HC Deb 17 January 2000 vol 342 cc557-610
Madam Speaker

I have selected the amendment in the name of the Prime Minister.

3.37 pm
Mr. Steve Webb (Northavon)

I beg to move, That this House believes that an increase of 75p in April 2000 in the rate of the retirement pension would be inadequate. Only in the House of Commons would this motion be controversial. The idea that paying retirement pensioners an extra 75p from next April could possibly be adequate would not occur to most of the pensioners in our constituencies, or, indeed, to non-pensioners. Here, it will divide the House, and, I suspect, may even be defeated. We live in hope.

Pensioners to whom I have talked—and, I am sure, those to whom many other hon. Members have talked— are insulted by the offer of 75p next April. They are not only insulted, however; they are resigned, which I find all the more worrying. They are resigned because they have reached a point at which they expect nothing better. Sadly, successive Governments have left pensioners feeling that they cannot trust any of the whole lot of them, and that this is no more than they could have expected.

It is not only the Liberal Democrats and some nationalists who believe that 75p is inadequate. I established on Thursday evening that 83 Labour Members had signed an early-day motion whose wording is identical to this motion. If we exclude the payroll vote, that means that approximately one in four Labour Back Benchers considers 75p inadequate, as well as the many more who think the same, but did not add their names. The Minister may wish to dismiss us as an Opposition party, but I wonder whether he wishes to dismiss the views of about a quarter, or perhaps more, of his own Back Benchers.

Those 83 hon. Members include former Ministers— and, indeed, one person who served in the Cabinet in this Parliament. We are talking not just about the awkward squad, but about some very senior as well as some newer Members. If the 83 were to vote for the motion along with the Liberal Democrats and the nationalists, the Government's majority would be decimated, provided that one other party voted with us.

Mr. Andrew Robathan (Blaby)

Not "decimated".

Mr. Webb

Yes, literally decimated. The Government's majority would be reduced from about 170 to about 17.

Sir Sydney Chapman (Chipping Barnet)

The definition of "decimation" is reducing by a tenth, not to a tenth.

Mr. Robathan

Exactly, Professor.

Mr. Webb

I am prepared to argue that it means reducing to a tenth, but I will not press the point.

The crucial question is, how will Her Majesty's official Opposition vote? We wait with bated breath to find out. Given that, had they been in power, 75p is all that pensioners would have got, one would expect them to vote against the motion. So on the ground that the Conservative party does not actually have a pensions policy, it should abstain. However, on the ground that the opportunist thing to do would be to rip up what it used to do and to say the opposite, it should vote with us; so there are all those possibilities. This afternoon, we look forward to finding out what the Tories will do.

The motion is about far more than the uprating. It is about whether the basic state pension has a future at all. The critical point is this: in a year when the Government had spare cash not just for everything else, but for pensioners and, indeed, for pensioner incomes, they thought of every way to spend it except putting it on the state pension. If they will not put it on the state pension in a year when they have plenty of money, will they ever if times are hard? If we do not stop the rot now, there will be no pension left to save.

To give an idea of how extraordinary the position in which we find ourselves is, I consulted the Library about what has happened to the state pension not just in the past 20 years, but since the war, relative to average earnings and relative to the poverty line. The results were astonishing and cast new light on what has been happening in the welfare state since the war.

When the pension came in, it represented about 14 per cent. of average earnings. That rose to 19 per cent. in the mid-1960s and stayed at around 20 per cent. until the early 1980s, when Mrs. Thatcher got her hands on it. Now it is about 15 per cent. In 30 years or so, it will be just 7 per cent. Why does that matter? It matters because pensions are about smoothing the transition from paid employment to retirement. If pensions lose touch with the earnings that they replace, they will achieve nothing.

I give one example. I have said that pensions were about 15 per cent. of average earnings. Hon. Members earn a minimum of £47,000 a year. Fifteen per cent. of that is roughly £7,000. Could any of us imagine retiring on £7,000? Clearly not. Of course, the pension in absolute terms is not £7,000: it is £3,500.

That is what we are increasingly condemning our fellow citizens to. It will get worse, not better because, by the time the Government state second pension comes in, the basic state pension will be half of income at the poverty line, or, in today's money, about £39 a week. The Government like to describe the state pension as the foundation of income in old age, but it is clearly a sinking foundation.

Not so long ago, the Labour party used to think that pensions should have something to do with earnings. This morning, I was leafing through Hansard from 13 April 1983. I came across the Labour spokesman's views. Succinctly and powerfully, he said: Although pensions being tied to prices might look good for electioneering slogans, it is catastrophic for people who are now aged between 30 and 50 who believe that they are paying into a scheme that will provide them with a decent pension. That will produce major problems in the future."—[Official Report, 13 April 1983; Vol. 40, c. 882.] What would happen under a Blairite regime to a firebrand left-winger such as that? Surely he would not find a place in the Government; he certainly would not as pensions Minister. It is a funny old world, as I am sure the right hon. Member for Birmingham, Perry Barr (Mr. Rooker) would agree.

Today, we are considering not just the value of the pension relative to earnings. Often, the Government will say that the pension is unaffordable. In last Tuesday's debate, they came up with some huge figure—tens of billions of pounds—on linking the pension to earnings and said that that was clearly unaffordable, but the answers that I have from the Library show that, in the 30 to 40 years after the war, successive Labour and Tory Governments not only linked the pension to earnings, but did vastly better. The pension rose from 13 per cent. of average earnings just after the war to 20 per cent. in the early 1980s—hugely better than earnings indexation.

