§ 3. Mr. Canavan
asked the Secretary of State for Social Services what is the purchasing power of the retirement pension compared with February 1974.
§ The Secretary of State for Social Services (Mr. David Ennals)
On the basis of the movement in the General Index of Retail Prices between February 1974 and November 1977, the latest date for which a figure is available, the purchasing power of the retirement pension increased by 22.5 per cent. over that period.
§ Mr. Canavan
I congratulate my right hon. Friend on improving the living standards of pensioners during a period of high inflation. Nevertheless, does he accept that there is no room for complacency in the campaign for better pensions? With the rate of inflation on the decrease now, would it not be fairer to calculate the next pension increase on the actual rate of inflation during the previous 12 months rather than on an unreliable forecast of inflation for the 12 months ahead?
§ Mr. Ennals
I think that my hon. Friend is right in that there is reason for pride that, despite the deepest recession that any of us recall, when working people have in some cases had to suffer a decrease in their standards of life, we have seen the position of the pensioner steadly improve. That is something for which the Government are entitled to claim credit.
1419 My hon. Friend referred to the method of uprating. We chose a method which calculated what the rate of inflation was likely to be. I said in May that it was my hope that the increase of 14.4 per cent. would actually mean a real increase for pensioners, and that is what it turned out to be. It was a 1.2 per cent. real increase for the pensioners. As my hon. Friend will know, we have to make a calculation which takes into consideration both prices and earnings and applies whichever is the greatest advantage for the pensioner.
§ Mrs. Bain
When the right hon. Gentleman is looking at the possibility of reviewing State pensions, will he pay particular attention to the increased cost of fuel? In the interim, will he perhaps exercise some influence on the Department of Energy to extend the electricity discount scheme to gas and solid fuel in view of the reports in the Scottish Press that people have died this winter from hypothermia?
§ Mr. Ennals
There is a later Question on hypothermia, but I think that the hon. Lady knows that, quite apart from the special provision for those on supplementary benefit, in calculating the level of pension and supplementary benefits we take into consideration any increase in the cost of fuel that my right hon. Friend the Secretary of State for Energy carries through. In addition, we have greatly increased the number of people on supplementary benefit who get the heating addition.
§ Mr. Pardoe
Will the Secretary of State take into account that probably a better way of measuring the improvement in the standard of living of pensioners is to compare the pension with average gross earnings and average take-home pay? Would he care to say what proportion of average earnings the pension now is, and what proportion it is of average take-home pay, and how that has improved over the past two or three years?
§ Mr. Ennals
The improvement has been encouraging. The pensioner now has a much higher proportion of average earnings than was the case before. On the basis of the latest available earnings figures—October 1977—the pension rates introduced last November were 34 per cent. of the single man's net average earn- 1420 ings and 52 per cent. of those of the married man. This compared with 26 per cent. and 41 per cent. in 1973. It can therefore be seen that the pensioner gets a much larger share in relation to earnings than previously.