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Baroness Crawley: My Lords, before the noble Lord sits down, the position of pensioners in the Comprehensive Spending Review has been criticised by both the noble Lords, Lord Higgins and Lord Goodhart. Does the noble Lord, Lord Higgins, not agree with me that, out of the £43 billion spending commitment in that review, the extra sums to be spent on health, for example, will have a very beneficial impact on many pensioners who are consumers of the health service?

Lord Higgins: My Lords, clearly, that is so. But these amendments relate to their pensions. We merely have the throw-away four lines by the Chancellor in the

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course of his speech which promise jam tomorrow but not jam today. I do not dispute at all the point made by the noble Baroness. Of course, that is so. But one needs also to take into account the extent to which the Government's proposals so far have an adverse effect on many pensioners.

Earl Russell: My Lords, I shall not dispute the claim made by the noble Lord, Lord Higgins, that in the funding of pensions, his is the most prudent party. The figures which I have, which I hope are roughly the same as those of the noble Lord, show that his party is committing to pensions, over and above what the Government are committing, the sum of £300 million, whereas we on these Benches are offering to commit £3.5 billion. There is a distinct difference.

In advancing that commitment, the noble Lord, Lord Higgins, illustrated why his party, like Sir Walter Raleigh, in 1066 and All That, is left over from the previous reign. If you follow questions of British social attitudes as regards whether people prefer tax cuts or increases in spending, the proportion favouring increases in spending has risen every year since 1983. At least in the past five years, the balance has clearly changed. The Government, very belatedly, are showing faint signs of realising that. The party of the noble Lord, Lord Higgins, has not yet realised it. It no doubt soon will.

I say to the noble Baroness, Lady Carnegy of Lour, that I have spent a lot of time reading the passages in the Companion about the financial privilege of another place. As I understand it, the position is--and I have checked it with some care--that this House is always free to ask and the other place is always free to refuse, from which it does not necessarily follow that the other place will refuse on any particular occasion. There are people in another place who feel a certain anxiety about whether they will hold their seats. Some of those people believe that the funding of pensions will make a considerable contribution to the answer to that question.

Like my noble friend, I was absolutely astonished that the Chancellor of the Exchequer did not take the opportunity in what he said yesterday to provide any increase in pensions. I appreciate, of course, all the technical arguments why it may not have been expedient to do so. But, in political terms, this is an emergency which has been coming for quite some time. I have seen it coming since I spoke to the Brent Pensioners' Forum in 1997, which is a while ago now. It has reached the point where, almost like the dissolution of a marriage, the trust of voters in the Labour Party is on the edge of disappearing beyond the point of recall.

I suspect that yesterday, the Chancellor of the Exchequer had, and threw away, his last chance. If the effect of his actions is to make Mr Hague Prime Minister, one might wonder why he did that. That is not for me to speculate. But, if that is the case, we have this year left. If pensioners are to be satisfied, something must be done now. We can no longer have before us the amendment of the noble Baroness, Lady

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Castle, which was disposed of at Report by a show of power that I have not seen produced by a government since the noble Baroness, Lady Thatcher, was in No. 10 Downing Street.

We could not have supported that amendment, as the noble Baroness, Lady Castle, knows very well. We too have prudence, but we do not put it in quite the same place as the noble Lord, Lord Higgins, does. But since that amendment is not before us, the amendment which my noble friend Lord Goodhart has moved is the only show in town. So, if people on the Labour Benches do not want to see Mr Hague in Downing Street, they might think that this amendment is the best prospect that they have left. It is a lifeboat. We are happy to offer it to them and we will welcome aboard any of those who want to join us.

I know that the Minister will make arguments about targeting. I remember the Minister herself, in some extremely able speeches in the single parent debates at the beginning of this Parliament, arguing that the hardship of being on benefit was in large part a measure of how long one had received it. I have weighed up those arguments and find them extremely powerful, especially in relation to pensioners. My noble friend Lord Goodhart touched on some of the points which are relevant, such as having to go to a nearer place for shopping and having to get a taxi because one cannot drive.

