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Baroness Hollis of Heigham: My Lords, the £5 and the £8 are from next April. The additional sum of £3 is for the following year. Given the prudent management of the economy, we believe that this is now the right time to make the money available to all pensioners. But through our minimum income guarantee and through our pension credit, what we are also doing is making sure that the poorest pensioners gain most. Something like one half of all the Government's new money is being spent on the poorest pensioners. Therefore, the bottom 20 per cent and the next 20 per cent get three times as much as the rest. I am sure that my noble friend would wish to see such redistribution in favour of the poorest pensioners.

Baroness Carnegy of Lour: My Lords, can the Minister answer the final question asked by my noble friend Lord Higgins and tell us precisely which definition of "pensioner poverty" is being used in the Statement? I think we need to know that.

The Chancellor tells us that he has been very prudent and wants to avoid stop-go. The noble Baroness has explained to us that the pensioner income guarantee and the pensioner credit will both be earnings-related. I think she said that some five and a half million people are involved. That must be a large sum involved every year. If these matters are earnings-related, it means that if earnings rise very fast in an inflationary way, too much money will be chasing too few goods. That problem will be enormously added to by what the pensioners get through the earnings-related addition. Does the noble Baroness not think

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that this will be extremely inflationary? Does she not think that this is perhaps contrary to the Chancellor's policy of being prudent.

Baroness Hollis of Heigham: My Lords, there are many definitions of "pensioner poverty" because poverty is multi-faceted. But the Government's broad definition of "poverty" tends to be either 50 per cent of mean or 60 per cent of median. It may be that the noble Baroness was slightly misled by the noble Lord's suggestion that there is a commitment to a statistic in terms of pensioner poverty. To my knowledge, that commitment has not been made. I should certainly support such an effort. But the commitment is to tackling child poverty and the statistics relate to that, not to pensioners. Perhaps there was something of a red herring there.

The noble Baroness asked whether extra money going into the pensioner credit would be inflationary. I am sure that the noble Baroness does not mean to suggest that the position on her side of the House is that one should not increase pensioners' income because one may fuel inflation. I am sure she would wish to dissociate herself from that suggestion.

Baroness Carnegy of Lour: My Lords, I am not speaking for the Opposition; I am speaking for myself. I want to know whether or not this will be inflationary. Of course I understand the position. I am a pensioner myself. I have an interest. I am just asking whether it will be inflationary.

Baroness Hollis of Heigham: My Lords, I am not a Treasury Minister. But my understanding is that if one is investing additional income in some of the poorest members of society, that is less likely to be inflationary--in the sense that the income is totally spent on food, housing and basic goods--than if one is investing additional income in those with higher disposable incomes. Let me remind the noble Baroness of what we are doing. At the moment, someone on a minimum income guarantee gets something like £77. From next April that will increase to £92 income for a single person and up to £100 when the new pensioner credit is in position. That is roughly speaking the bottom 20 per cent of our population profile--for the most part, older single women who are poor now, either because they did not work or because they had interrupted work careers. We need as a result to help them. Any increase in the basic state pension does not help them because for the most part they do not have complete state pension records. Therefore, to raise their pension by an earnings link will not help them. They have to be targeted in this way through MIG.

There is the second group who may have saved £20 to £30 which as a result barely lifts them above the MIG floor. That is the group we are trying to seek--the next 20 per cent--with the pensioner credit which has been warmly welcomed. Of course there are many questions--some raised by the noble Earl, Lord Russell--that we have not yet answered because this is a consultative scoping document and we want people's responses on it. What we are seeking to do is to ensure

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through MIG that we help the poorest 20 per cent; through the pensioner credit we help the next 20 per cent. At that point the stakeholders and occupational pensions kick in for the rest, who will be floated above that level. In that way, for the longer as well as the shorter term, we shall be addressing pensioner poverty.

Lord Ashley of Stoke: My Lords, I warmly welcome the increases for disabled people and for carers. These are nothing like as derisory as has been made out by noble Lords opposite. I am particularly pleased about the amount paid to carers. I pay tribute to the noble Baroness, Lady Pitkeathley, who brought the issue of carers before the House. Her work has no doubt resulted in the Government's move.

Although I welcome the increases in pensions, they should not be going only to older people; they should be going also to severely disabled people of working age. Their problems are the same as those of older people.

Lastly, perhaps I may refer to the winter fuel payment, which is not a gimmick as the noble Lord, Lord Higgins, made it out to be. The winter fuel payment is an extremely important payment of £150 per year. Pensioners over 60 years of age get it. I believe that severely disabled people are entitled to the same kind of payment because they suffer the cold as much as old people. In the main they are poor and cannot afford to warm their houses. Will the Government consider as a matter of urgency the payment of the winter fuel payment to severely disabled people?

Baroness Hollis of Heigham: My Lords. I shall take that point back, but I would not like my noble friend to be under any misapprehension about the degree of support that we are offering disabled people in this package today. Of the £200 million new money--not recycled or reannounced money--something like £100 million is going to increase the carers' premium, which the noble Lord welcomed. Of the other £100 million nearly half is going to disabled children. That is the disabled child premium on income support. Half of the rest is a disability income guarantee for the poorest disabled families. So half of that £100 million is already going to disabled children and people of below pensioner age. I believe that their needs too are being properly addressed in this Statement.

Lord Rix: My Lords, as president of Mencap, I was both amazed and delighted that the very first part of the Statement on the annual uprating of benefits was concerned with families who have children with disabilities. It then went on to a subject which is often well below the title--those disabled people who are unable to work and their carers, which unfortunately includes many people with a learning disability. The disability income guarantee is to have a considerable uprating while carers, too, are to share in this long-overdue largesse. No doubt the reason for this decision to spend £200 million more next year on supporting carers and people with disabilities is largely due to the undoubted charm, diligence and expertise of the noble

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Baroness, Lady Hollis of Heigham, in persuading her right honourable friends the Chancellor of the Exchequer and the Secretary of State for Social Security to act with such munificence. But I should like to congratulate the noble Baroness and inquire whether the promise of support for every year up to 2001 is but a harbinger of even better things to come.

Baroness Hollis of Heigham: My Lords, I am delighted that the noble Lord, Lord Rix, has welcomed our measures. Given the position of responsibility he has held and the way he has fought for a particular and sometimes overlooked constituency, I am particularly glad about the way the carer premium and the disabled child premium will interlock. It means that a parent--perhaps a lone parent--who is on basic income support and cares for a child who has severe learning difficulties or possibly cerebral palsy will gain not only from the increase in the carers premium, which will go up not by £2 but by another £8, which means £10, but also from the increase in the disabled child premium--so that family may enjoy a cash increase of nearly £20 and a real increase of around £17 or £18 next April, which will make a significant difference to their ability to lead better quality lives. I am delighted that the noble Lord felt able to welcome it.

Lord Roberts of Conwy: My Lords, while there are clearly very welcome aspects of the Minister's Statement, a great many of the benefits really amount to jam tomorrow. Perhaps I may take the Minister back to her example of personal credit. As I understood her, she instanced the person on £77 of pension who has an occupational pension of £20. Then, by some device, that £97 became £100; and not just simply £100, but there was a further payment of £12 in respect of savings. Is that £12 related to the level of occupational pension for which the person has qualified after, presumably, working for it, and to what is the extra £3, which makes the £100, related?

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