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Lord Pearson of Rannoch: In supporting the amendment which has been so eloquently moved by the noble Lord, Lord Stallard, and supported by the noble Baroness, Lady Seear, there may not be much new that I can add. But I would like to put a little flesh on some of the bones which they presented to the Committee.

I wish to underline two fallacies in the Government's position on the issue. The first is the suggestion that our pensioners, who have gone to live overseas—particularly in the Commonwealth—knew what they were doing when they went. The second is that we

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should not afford the £230 million annually to keep their pensions level with those who have continued to live here.

As to the first contention, the British Australian Pensioner Association strongly denies that the vast majority of its members knew what they were letting themselves in for when they left. I, for one, have no reason to believe that they are in bad faith. But my interest in this matter was awakened by a friend and business associate who lives in South Africa. He has been good enough to send me excerpts from his correspondence over more than 10 years; first with the DHSS and, more recently, the Benefits Agency.

Any fair-minded person reading that file could not possibly claim that my friend should have been aware of the disadvantage he was about to suffer when he moved to South Africa. He is not part of any official lobbying organisation, but he has recently spoken to six other people in similar circumstances there, only one of whom was aware of the problem before he left.

I feel fairly sure that that is a proportion which may apply to all our 400,000 overseas pensioners. I feel that it is up to the Government to show that what I and other noble Lords say on the matter is incorrect and that the Government's position is therefore vaguely tenable morally.

Certainly, the file from my friend in Johannesburg would not help them. Two longish letters, one from the DHSS in 1984 and another from the Benefits Agency in 1993, studiously avoid any mention of the disadvantage which the recipient was about to suffer. It is true that the DHSS did enclose a leaflet numbered NI 38, dated April 1978 and entitled National Insurance Guidance for People Abroad. But it is only with the benefit of hindsight that any normal person would be able to discover the warning hidden away on page 10. Indeed, even with hindsight the leaflet is printed in such a way as to make one think that index-linking would be withdrawn from the benefits only under point 19 of the document which covers:

    "the widowed mother's allowance, child special allowance and guardian's allowance".

I would, of course, be happy to show my noble friend the Minister the leaflet in question and I believe he would have to agree that the wording and the layout are grossly misleading.

So to me at least—and I think to other noble Lords who support this amendment—it is clear that most of our 400,000 pensioners living abroad did not know of their impending disadvantage before they left this country.

However, I believe that the Government's position becomes even less sensible when they say that we cannot, and should not, afford the £230 million per annum required to bring all our overseas pensioners into line with those at home. This contention seems to miss the point that the 400,000 pensioners for whom we seek justice certainly save the Treasury very much more than the £230 million that it could cost to give them that justice. Indeed, a tiny indulgence in lateral thinking would show the Government that it is economically sensible to encourage our older people to go and live in the Commonwealth if they want to, rather than

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discourage them from doing so, as we do now by withholding their index-linked pensions. I suggest this because they are no longer a burden on, for example, our health budget when they live abroad. I hope that a very few figures might help convince my noble friend of this and persuade him to look favourably on this amendment tonight.

According to the latest departmental health report of March 1994, our hospital and community health services cost £14,788 billion for the 1990-91 year. Of this figure, some 42 per cent., or £6.01 billion, was spent on the over-65s. Likewise, local authority net current expenditure on personal social services amounted to £4.6 billion in 1991-92, of which, again, some 40 per cent., or £1.84 billion, was spent on the elderly. Thus, of these two voices alone—and of course there are many others—some £7.85 billion was being spent on our resident pensioners in 1991. Our resident pensioners numbered some 10,087,000 in 1993. The 400,000 pensioners considered by this amendment therefore amount to some 4 per cent. of our pensioners here. It must be fair to assume that if they had continued living here they would have incurred 4 per cent. of the costs in the two areas that I have quoted. Four per cent. of £7.85 billion is, if I am not mistaken, £316 million, or £86 million per annum more than the £230 million which the Government say that the amendment would cost. So by going to live in the Commonwealth and elsewhere, these 400,000 pensioners would still save the Treasury £86 million per annum, on the voices I have quoted alone, even after they had been fairly treated and topped up at a cost of £230 million annually.