But there are things such as the overcoat wearing out. As one gets older one feels the cold more. These big capital sums are one of the great hardships of any life on benefit. For that reason, the figures which the Minister will undoubtedly present will be telling very much less than the full story. This is a much better targeted amendment than the Minister will suggest.

The Minister will of course sing the praises of the minimum income guarantee. I understand the good intentions behind MIG. I am not going to shoot the Minister; she is doing her best. She is making great efforts. Perhaps the noble Baroness, Lady Castle, would like to share the joke with me. I might enjoy it.

Baroness Castle of Blackburn: I could not resist it. You said that you were not going to shoot her because she was doing her best. I merely added, "to shoot herself".

Earl Russell: My Lords, the noble Baroness, Lady Castle, has a lot more confidence in the Minister's aim than I have. The Minister is doing her best to find the people who are entitled to MIG to take it up. But, as the noble Baroness, Lady Castle has explained to this House many times, there are a great many people for whom the obstacle to taking up MIG is a simple, plain matter of pride. They do not take charity. They believe that they have earned it.

Since there are qualities in our population which I do not want to discourage, I believe that the people MIG is least likely to reach are those who need it most. For that reason I do not think that MIG can ever do what is wanted. I believe that my noble friend's amendment is the only thing that can. I hope that the House will view it with favour.

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7.45 p.m.

Baroness Hollis of Heigham: My Lords, despite the bait laid down by the noble Lord, Lord Higgins, and to some degree by the noble Lord, Lord Goodhart, I do not intend at Third Reading of this Bill to go into a wider debate on the Comprehensive Spending Review, as opposed to the details of this amendment at Third Reading of this Bill.

The purpose of this amendment is to allow the payment of an age addition to the basic state pension to people of 75 years of age and to allow for a higher age addition at the age of 80. As we have had a version of this at every stage of the Bill, noble Lords will not be surprised at my arguments any more than I am entirely surprised by the arguments adduced by the noble Lord, Lord Goodhart, this evening. I accept with the noble Lord that on average pensioner incomes tend to decline with age. But the differences within age cohorts are, as the noble Lord, Lord Goodhart, has acknowledged tonight, infinitely greater than the differences between them.

To put these differences into context, we can look at the median cash incomes that couples are receiving. For couples under 75 years of age, the poorest one-fifth are receiving on average £133 per week; the top one-fifth are receiving £457. For the over 80s, the poorest one-fifth receive £113 and the top one-fifth receive £348. That means that in each age group the richest one-fifth receive more than three times as much as the poorest one-fifth. The difference between age groups is much smaller and only about 12 per cent less. To put it in cash terms, the average income range within each age cohort spans about £250. The average income between age cohorts is approximately £25. In other words, the range within each age cohort is about 10 times greater than the differences between age cohorts.

In other words, that would mean that the Liberal Democrat amendment would give an additional £10 to those on £350 a week, providing they are over 80 years of age, but give nothing to those receiving £133 per week--about one third of the other group--because they are under 75 years of age. That is the effect of the amendment of the noble Lord, Lord Goodhart. There will be an extra £10 for those receiving £350 a week because they are over 80 years of age, and nothing at all for those receiving £133 per week because they are under the age of 75. What sort of justice is that? There is none.

The noble Earl, Lord Russell, said that he had been persuaded in an earlier debate by the analogy with lone parents that people, through length of time on benefit, become poorer. That is true if pensioners were in the same position as lone parents. But lone parents are on benefit because they have no other income and therefore, over time, their capital goods wear out. Their income is the same irrespective of whether they have been receiving benefit for five years, 10 years or 20 years.

The point about pensioners is that they do not all have the same income as lone parents. The point being made by the noble Earl, Lord Russell, substantiates the point made by government. It is precisely because of the

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inequality of income, unlike the equality for lone parents, that we need to target help in the way that we propose. I give way to the noble Earl.

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