Those 30 to 40 years were not years of unparalleled boom, yet successive Governments found the money to do that. How can it be that a prosperous country such as ours cannot find the money to do it now, when successive post-war Governments did? Could it be to do with political priorities and the fact that, incredibly, the basic pension is still not a priority?

We must consider a second aspect of the pension's value—its value relative to the poverty line. Although the Minister is very fond of saying that the pension was never intended to be enough to live on, when it was introduced—when it was worth 108 per cent. of the national assistance line—it was exactly that. If one had only a pension, one was not entitled to a top-up, because the pension was supposed to be enough to live on.

For most of the post-war period, the pension has been worth about 95 per cent. of the poverty line, or just a shade below. In the past year or two, however, there has been a drastic fall in its value. For someone who is newly retired, the pension is now worth 86 per cent. of the poverty line; amazingly, for an 80-year-old, it is 79 per cent. of the poverty line—which is a full £18 per week short of the poverty line. The consequence has been a huge and growing gap between the pension and the poverty line.

How is the gap to be filled? According to Ministers, for most people, it is to be filled by voluntary savings.

Mr. Dale Campbell-Savours (Workington)

I have been listening very closely to the hon. Gentleman's comments. However, I should tell him that—I say this in the Chamber, as it is a contempt of the House to mislead it—last year, from my 69,000 constituents, we received only six letters complaining about the level of the state pension. With the introduction of the pension guarantee, much of the argument on raising the state pension has effectively been destroyed. The hon. Gentleman has now been speaking for seven minutes, but has not even mentioned that.

Mr. Webb

The hon. Gentleman may be sure that I shall mention it. Furthermore, I think that he has received so few letters on the issue because people do not think that there is any point in sending one. As I said, pensioners do not trust any of us on the issue because they have been let down by so many of us.

The gap between the basic pension and the poverty line has to be filled. However, if it is to be filled by people's voluntary savings, and if they will receive only a means-tested top-up—which the hon. Member for Workington (Mr. Campbell-Savours) just mentioned— why should they bother to save?

Currently, someone retiring with £40,000 in savings should not have bothered to save that money, as it will buy him or her a pension top-up and payment of rent. The way things are going, if we retire with £100,000, we need not have bothered; expressed as a lump sum, it is only the gap between the basic pension and the poverty line. Why should anyone save in such circumstances?

The phrase in the Government's amendment to the motion that we should support the Government's commitment to letting pensioners benefit more from their savings is ludicrous. The Government are discouraging savings with every step that they take.

Why is this year's pension rise so low—only 1.1 per cent? In the year to September, the inflation rate was precisely 1.1 per cent.—whence the pension increase of 75p was derived. The increase will give pensioners another £39 a year, to meet all the price rises facing them. However, let us consider their various bills.

Last April, I tabled a question on council tax increases, and was told that, net of all rebates and benefits, the typical pensioner had to pay an extra £40 in council tax. As the same funding formula will be used this April, the increase could well be similar. Paying that one increase will thus require all a pensioner's pension increase, leaving him or her nothing to pay for other price increases. As the motion states, the 1.1 per cent. increase is inadequate because it does not reflect the rise in pensioners' cost of living. However, the situation is even worse.

Inflation was low because mortgage rates and interest rates were decreasing. The consequence of those decreases has not only been a poor pension increase, but decreasing savings incomes for pensioners. Pensioners were therefore hit with the double whammy of decreasing incomes, caused by decreasing interest rates, and a poor pensions uprating.

It is one thing to say that 75p is not enough, but another to suggest what should be done. There are two aspects to our proposals. First, as pensioners are buying a different basket of goods, indexation should relate to pensioners' true cost of living and not to the average cost of living of the population overall. The Government should therefore construct a proper pensioners' price index. Although there is already a pensioners' price index, incredibly, it does not include housing. It therefore does not provide a proper basis for indexing pensions.

I hope that the Minister will tell us that the Government will determine pensioners' true living costs and index pensions on that basis.

Mr. Dafydd Wigley (Caernarfon)

I support the hon. Gentleman wholeheartedly on the need for a relevant index. Does he accept that that would not in itself make up for the loss that pensioners have suffered since 1980–81, when the change was made? Does he also accept that we need to bridge that loss for pensioners as far as we can and as quickly as possible?

Mr. Webb

The right hon. Gentleman is right. I was going to describe the second part of the package. The oldest pensioners have lost most from 20 years of price indexing the basic state pension. Those who retired when the link was broken have had nothing but price indexation for 20 years. Inflation has eroded their savings. Many of them are elderly widows on low incomes. That is why our party wants substantial additional resources to be focused on the oldest pensioners—the over-75s and over-80s. We want a targeted approach that does not rely on means testing, but which would help to deal with the problem that the right hon. Gentleman raised.

The hon. Member for Workington referred to how the Government's other policies have helped pensioners. Those policies are listed at considerable length in the amendment. Let us take a look at some of them. The amendment stretches the truth considerably on the tax guarantee, saying that it now means that two thirds of pensioners now pay no income tax". The use of the word "now" twice is proof that nothing has happened. One would expect the number of pensioners paying income tax next year to be only a fraction of the number the year the Government came to office, but the facts show that the figure is the same. So much for a tax guarantee. The Government can guarantee only that as many pensioners will be paying tax as ever.

