certainly does-favours a move away from council tax towards something such as a local income tax, which would be based on ability to pay and, at a stroke, would help pensioners and people on a limited income. Such people would not have to apply for anything because that local tax would be based on their income. I congratulate the hon. Lady on the debate and urge the Government to take the issue more seriously. Surely, this is one subject where the Government could be seriously to the left of the Conservatives.
Mark Williams (Ceredigion) (LD): It is a pleasure to serve under your chairmanship, Mr. Gale. I am grateful to my hon. Friend the Member for East Dunbartonshire (Jo Swinson) for raising the issue and am particularly grateful to the hon. Member for Glasgow, East (John Mason) for the speed at which he made his remarks.
These are critical issues. We have a higher proportion of pensioners in Wales than anywhere in the UK- 21 per cent. compared with 19 per cent. in England and Scotland. In my constituency of Ceredigion that figure rises to 24 per cent. We have heard the statistics: 22.1 million people in the UK are living in poverty and two out of three pensioners rely on benefits. I want to make three quick points. First, the key trend is that older people tend to be worse affected by inflation than the general population because they tend to spend a higher proportion of their income on things that have had particularly large price increases, such as fuel, food and council tax. The National Pensioners Convention has estimated that 40 per cent. of pensioners' income is spent on those things, which puts pensioners in an acutely vulnerable position.
That is backed up by a 2008 report by the Institute for Fiscal Studies, which talks about food and fuel inflation being at 6.7 per cent. However, for pensioner couples that figure is 7.7 per cent. and for single pensioners it is 9 per cent. Inflation might not be the most pressing problem at the moment-it stands at 3.5 per cent.-but
it looks set to increase, so we need to monitor that position very carefully and look out for those food and fuel spikes.
It would be churlish not to welcome the 2.5 per cent. increase in the pension-the £2.40 and the £3.85-but when we put that in the context of the 50p a month charge on phone lines to finance broadband, we realise how minimal that increase is, not least for constituencies such a mine where there is minimal broadband and a large number of my constituents cannot access it.
I have two specific points for the Minister. The last time we had a debate on the subject in this Chamber was in December 2008. One of the clearest points made was that council tax benefit should be renamed the council tax rebate. The Government were receptive to the idea and an amendment was put forward. The amendment was removed on the basis that the Government would bring that issue forward, but the time frame for that is yet to be forthcoming.
The Royal British Legion has particular concerns. The response from the Minister to the legion stated that the Government would be consulting with local authorities and other key stakeholders in due course. We are still unclear about what "due course" means. Renaming council tax benefit would deal with some of the issues about pride and lack of take-up raised by other hon. Members. It is appalling that only up to 61 per cent. of pensioners eligible for council tax benefit claim it. We need to do something to deal with that issue, which was part of the legion's return to rationing campaign. Research for that campaign revealed that 38 per cent. of older veterans were living on an income less than that required for healthy living.
I reiterate the concerns raised about fuel poverty. Particularly in a rural constituency such as Ceredigion, many people come to me with concerns about the costs of heating their home. They are unable to do so and they are unable to switch between different suppliers because of the monopolistic situation that exists.
Finally, I wish to highlight the work of the voluntary sector in bringing awareness of pension credits and other available benefits. Age Concern Ceredigion has reported a 10 per cent. increase in poverty-related inquiries among the 32,000 over-55s with whom it works. It has helped people access up to £1 million in benefits. It is an independent charity that is combating rural isolation and promoting income maximisation. It has a £100,000 shortfall in its funding for next year-because of the recession, grants are drawing up-so it will have to cut back on some of the invaluable work it does for those people. That work is replicated by citizens advice bureaux, the Royal British Legion and volunteer consultants such as Rif and Ann Winfield in my constituency. They have an important contribution to make in the short term, before we get the full citizens pension that the Liberals Democrats would certainly support.
My final point is this: the spectacle of a retired couple in south Ceredigion who have to reconcile whether it is more provident to put £10 of petrol in the car to do their shopping or to walk cannot be right, and that is why this debate is so important.
Steve Webb (Northavon) (LD):
I congratulate my hon. Friend the Member for East Dunbartonshire (Jo Swinson) on securing the debate on this important
matter. As we have heard, she has a track record of raising such matters, including Equitable Life, and I thought that her contribution was characteristically well researched and comprehensive. She has done the House a service by giving us the chance to debate these vital issues. Various facets of pensioner poverty have been discussed, particularly the position of women, to which I will return.