Of course, my noble friend may be tempted to reply that he does not have to pay the £230 million annually, and so he can happily save that and the notional additional £86 million as well. With much respect, if he is minded thus to reply, could I suggest that the Government look a little further ahead? People are living longer nowadays, and the number of our resident pensioners is rising, together with their associated costs. There were, for example, 8.7 million pensioners in 1979 and 10.09 million in 1993. I do not know what proportion of our total DHSS budget and other expenditure they consume—perhaps my noble friend on the Front Bench can help us here—but it must be a very much larger figure than I have quoted. Indeed, total DHSS expenditure now stands at £102 billion per annum, of which £31.75 billion is for health and £70.36 billion is for social security. So colossal figures are involved. That is why I suggest it must be in the interests of the Treasury to encourage as many of our pensioners as wish to live in the Commonwealth to do so. Over time—and not very much time —the benefits would be far greater than the £230 million per annum at stake this evening.

6.45 p.m.

Lord Dean of Harptree: It is very unusual for a pensions Minister to have any friends when this matter is discussed. But I wish to be at least half a friend to my noble friend the Minister. As Members of the Committee know, the reality is that this particular

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provision has existed in the National Insurance scheme ever since 1948. It has been quite clear from that day to this that any pensioner who goes to live overseas, unless there is a reciprocal agreement, will receive the pension at the level at which it stood when he left this country.

With respect, I do not attach much importance to the arguments of ignorance. The information is there if the pensioner wishes to seek it before he goes. The reality is that this matter has been discussed with governments of both political colours over most years; and they have all reached the view that the present position should obtain. There are some very substantial arguments, which I have no doubt my noble friend will deploy when he comes to reply to the debate.

There is of course another fact too; namely, that pensioners who have gone over—

Lord Stallard: Before the noble Lord continues, he mentioned the provision in the 1948 Act. But if we accept his argument, did that not apply equally to the 300,000 pensioners who went to other countries? Why should there be discrimination? The noble Lord discriminates in saying that this payment was there for all but we waived it in the case of 300,000. That is pure discrimination.

Lord Dean of Harptree: I believe that the noble Lord refers to reciprocal arrangements. I intend to come to that point. I agree that it creates anomalies which make it very difficult for pensioners living overseas to understand. Perhaps I may develop the other arguments first.

The reality is that pensioners who live overseas are not subject to United Kingdom tax. That is a harsh fact, but it has to be taken into account. We also have to take into account that in our arrangements the now annual increases in the National Insurance pension are based on cost-of-living increases in this country. There are no equivalent criteria that one can use for pensioners living in Australia, New Zealand, South Africa or other countries with which we do not have reciprocal agreements. So I hope that my noble friend will feel that at least he has one "half friend". There are of course the anomalies, the disparities, which grow year by year. Every pension increase which takes place in this country means that the gap between pensioners in this country and those overseas grows bigger.

I wonder whether my noble friend is able to say anything at all about the possibility of progress through reciprocal agreements. I accept the point that the noble Lord, Lord Stallard, made. It is very difficult to explain to a pensioner who lives in Canada or in the United States that the disparity between the pensions should be as great as it is. If it were possible to have some progress with reciprocal agreements, that would help in dealing with the understandable grievance that overseas pensioners feel.

If that is not possible, I wonder whether my noble friend has considered, or would consider, the possibility of doing something special for pensioners who, say, are over 80 years of age. There is a precedent for a pension being introduced in this country for those who have not earned one through contributions. If no other progress is possible through reciprocal arrangements, is there any

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possibility of some special consideration perhaps being given to those who are over the age of 80? I hope that I have not entirely spoilt the friendship with my noble friend with which I started my speech. But I very well understand the position that Her Majesty's Government, like previous Governments, are likely to take up on this difficult issue.

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