What about the winter fuel money? It might as well be called the winter biscuit money or the winter tea money, because it has nothing to do with fuel. Clearly it is welcome, but why was it not put on the pension and related benefits? When the Government had £500 million—or whatever the figure was—for pensioners, why did it go on winter fuel money? Winter fuel money does not have to be indexed, so next year it can be £100, the same as this year. Who knows whether a future Government will carry on with it? Have we voted for a winter fuel payments Act? Of course we have not. The change did not need primary legislation because it is a social fund payment. I wonder whether hon. Members who are older than 60 realise that they are the beneficiaries of social fund payments. That is how easy the measure was to introduce and that is how easy it will be to do away with. Had the money been put on the pension, it would at least have had to be indexed. Although it might have been phased out slowly, it would have been better on the pension.

The Government sometimes say that our proposal for age additions is poorly targeted, but what else is paying £100 tax free to everyone in the country older than 60? It is scarcely a targeted strategy. The Government are guilty of inconsistency.

At least the Government have listened to us about the additional needs of older pensioners when it comes to television licences. Their policy is welcome to that extent, although there seems to be no explanation of why pensioners are not being given the money to spend for themselves.

The minimum income guarantee is a good benchmark, but to coin a new Labour phrase, it should be for the few, not the many. It should be a residual measure, catching the few who fall through the safety net. It should not be a mass approach for hundreds of thousands of pensioners. The Government tell us that in 2047 all will be well, but we have slightly more urgent priorities. Critically, one third of those entitled to the so-called guarantee do not get it. Money on the pension would reach them, but the so-called guarantee is not guaranteed.

Mr. John Bercow (Buckingham)

On the subject of effective targeting, does the hon. Gentleman agree that it would be very wise, as my right hon. Friend the Leader of the Opposition recommended, to abolish the 65-year age restriction for claimants of invalid care allowance and the carers premium, thereby helping 55,000 of the poorest pensioners in the country?

Mr. Webb

I have a lot of sympathy with the hon. Gentleman's point, which is why I am curious as to why the Leader of the Opposition did not do that when he was a social security Minister.

The objection to such increases in the pension is usually that they would not benefit the poorest pensioners. It is sometimes said that if extra money is put on the pension it will just come off their income support, but that ignores three important, deserving and needy groups of pensioners, all of whom would benefit from a pension rise.

The first group are the 750,000 pensioners—as estimated by the Government—who are entitled to income support but do not claim it, typically missing out on £1,000 a year. They would benefit in full from a pension rise, and they are the poorest pensioners in the land, bar none. In addition, there are 600,000 pensioners who live below the income support line but who have capital above the measly £8,000 threshold. I should point out that £8,000 is not very much life savings. Most of us would be concerned if we started our retirement with only £8,000 accumulated. However, that is enough to deny someone the so-called guarantee. Those people would get a pension rise in full.

The third and final group—the group who write to me most, from all around the country—are those who have small amounts of savings, taking them beyond the reach of the means-tested benefits system. They get nothing from the so-called guarantee; they get pension rises in full. If the Government really believe, as they say in the amendment, in letting pensioners benefit more from their savings they will reward those people who have saved, and not penalise them.

How would our proposals—pensioner price indexation and extra money for the older pensioners—be paid for? Has anyone looked at the value of the national insurance fund recently? The balance is getting on for £15 billion, and the annual surplus is in excess of £1 billion. The package that I have just proposed would cost about half that. These are modest demands, yet the vast amounts in the national insurance fund suggest that the money is there. It is about priorities. The specific figures that we have identified are a £5 increase for those over 80 and a £3 increase for those over 75—as a down payment, with more to come.

Mr. Bill Rammell (Harlow)

I have sympathy with the hon. Gentleman's view that we need to be doing more for pensioners. However, did I correctly understand him to say that there is a £15 billion surplus, half of which would be taken to fund his party's proposals? Could he clarify that?

Mr. Webb

I apologise if that was unclear. The balance is £15 billion, and there is an surplus of more than £1 billion every year. The package would cost half the annual surplus—about £0.5 billion. In other words, the balance in the account would continue to go up even our proposals were implemented.

I have outlined what I believe should be done. It is not enough for Opposition parties—as some are wont to do— to say how terrible things are without putting forward a credible alternative. [HON. MEMBERS: "Like the Liberal Democrats."] We have proposed what we would do today.

The motion is simply about this April's pension rise. As regards the basic state pension, the Government have said that they will carry on with what the Tories did. Pensioners will get 75p this April unless the House can convince the Government that that is unacceptable.

Mr. Frank Field (Birkenhead)

I was one of those who willingly signed the relevant early-day motion, and I will continue to do so in future. I am sure that the hon. Gentleman is aware that I am not the only Labour Member to sign it. While one is pleased and proud with what the Government have done up to now, many of us had hoped that the Government would be doing even more by the time of the general election. That is why we signed the motion.

Mr. Webb

I am grateful for the right hon. Gentleman's support, and we share his hope that the Government will do more before the election. We would like them to do something this April, rather than let pensioners have another year of inadequate incomes.

Mr. Simon Hughes (Southwark, North and Bermondsey)

My hon. Friend has expressed the views of the parties, and he answered the question from the hon. Member for Workington (Mr. Campbell-Savours). What is the view of the pensioners' movement and pensioners' organisations? In my experience, this is one of the two main pensioners' issues that all the pensioner groups make the most representations about. They are livid that the Government do not understand how measly their proposal for this year is.

