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Baroness Hollis of Heigham: My Lords, it is open to any noble Lord to seek to discuss this at any time, and I would be delighted to do so.

Lord Morris of Manchester: My Lords, I listened carefully to my noble friend's reply. She clearly appreciates the strength of feeling behind the amendment, and the support for it is remarkably wide ranging by any standard. My noble friend's willingness to enter into discussion about what we are seeking is encouraging, and I most strongly urge her and the Secretary of State to move as quickly as possible in doing so. In the hope that we shall now be entering into meaningful dialogue about the way forward to the more rational approach to social policy that we envisage I shall not press the amendment at this stage--for it was not victory that we sought tonight but a sensible agreement on an issue that is primarily about humanity and common sense. I hope that that is what can now be achieved. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Baroness Castle of Blackburn moved Amendment No. 53:

After Clause 18, insert the following new clause--


(“ . In section 44(4) of the Contributions and Benefits Act, for “£66.75" there shall be substituted “£75".").

The noble Baroness said: Amendment No. 53 has been grouped with Amendment No. 55. The amendments represent two main strands of policy among those of us who wish to destroy the dependency culture in this country and encourage people to stand on their own feet. We heard a most impressive speech by Lord Morris on the amendment just debated. We were all in broad agreement with the amendment and the sentiments that he expressed. But we would also agree that in analysing poverty a very important factor is low self-esteem. I believe that the Minister also agrees with that; indeed, she hinted at it.

Therefore, what we seek to do in Amendment 53 is to embody the Government's own measurement of need--£75 a week for a single pensioner--in a basic state pension as of right. This is designed to remove from applicants the demeaning business of explaining every scrap of income and having it analysed, poured over and generally suspected until the facts have been fully established. The Government have themselves established a measurement of need which is the £75 a week for a single pensioner embodied in the minimum income guarantee.

So the Government have said, “If we are to give people enough to keep them out of need, this is the amount we should pay". But at the same time they say that all their spending must be targeted: that only the poorest pensioners should receive this sum. I found it an interesting contrast with what the Government say on other aspects of their policy. For instance, I am the first warmly to applaud the Government on what they are doing about child benefit. As the Minister rightly said, it is being increased to a spectacular degree. The Government have resisted siren voices which said that it should be taxed or means tested. “No", say the Government, “that shall be a child's right". Good. But it is a little difficult to reconcile that with other government statements about the need for targeting.

Let us consider the National Health Service. Again I applaud the Government for giving it such a high priority in their future public spending. But the whole essence of the health service is that it is the right of citizens; there is no targeting. Imagine what would happen to the ethic of the health service if it were to be means tested. We all know that it would undermine health for people to have to rely on what they have put into private insurance before they could be sure what they would get out. No: we say that the health service is the right of people as citizens; and that surely is the best way to establish social inclusion.

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We have all expressed agreement about the need to attack poverty and to have definitions which enable us to meet need. But suddenly the Government say, “This sum shall not be the pensioners' as of right even though they have contributed towards it all their lives". I believe that that gulf is immensely dangerous for the Government's whole strategy. If they are to sell the need for targeting--"We must spend all our resources on the poorest people"--it is eating away at the ethic underlying their excellent policies on child benefit and the NHS. I warn the Government that there are dangers in that.

Amendment No. 53 seeks to provide that the basic state pension shall be raised to the Government's own measurement of need: £75 a week for a single pensioner instead of the £66.75 he or she receives at present. I make two points. First, it can be afforded. I had a little exchange of views over this earlier with the Minister. The Government Actuary's recent report on the uprating of benefits indicates that there is a margin above the prudent safety level which he said must be observed in the fund if all future demands are to be met. It would cost £3.8 billion to adopt Amendment No. 53. But the Government Actuary has said that there is something like £5.9 billion in the National Insurance Fund above the prudent level which the Government Actuary said must be observed at all times.

At this hour of the night or morning, wherever we are at, we do not want to start jousting about elaborate figures. However, after an exchange of detailed correspondence, the Minister must now recognise that the figures we quoted from the Government Actuary's report are right.

