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Baroness Hollis of Heigham: £6.5 billion more.

Baroness Castle of Blackburn: More than what?

Baroness Hollis of Heigham: £6.5 billion more on pensioners than the forecast figures that we inherited and £2.5 billion more on pensioners than would have been the case had we restored the earnings-linked pensions.

Baroness Castle of Blackburn: I am coming to that with great relish. It is £6.5 billion more than Margaret Thatcher's lot. I would not expect it to be the same. Our policy manifesto did not promise no improvement on the present pattern. I do not think a Labour government should make great play with a figure like that. It should be contrasted with previous Labour administrations.

The Minister has just said it is £2.5 billion more than if they had restored the earnings link. It is fascinating, is it not? It does require a little careful study. One does have to keep a rather cool head when going through this minefield of pensions policies.

I am going to examine that figure. I think the important thing about the £6.5 billion is who receives the benefit. We are never asked to examine that. Let us

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return to this point. They are going to spend by the end of this Parliament £2.5 billion. At one stage we heard a higher figure than that, so perhaps some statistical realism has been creeping into the Ministry, but £2.5 billion more than if they had restored the earnings link.

On whom is that £2½ billion to be spent? Let us have a look. My trouble is that I work all these figures out and then I cannot read them, so I am trying to do it, as best I can, from memory. By refusing to restore the earnings link which a previous Labour government had introduced for keeping the basic state pension in line with national prosperity, a single pensioner in the lifetime of this Government would have received £195 more than they are doing at present. A married couple would have received £312 per year more.

What have they got to offset that? The Minister talks about this £2½ billion. They should be rolling in it. Right, let us look. They both, single and married, receive the same fuel allowance because, remember, that does not go to the pensioner, the individual; it goes to the household. Therefore, they each receive £150. If they are over 75, then they will receive another £43 from the TV bonus, rebate, whatever it is called.

If you do some arithmetic, you will find that the single person's £195 has been replaced by £150 or, if he is over 75, £193, because he will receive the TV bonus on top. So it is pretty well level pegging, is it not? He is not receiving anything of that £2½ billion.

If we look at a married couple, we find a much more damaging picture. We find that married couples under 75 will receive £150 fuel allowance to offset the £312 that they have lost from the refusal to restore the earnings link. Why is that? It is because, of course, the fuel allowance is per household, not per pensioner. If they had been receiving a pensions increase--the earnings link--that would have been per pension. Fuel allowance is per household and, of course, so is the £43 TV licence money which they will receive if they are over 75.

Therefore, that £195 is reduced, in the case of a single pensioner, to £150 or £193--you do the mental arithmetic. And the married couple's £312 is offset by a mere £150 a year or, if they are over 75, £193.

I shall be very interested to know whether the Minister challenges those figures, because, if she does not and she accepts them, then she is admitting that it is meaningless to say, "We are spending 2½ billion more on pensioners". It all depends on who is getting what.

There will clearly be losers among people of modest incomes, among people who may be just over their savings or occupational pension limit for the minimum income guarantee, which is not, after all, so very splendiferous.

I think that the Government should, at the very least, show a bit more honesty and humility. If they came to us and said, "Look, it costs too much and we are sorry, but we just can't take it on board for the moment", we might disagree and quarrel but we would respect them. However, to come along with figures such as £6.5 billion more than Margaret Thatcher

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spent, which is not difficult, or to say, "We will be giving to pensioners £2.5 billion more than they would have received if we had restored the earnings link", is to discriminate, is it not? It is almost like the old days of the Poor Law and the deserving poor. People who have saved are not the deserving poor in this Government's estimation.

I ask the House most seriously to think about what it is doing. We shall go on fighting this battle. We shall go on meeting with pensioners who are 100 per cent behind us because one of the tragedies is that the Government would not listen. In 1996, when some of us were begging the government to include in the manifesto the pledge to restore the earnings link which had been so rudely abolished in 1980, we were told, "We're going to set up a pensions review body. Pensioners will have a voice". I know that I am an old cynic, but I said, "Yes, but who'll be listening?" and, of course, the Government did not listen. That pensions review body unanimously urged the Government to restore the earnings link. What on earth was the use of going through that charade? It reminds me of Glendower in Henry IV, who boasted,

"I can call spirits from the vasty deep",

and his companion said,

"Why, so can I, or so can any man.

But will they come when you do call for them?"

Will the Government do what the pensioners unanimously asked in the review body and are still asking? The Government have, of course spent money, but they have done so in a discriminatory way. I can assure the House that pensioners' dignity has never been more alert than it is today. Just like the disabled, they want to be treated as normal people in society, like everybody else, not labelled the poorest pensioner.

9.30 p.m.

Lord Goodhart: We have all listened with great respect to the two noble Baronesses who have spoken from the Government Benches. They undoubtedly make a strong case.

As we made clear in the House of Commons, and as I tried to make clear earlier in the debate this evening, the position of my party is that we are particularly concerned with the position of the older pensioners. That is why we put forward our own proposals for the age additions. We see this as a problem not only with the basic state pension, but also, for reasons I explained, with the state second pension, which is targeted particularly at those on modest incomes but, as things are now, will end up leaving those who live long enough dependent upon the minimum income guarantee.

We would prefer the Government to act in that way to deal with the problem of the older pensioners. We see that as a better-targeted and a more cost-effective way of dealing with such problems.

Baroness Hollis of Heigham: I hope that the noble Lord will allow me to intervene. We debated this point much earlier and I believe he accepted my figures. Though I have much sympathy with his analysis of the

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problem, the statistics do not bear out his assertion that age-related rebates on the state pension, as he suggested, would meet the problems he identified. I had thought that perhaps the noble Lord had accepted that, unfortunately, the statistics do not support what he is seeking to do here. In the light of that, does he agree that it is better to examine the MIG and so forth as more responsive, sensitive and appropriate ways of addressing pensioner poverty?

Lord Goodhart: We have already argued that point. Our position remains clear on this. On these Benches we do not think it satisfactory that people who, when they first become pensioners, do not qualify for the minimum income guarantee, should be forced by a decline in the value of their pensions relative to the value of the MIG to become dependent on it at an advanced age. However, I do not want to reopen that argument because I was coming to the end of my remarks.

If the Government insist on operating solely through the MIG and will not move in the general direction of giving non-means-tested help even to the oldest pensioners, then, if these amendments are pressed to a vote, we are likely to support the amendments.

Lord Higgins: I cannot hope to match the eloquence or analytical capabilities of the noble Baroness, Lady Castle, and I shall not detain the Committee for more than a moment or two.

The noble Baroness has rightly drawn attention to the reaction of pensioners to the Government's proposals. That is not outside my own experience, having represented Worthing for a number of years. It was said of that town that people went there to die and forgot where they came from. It is worrying that against this background a huge amount of press publicity has been put out saying that people should not worry because matters will be put right next year, but no specific information has been issued.

Perhaps I may make three points. First, the policy of the Government is in total chaos as far as means-tested or non-means-tested benefits are concerned. On the one hand, the Government stress means testing, but, on the other hand, we have seen a series of gimmicks put in place for TV licences and winter fuel payments which are not means tested. To a considerable extent those benefits reach many who do not in fact need the help.

Secondly, the figure of £6.5 billion has been mentioned by the noble Baroness as representing the increase in the amount targeted for pensioners. Perhaps I may ask her a specific question. Does that £6.5 billion take account of the changes in advance corporation tax that have removed roughly the same amount from private pension schemes?

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