Mr. Webb

My hon. Friend is right. Not long ago, I addressed the national pensioners' convention in Blackpool—an audience of 1,500 pensioners. They are calling for earnings indexation and a substantial increase in the pension for older pensioners, in line with our arguments. We are finding that our arguments are gaining resonance, and pensioners are concerned that people are out of touch.

Mr. Jeremy Corbyn (Islington, North)

I have a great deal of sympathy with what the hon. Gentleman has said. In his assessment of pensioners' living standards, has he made any calculation of the increasing costs imposed on the elderly in day centre and home help charges and all the other charges made by local authorities of all parties throughout the country? Obviously, those charges affect the living standards of a specific group of people who used to have to rely on an inadequate pension and now have to rely on an inadequate pension minus the charges.

Mr. Webb

The hon. Gentleman is absolutely right. That is exactly the sort of item that should appear in the index of goods that we take into account when we consider what should happen to pensions, even though it has no impact on the retail prices index.

In a year in which the Government had money for pensioners, they put nothing into the pension. A sentence of death is hanging over the state pension. By our votes this evening, we have a chance to bring it a reprieve.

4 pm

The Minister of State, Department of Social Security (Mr. Jeff Rooker)

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof: notes that the Government inherited a situation where increasing numbers of pensioners were living in poverty and where, if nothing had been done, one in three people would have retired on to means-tested benefits by the middle of this century; congratulates the Government on the start it has made in dealing with these problems; applauds in particular the introduction of the Minimum Income Guarantee, benefiting one and a half million pensioner households, and welcomes the Government's commitment to raising it in line with earnings for the rest of this Parliament and to conducting a take-up campaign to ensure that pensioners get what they are entitled to; supports the Government's commitment to helping pensioners, including the restoration of free eye tests and the new winter fuel payments, which benefit over seven million pensioner households and will be paid every year from now on; welcomes the Government's commitment to extending further help with pensioners' needs, including free television licences for people aged 75 or over from next autumn and the extension of concessionary public transport fare schemes; supports the Government's commitment to letting pensioners benefit more from their savings through the minimum tax guarantee which now means that two thirds of pensioners now pay no income tax; and welcomes the Government's plans to reform pensions, through the new stakeholder pensions and second state pension, so that everyone who puts in a full life of working or caring will in due course be able to retire on an income above means-tested levels.". I welcome this debate—one of the key debates for the Liberal Democrats. The subject, which they have chosen, is important to the Liberal Democrats here and to the Government, but it clearly not important to 72 per cent. of Liberal Democrat Members, as they have not bothered us with their attendance: a factor that they can explain in due course to their constituents.

Mr. Tom Brake (Carshalton and Wallington)


Mr. Rooker

Oh, yes. We will have some cheapness today.

I regret the fact that I shall have to use some figures and statistics today; I shall try to keep them to a minimum but, in rebutting some of the points made by the hon. Member for Northavon (Mr. Webb) it is inevitable that I shall have to use some. As the hon. Gentleman said, the motion deals only with the supposed inadequacy of the 75p increase. The rest of what he said is not in the motion. It is on the record, but that is not the same as presenting a motion to the House that can be debated.

The hon. Gentleman did not tell us what is quite clear: that the Liberal Democrats have changed their policy since the general election. We make no apology for fulfilling our manifesto commitment—and indeed going beyond it. It is well known that the commitment on which we were elected was to use the basic state pension as the building blocks of pensioner income and to raise it at least in line with prices. That has been done for three years.

On page 49, the Liberal Democrat manifesto—I am not taking this out of context; I shall quote the whole sentence—said: The basic state pension will remain indexed to prices. That is exactly what the 75p is. The manifesto also said: We will create an additional top-up pension for pensioners with incomes below the income support level. This will be indexed to earnings". That is exactly what the minimum income guarantee is. As my right hon. Friend the Chancellor has said on more than one occasion, it will continue to be index-linked to earnings.

The Government have put into effect two key planks of the Liberal Democrat manifesto, and we are being held to account and complained against today with regard to one of them. I am not sure whether there has been a change in Lib Dem policy.

Mr. Paul Burstow (Sutton and Cheam)


Mr. Rooker

Oh, there has.

Dr. Jenny Tonge (Richmond Park)

Will the Minister give way?

Mr. Rooker

No, I must make a bit of progress. I have not actually started my speech yet. I made those introductory remarks to get the tone of the debate right on the matters on which we are being attacked, one of which is pensioner incomes.

The hon. Member for Northavon sometimes talked about the basic state pension and sometimes about total pensioner incomes, although he never quite put it that way. If any right hon. or hon. Member knows a pensioner who lives on an income of £66.75 a week—the basic state pension—and who has no capital over £3,000, it is their bounden duty to ensure that he or she gets the benefit of the minimum income guarantee. Everywhere I hold meetings—including pensioners' convention meetings—I say, "Hands up, anybody who is getting only £66.75." I know that that is slightly unfair because, by their nature, such meetings may not be attended by the poorest, but so far, no one has put their hand up.

The Government are deliberately targeting resources on the poorest pensioners, but the reality of pensioner incomes is different. The average income for a pensioner couple now, on 1996–97 figures—the latest ones, which were published in 1998 in the pensioner income series, although we will have more up-to-date figures by the end of the month—is £248 a week. The average income for a single pensioner is £129 a week.