I want to make a second point about the £75 as of right. It is the contributory pension. People have paid in what they have been asked to pay to balance the national insurance fund. The £75 is an extremely modest sum because if the earnings link for the uprating of the basic state pension, which the Labour Government of 1974 introduced, had not been immediately abolished by Lady Thatcher coming into power, the single pensioner's basic state pension would not be just £75 a week, it would be £93.

That earnings-related pension had to be adjusted by the Government Actuary in terms of the contributions needed to cover it. If that had been done and had been accepted as a target and people had made the necessary contributions to cover it over the past years, it would be balancing itself now. It is not the pensioners' fault.

When I introduced SERPS, the earnings link and other pension improvements in that 1974 government, we had to put in our White Paper the Government Actuary's assessment of the cost and what figures would be needed in contributions to cover it. A substantial increase in contributions was necessary and I know that some people said, “Oh, good, they've got themselves into trouble now. People will never accept that". On the contrary; it

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was extremely acceptable. People are sensible if you tell them that what they want has to be paid for somehow and they had better face up to it.

So we are not making a wild demand. We are not asking for that lost ground to be recovered all at once. We are realists and we are reasonable. However, we say to the Government, “Look, what's the good of telling us that you're going to have an annual assessment of what really constitutes need, and in the mean time here is our assessment of need; £75 a week, and then deny that as the basis of the basic state pension?".

That merely means that instead of rolling back the tide of means-testing wherever possible, we are institutionalising it in our new pensions policy. In my view, that is one of the reasons why so many pensioners have been reluctant to take up the income support to which they are entitled. That annoys me a little bit and I am trying to be reasonable at this late hour. However, for the Minister to say, “Ah, but you see we have had these pilot schemes and we are discovering that one of the reasons why people are not taking up pensions is that they have got too much money, not too little; they have been saving and they want to hang on to that; they do not want it to be counted", and then for her to go on to say, “We fully agree that the Government must encourage thrift"; I am sorry, but I do not think it tallies.

As regards these pilot schemes, for the Minister to release titbits to us out of context is not right. These pilot schemes produced their reports in December last year. The Minister can trot out little bits of those reports, while we are ignorant of the context of the figures to which she refers. She owes it to us to let us have the analysis of all those reports of pilot schemes investigating why people do not claim Income Support to which they are entitled. We ought to have a proper evaluation of those reports placed before us.

I am told that it is now hoped that we may receive them this December. But, really, why take a year? Once again it is taking policy bit by bit and giving us a great spiel about why such a bit here is essential and not giving us the whole picture. I am sure that the Minister must deplore that long delay. It has not delayed the Government going ahead with some aspect of their pensions legislation. I believe that that legislation ought to be suspended until we have a more complete picture of what has influenced people and what we should be aiming for.

Amendment No. 55 calls for the restoration of the earnings link for the future uprating of pensions. If we do not do that, the gap between the benefits as of right and the means tested benefits is going to grow. The Government have said that in the longer term they are hoping to uprate the minimum income guarantee in line with earnings. But why do only that, while refusing to uprate the pension as of right on the same criteria? We are due, at any moment now, to have an announcement of the coming year's uprating.

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I heard a rumour--we were told it this week. If the Government insist that they are sticking by price indexing and if the basic pension to which people have contributed to get something as of right is to be uprated in line with the Retail Price Index--which I gather is up by about 1.1 per cent, while earnings have gone up by 4 per cent--then the basic state pensioner is going to fall behind in a society which is becoming increasingly comfortable.

If you take the figure of 1.1 per cent and work out the uprated increase, I believe it amounts to 72 pence, which--as some wit pointed out--is the price of a bag of peanuts. The resentment among pensioners will deepen, because they have their dignity. I do not believe that one can tackle poverty while riding roughshod over that dignity. I do not believe that targeting is the answer. People must of course contribute for what they receive, but it is government's job to alter the contributions so as to cover the needs of the National Insurance Fund. That is just, as the Government raise taxation to cover the cost of the National Health Service; just, as they have to spend money on increasing Child Benefit. Why should the pensioner be singled out for the indignity of targeting? I do not believe that either the financial poverty or that psychological poverty which keeps people down will be abolished by constantly extending the area of means testing. I beg to move.

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