I also want to thank the Minister. Rather than sitting for an hour twiddling her thumbs before reading out a prepared text, she has intervened on several occasions to make her points, which was entirely welcome. Therefore, I will save her the trouble of reading out her prepared text. In such debates Ministers tell Members all the things the Government have done to improve take-up, for example, or to address all the matters that have been talked about, but the point my hon. Friend the Member for East Dunbartonshire and others have made is that, after all the things the Government have done, such as the take-up campaigns, we still have vast pensioner poverty, rising fuel poverty and very poor take-up. The question is not what the Government have done, but what will they do to address the aspects of poverty that are still very much with us, because pensioner poverty, as the hon. Member for Islington, North (Jeremy Corbyn) said, is a blight on our society. It should be the role of the state, not necessarily to deliver, but certainly to ensure that pensioner poverty is defeated. The fact that successive Governments have failed so lamentably on that is a shame on us all.
The hon. Member for Croydon, Central (Mr. Pelling) and my hon. Friend the Member for East Dunbartonshire referred to the position of women. One facet of the changing pensions landscape that is prejudicial to women has not had the attention it deserves. The hon. Member for Glasgow, East (John Mason) mentioned the demise of final salary pension schemes. Although they tended to reinforce the gap between men and women, because men tended to earn more, when we switched to money purchase schemes we found that they were biased against women because women tend to live longer. Under such schemes, a man and a woman could start the same job at adjacent desks, leave their work at the same age and earn precisely the same amount of money, but the man will get the bigger pension. He will not live as long, so the total pot of money would be the same, but it is not much consolation for someone living in poverty to be told, "Don't worry. You can have a long period of poverty, rather than a shorter period on a higher income." Can the Government just watch the shift to defined contribution schemes, which are biased against women, and the introduction of personal accounts, or National Employment Savings Trust pensions, which are part of a whole new system of defined contribution pensions that will also be biased against women, relative to state provision, for example, which is unisex?
The Government cannot stand idly by and watch those things happen. I fully accept that the April 2010 changes are welcome, as the Minister said, but they create a cliff edge that means that women who are born perhaps a day too early will miss out on the whole improvement. I fully accept that there has to be a day when things change, but when the change is so substantial, the onus is on the Government to avoid those cliff edges and phase things in so that those who reached pension age in 2008-09 could have some proportion of the benefit of the changes, which would be a better step.
Members have discussed a default retirement age, and the best that the Government could say on that after 13 years is that a review is being undertaken. That is pathetic. Injustice is injustice. Being discriminated against because of one's age and the idea that one's fitness for a job depends on the date on one's birth certificate is nonsense. Are we really in the 21st century? Do we need a review? Should we not get on with it? I joined the hon. Member for Eastbourne (Mr. Waterson), with whom I seem repeatedly to be joined at the hip on these occasions, at a pensions dinner last night, and he announced to an expectant world that the Conservatives have decided to scrap default retirement ages. I am delighted that they followed us in a case that we have been making for years. There is great joy in heaven when a sinner repenteth, so I welcome him to the fold. That is a good step, and hopefully, as in so many areas, the Liberal Democrats lead the way, the Conservatives follow and finally the Government will implement the change. Incidentally, I could not help noticing that there were more ex-Conservative Members in the Chamber this morning than current Conservative Members.
The issue is not just one of retirement age-annuities have been mentioned. My hon. Friend the Member for East Dunbartonshire made the point about compulsory annuitisation, which is something we need to end, but it is a bigger issue than that, as I am sure she would agree. When people reach pension age, roughly one third choose to stay with their current provider, and do it without thinking about it, about one third look at the alternatives but stay with their current provider and about one third switch. The evidence is that many people could simply get a bigger pension by shopping around, and the open-market option should be taken up much more highly. It is not a particularly partisan point, but I think that Governments should do much more, whether through behavioural economics or other means, to nudge people away from the latent assumption that one stays with one's current provider.
Angela Eagle: The open-market option is a clear way to go. We are working with some of the insurance companies to ensure that they release the funds more quickly, because there are issues about how fast the funds can be released so that an open-market option can be purchased practically, but I agree with the hon. Gentleman's point. We are doing things to try to make that easier. Then, of course, we have to persuade people to use it.
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