It is true that there is a difference with age. For couples in which the male is aged over 75, the average income is £226 a week, and for the others it is £259 a week. It is a fact that, as pensioners get older, their income falls. Among single pensioners, the average income for men is £141 a week, and for women it is £126. It is a myth that the generality of pensioners exist on £66.75 a week.

Mr. Simon Hughes

No one is saying that.

Mr. Rooker

The whole thrust of the speech by the hon. Member for Northavon was directed towards perpetuating that myth.

Mr. Corbyn

My right hon. Friend the Minister will have heard my intervention in the speech by the hon. Member for Northavon (Mr. Webb). In the assessments made by my right hon. Friend's Department, what examination has been made of the cost of living index as it relates to pensioners in terms of transport costs, increased charges imposed by local authorities and the loss of former public facilities that now have to be paid for privately? All the evidence that I have seen suggests that pensioners are becoming significantly worse off because of cuts in local services.

Mr. Rooker

I say to my hon. Friend genuinely that the whole range of income is taken into account. I am giving average figures, which are the only ones any of us can give unless we use an individual example. In many ways, we succeed or fail in this place by giving individual examples of our constituents, but when we make a global assessment, we have to use averages based on pensioner incomes and expenditure. The factors that my hon. Friend mentioned are taken into account. We must remember that averages can be misleading. However, that does not alter the fact that the figures that I have given show that average pensioner incomes are now totally different to what they were 20 years ago.

Mr. Simon Hughes

I am sure that the Minister understands that, even given the Government's present policy of the minimum income guarantee or the policy that he is right to say that we had at the last election— although we have moved on since—of a minimum basic income, a minority of pensioners do not get anything above the basic state pension. Will he confirm that there has never been a 100 per cent. take-up and that there probably never will be? If we are to meet the needs of the poorest pensioners, we must do something other than keeping the pension down and getting pensioners to make up the difference by applying for other benefits. Many people refuse to apply for those other benefits because they fear means testing and see it as degrading.

Mr. Rooker

I accept the point. As the hon. Gentleman knows, we have three sets of benefits. We have the means-tested income benefits and the minimum income guarantee, for which we will shortly announce a Government-led, national take-up campaign. It will be a unique campaign for a Government to run.

However, many other benefits are not income related, yet their take-up remains a problem. For example, attendance allowance take-up by pensioners is about 40 per cent. of what we think that it should be. It is difficult to drive a take-up campaign on benefits that are not income related, but the hon. Member for Southwark, North and Bermondsey (Mr. Hughes) is right: the Government have a moral obligation and duty to target resources on the poorest pensioners. The campaign will cost several million pounds, and we shall announce the details shortly.

Mr. Campbell-Savours

My right hon. Friend gave some interesting statistics earlier that may surprise many people outside the House. Will not the figures for 1996–97 be substantially higher than those that he gave? Are there any projections about what those figures will be? All hon. Members want the state pension to be increased substantially, but the amount of correspondence that we receive on the level of the base pension has diminished. We need more accurate statistics that show the truth of what is going on in the country.

Mr. Rooker

My hon. Friend is right to say that the figures will have changed from those that I quoted. However, the new pensioner income series figures for 1997–98 will be available before the end of the month, and the Department of Social Security will publish a paper on pensioner incomes shortly afterwards.

I will not go into the details, but a pensioner in my constituency made an inquiry of me last Friday evening. I had not met the gentleman before but, in the course of our conversation, I happened to see the pension forecast made for him just before he retired in May last year. His basic state pension was £66.75. He had a full, 100 per cent. national insurance pension after working in the engineering industry. The salaries that he had received were not massive, as he was not involved in highly skilled work. He had almost £6 in graduated pension from the system operating between 1961 and 1975, and his SERPS pension was well over £50.

My constituent's income was therefore more than £120—almost double the basic state pension. That is typical of three quarters of the people who are retiring now: they do not retire only on the basic state pension, as they also have the benefit of SERPS and the other pension. I shall deal with those receiving only the basic state pension shortly.

Average pensioner incomes have risen in the past 20 years, but the gap between the poorest pensioners and the most well-off has widened significantly. The incomes of the least well-off 20 per cent. of single pensioners have risen by only 28 per cent. in real terms, whereas the incomes of the richest 20 per cent. of pensioners have increased by 76 per cent. in real terms.

The main reason for the improvement in many pensioners' incomes has been the growth in incomes from occupational pensions and from investment. In 1979— three years before the left-wing firebrand's remarks referred to by the hon. Member for Northavon—43 per cent. of pensioners had occupational pensions. By 1996–97, that figure had risen to 65 per cent. Occupational pensions have been a massive success in this country, and the credit for that goes to all the parties and individuals involved. The contribution from Governments can be seen in the tax advantages associated with the schemes.

Since 1979, there has been an increase in real income from occupational pensions of 162 per cent. That is a very substantial increase, and the average amount of investment income received by all pensioners has doubled in real terms. The proportion of pensioners dependent on means-tested state benefits was 40 per cent. in 1996–97, including 28 per cent. of those who were recently retired. So about a quarter of today's pensioners are coming out of a lifetime of work on to the means test. That is a serious situation, which no Government can ignore. There is an overwhelming case for ensuring that we take effective action in respect of those pensioners, and that is what we have tried to do.

I suppose, when I look around the Chamber, that very few understand more than I do the feelings about the links between the basic state pension and prices rather than earnings.

Mr. Campbell-Savours

The Rooker-Wise amendment.

Mr. Rooker

It has nothing to do with that.

When that link was introduced by the previous Labour Government—much to their credit—it operated for only four years, and was calculated wrongly for three of those four years. However, there is no doubt that it gave pensioners a real increase in the basic state pension.

Of course, there was no state earnings-related pension then: SERPS effectively started accumulating only from 1978. We were in a different situation. Nobody could have given the kind of total incomes that pensioners receive today, even in the values of 1979.

There were many years in which the basic state pension did not increase at all—1956, 1957, 1959 and 1960. It should have gone up in May 1964, but it did not; it should have gone up in November 1970, but it did not. I do not want to make a party political point, but a Conservative Government were in power on every one of those dates. So it was not the norm to have an annual increase and in some years—it happened in 1975 in particular—there were two increases because the Labour Government needed to make up the gap that had occurred before they came to power.

There are various beliefs that pensions have risen every year, that they have always been linked to earnings and that the basic state pension has always been enough to live on. Those are all myths; they are untrue.

Mr. Webb

Does the Minister accept the point that I made based on the Library's figures? History shows that, since the war, the pension has not simply been earnings-indexed but has risen as a share of average earnings from 14 to 20 per cent. The Minister may be saying that pensioners should be grateful for an annual increase but, since the war, Governments have done better than providing earnings indexation over a period of decades. Why is that so impossible now?

Mr. Rooker

That completely ignores the example that I gave from my constituency of someone who has just retired and has SERPS of more than £50 a week. Of course, those figures are based on the basic state pension—anyone can make those calculations, because we know the figures. They are universal, as long as people have the full 100 per cent. Succeeding Governments—and the graduated pension, from 1961 to 1975, was introduced by a Conservative Government—attempted to build on the basic state pension so that people received an amount that related to their earnings. That was an important element, but is never taken into account in statistics based on the basic state pension.

I accept the hon. Gentleman's point, but it is valid only if the basic state pension is total pensioner income. I refuse to accept that. One must consider the total pensioner income in the round, which is why Richard Crossman and Sir Keith Joseph, along with previous Ministers, attempted to make that break, to build on the basic state pension. Therefore, it is inevitable that there is fluctuation when prices are compared with earnings, because one is looking at a moving target, based on individual circumstances. So, although I accept the hon. Gentleman's figures, I do not think that they paint a true picture, or do any service to pensioners—either pensioners of the future, who are thinking about saving for a pension, or today's pensioners.

Mr. Bercow

Will the Minister give way?

Mr. Rooker

If the hon. Gentleman's intervention is as good as his previous one, then yes.

Mr. Bercow

I am grateful to the right hon. Gentleman for giving way. I hope that he will agree that, notwithstanding the importance of improving provision, it is of the essence that the existing system should be efficiently administered. Following the breakdown of NIRS2, which deprived thousands of pensioners of their legitimate entitlements, does he recall the "Dear colleague" letter of 11 September 1998 from the Secretary of State which said that the problem would be resolved in the next couple of weeks? However, on 28 January 1999, the right hon. Gentleman was forced to admit that it would be many months before the problem was completely resolved. Has it now been resolved, in each and every case?

Mr. Rooker

No. As I said in answering a question last week, the latest information from the Benefits Agency is that 83,000 cases are outstanding and we expect all to be settled this year. NIRS2 has been bad for pensioners— some have not been paid correctly, although some have been overpaid. That massive computer system—bought on the cheap by the Conservative Government—is crucial to many of our reforms. Bereavement allowances, state second pensions and stakeholder pensions all depend on the success of NIRS2, as does pensions forecasting.

There is no quick fix for the computer system, and delays, though regrettable, are inevitable. A quick fix would be irresponsible given the high dependency on the system of many policies, benefits payments and contracted-out rebates. We hope to settle the 83,000 cases—some underpayments, some overpayments—by the end of the year.

Let me turn to the costs implied by the hon. Member for Northavon in his speech; of course, no costs were mentioned in the Liberal Democrat motion, which makes no proposal. Increasing retirement pensions—and, we should not forget, linked benefits—by the average earnings index would cost £1 billion net in 2000, and £8 billion in 2010. I answered questions on this subject within the last week and in November, so I almost expect an intervention at this point. The single pension will go up to £67.50 a week in April but, if it had been linked to earnings or prices—whichever was higher—since 1979, when the link was broken, it would be £97, a difference of almost £20. The cost of bridging that gap in one go would be £13 billion net, including the additional cost of benefits linked to the retirement pension.

We have just under 11 million pensioners. By 2030, there will be almost 14 million, so the gross cost of even a modest change in April would be £30 billion a year by then. Much of that money would go to well-off pensioners. I do not claim that those on the average are well off, but they are much better off than people on income support, who would benefit less. That cannot be right. We do not apologise for using the basic state pension as a building block. No one is expected to live on that pension alone. For anyone who has no savings, there is other provision, such as the minimum income guarantee.

One of our traditional aims has been to concentrate help on the least well-off, while managing the system so that those who can do things for themselves do so without Government involvement. Since the second world war, the lack of a consensus on pensions has meant that no Government have been able to build for the long term. I do not say that people cannot trust Governments—that would be wrong, and unfair to Governments of both parties. However, the more provision people make for themselves via funded schemes and occupational pensions, the more secure they are bound to feel, given the history of pension provision.

By 2001–02, we shall spend £4 billion more in real terms on pensioners. We make no apology for that, as much of the money will be targeted at the poorest pensioners. Some 1.5 million pensioners are benefiting from the increase to the minimum income guarantee by £160 a year in real terms. Pensioner couples aged more than 80 and on income support will be £455 a year better off, in real terms, after this April's increase—that is more than £8 a week. The actions that we have taken will ensure that as many people as possible receive that extra benefit. We have not merely based our actions on research, but have piloted schemes to find the best way of organising the take-up of that benefit.

We are examining the rules on capital. Some of the points that the hon. Member for Northavon made about capital and savings are right. Our commitment is that, before the end of this Parliament, we shall have done something about capital limits, which have been frozen for so long. That is unfair on many pensioners—whether the limits are £3,000, £8,000 or £16,000. We shall deal with the matter—it is in the package.

However, it is true that part of the package is not about the least well-off—we make no apology about the winter fuel payments. To put that money into people's hands before Christmas, we needed a cut-off date in September, in order to pay £100 per pensioner household—indeed the amount will now be paid to all men and women aged over 60. If we had undertaken means-testing for the payments, it would have cost us £100 to organise each payment. That is why we acted in that way. The money is not targeted in the sense suggested by the hon. Gentleman, because we consider that it forms part of our policy of ensuring that the wider pensioner community should benefit from the economic performance of the country.

The same argument applies to television licences—free to the over-75s, but not means-tested. That is a further demonstration that we are spreading more of the country's income around the pensioner community.

I realise that the time for debate is short, so I shall come to a conclusion. The minimum tax guarantee and other measures have taken 200,000 pensioners out of tax, and two thirds of pensioners pay no income tax at all. The VAT cut on fuel affected everybody, but fuel is a disproportionately high part of pensioner expenditure, so pensioners also benefited from that cut.

One of the most despicable and cheapskate policies of the Conservative Government was the removal of free eye tests for pensioners. We have reintroduced those tests.

There is a new home energy efficiency scheme for those over-60s who receive an income-related benefit. The maximum grant will be increased from the present £315 to £2,000. That will be of substantial benefit to about 460,000 households over the first two years, 280,000 of which will be households whose members are aged more than 60.

We could develop that package. However, we make no apology; we have stuck to our manifesto commitment. We have ensured that the extra resources are targeted on the poorest pensioners, who are substantially better off than they were when the Government came to power. We know that, over the totality, general pensioner incomes are much higher than the basic state pension. To ignore that fact does an absolute disservice to pensioners—as did the contribution of the hon. Member for Northavon.

4.28 pm
Mrs. Jacqui Lait (Beckenham)

It is a great pleasure to take part in this debate and to hear the Minister of State lauding the achievements of the Conservative Government over 18 years, as many pensioners now retire on considerably more than the basic state pension. On the other hand, it is a shame that we had to listen to a typical Liberal motion. Many of us who have fought the Liberals in many elections will recognise the technique. The measure sounds supportive and costs a huge amount. As we discovered during the debate, their minds were changed halfway through the formation of their policy and they have ducked all the decisions.

The motion does not say what Liberal Democrat policy is, although the hon. Member for Northavon (Mr. Webb) tried hard to explain it. It smacks of the luxury of perpetual opposition, as do so many of their promises. They promised extra police officers and to double child benefit. They would take child support back to the courts—that would be £800 million. As we discovered this afternoon, they would use up the national insurance fund surplus. That would have a direct effect on the retail prices index.

All those measures would add significantly—

Mr. Corbyn

Will the hon. Lady give way?

Mrs. Lait

If the hon. Gentleman will allow me to complete what I was saying on this fairly substandard Liberal motion, I shall be delighted to give way.

Those combined changes would add a huge amount to public spending, which I am sure that the hon. Member for Truro and St. Austell (Mr. Taylor) will be keen to rein back when he does his sums for his Budget statement.

Mr. Corbyn

Before the hon. Lady completes her litany of past mistakes, will she explain why, in 1980, the Conservative Government broke the link with earnings? Ever since, the pension has been deteriorating as a proportion of earnings. The whole pensioner community feels robbed by 18 years of Conservative government. Is the hon. Lady suggesting that she would reinstate the link with earnings, as many of us would wish to do?

Mrs. Lait

Interestingly, we have heard the Minister explain why the Government are not restoring that link. Although the hon. Member for Islington, North (Mr. Corbyn) probably believes that everyone in Islington retires on only the basic state pension, as a result of our changes two thirds of all pensioners now retire on considerably more than that.

We have heard from the Government this afternoon great appreciation of everything that has been done in the past 18 years. The Minister expressed an intention to continue many of the things that we introduced. I should think that it is a great comfort to many pensioners that the Government have not yet tinkered with many of them. However, just last week—it was very opportune— I received, from a constituent who has given me permission to use his name, a critique of the 75p by which the state pension is being increased. Mr. Frederick Pemberton, who lives in Beckenham, had written earlier complaining about it and then produced a critique of the reply that he received from the Department. He starts: This so-called Promised Land. Five per cent. VAT on fuel. This VAT cut is not specifically for pensioners, but for all households. Twenty million pounds to improve cataract service. Fifty million pounds to boost cardiac care. Again the two services are for all the country. Concessionary bus passes. As I live in one of the London boroughs I receive a free bus pass. This scheme has been in existence for at least 12 years. The home energy efficiency scheme and locks and bolts. This applies to 150,000 pensioners. That works out at 0.13 per cent. of pensioners in the country. As a home owner, I do not qualify.

Mr. Pemberton continues: Ten pounds for the free eyesight test. As pensioners only purchase spectacles once in five years, this generous grant works out at 4p a week. Free television licences. Thousands of homes in the country have a pensioner over the age of 75 living with them. They are the ones who will also benefit from the free licence. He went on to say that his and his wife's income will increase by 1.1 per cent. plus the winter fuel payment, which makes a total of £3.40 a week.

Mr. Pemberton's letter reflects the comments that I have heard from many pensioners. It would be wise for everyone to recognise that even affluent areas such as Bromley contain pockets of real deprivation and that pensioners, as reflected in that letter, feel badly let down.

Mr. John Cryer (Hornchurch)

Does this mean that the hon. Lady wants to take away the free eye tests that the Government have given pensioners?

Mrs. Lait

I was merely pointing out that it has a marginal effect on any pensioner's income.

The minimum income guarantee, from which we hope that many pensioners can benefit—including the 600,000 who currently do not—is an extension of means testing, with all the problems that go with that. It is only for people on income support. Pensioners with any savings do not qualify. [Interruption.] If that is not correct, I would be more than happy for the Minister to let me know.

Mr. Rooker

I will correct what the hon. Lady said, because people listen to what we say in this place. She said that if a pensioner has any savings, he does not qualify. That is not true. There are capital limits of £3,000 and £8,000, and I have said that we shall address those figures—by implication, raising them—before the end of this Parliament.

Mrs. Lait

I am delighted to learn that people with savings of £3,000 and £8,000 will benefit from the minimum income guarantee. However, 600,000 people do not claim the benefit for reasons that the much vaunted research has produced, but which many of us have known for many years. All the Government have done is waste money on research that has told us what we already know. People find the process of claiming for means-testing off-putting and they do not like the stigma attached to it. We have been aware of that, as have the Government, for many years. However, the right hon. Gentleman tells us that the Government will carry out yet more research to find out how they can best sell the minimum income guarantee. It will cost several millions more pounds to try to ensure that those 600,000 people benefit from it.

As I understand it, the recommendations in the report that was published on 13 December said that the most sensible, and probably the cheapest, way of ensuring that everyone knows about the minimum income guarantee is to write confidentially to all those who may be eligible for it. If it will cost several million pounds for the 600,000 pensioners who do not claim, it would be interesting to examine the administrative costs of the scheme.

We fundamentally object to the minimum income guarantee because it is a disincentive to save. Like the Under-Secretary of State for Social Security, the hon. Member for City of York (Mr. Bayley), I spent a large part of last year on the Committee considering the Welfare Reform and Pensions Act 1999, which introduced the stakeholder pension. Tomorrow, we shall start to consider the Child Support, Pensions and Social Security Bill, which will introduce the state second pension.

As I understand it, both pensions will be worth what people can already claim under the minimum income guarantee and housing and council tax benefits. If that is so, I will be dissatisfied. Who on a tight budget and with a small income will put money into either the stakeholder pension or the state second pension? Why bother? If people have to manage on a tight budget and the kids need shoes, who will put money into a pension? I have yet to receive an answer to that question from the Government, but it must be dealt with. There is no reason for people in such circumstances to buy into either of those pensions.

Mr. Campbell-Savours

Can I trigger the hon. Lady's memory? Does she recall the great debates of the 1970s when Labour pioneered the state earnings-related pension scheme? That was 30 years ago, and the whole country looked forward to substantial pensions well into the future and past the millennium. However, does she remember what happened in the 1980s when I sat on the Opposition Benches and we watched SERPS being progressively undermined and destroyed by a Conservative Government? Why does not she refer to what happened in the 1980s?

Mrs. Lait

The hon. Gentleman must recognise that SERPS has been made affordable, as have private occupational pensions. They are just as important because more and more people wish to save outwith the Government's provision. They realise that, if they have a private pension over which they have control, they are not at the whim—dare I say it—of politicians. I support them entirely. It is infinitely better to be in control of one's own money.

Kali Mountford (Colne Valley)

Can the hon. Lady cast her mind back as far as last week and answer the question that was put to the hon. Member for Havant (Mr. Willetts)? If it is not possible for people to contribute to the state second pension or the stakeholder pension, how can people with earnings of less than £9,500 a year possibly afford a private pension scheme?

Mrs. Lait

The hon. Lady has entirely missed the point. The state second pension and the stakeholder pension are not sufficiently attractive to encourage people to save. That is because of the package of benefits that they would otherwise receive. However, I have been generous with my time. To allow many other hon. Members to speak, I hope that I shall be allowed to draw my remarks to a relatively speedy conclusion.

The Minister of State referred to the problems that pensioners are having as a result of NIRS2 computer failings. I am reassured that those failings will be cleared up at some time during the coming year, as the Benefits Agency hopes. As my hon. Friend the Member for Havant (Mr. Willetts) has said, that is a year late already.

Given the catalogue of problems that pensioners have faced, does anyone blame them for not wanting to be involved with the Government? They have been hit by advance corporation tax, and future pensioners are now realising the cost. Only last week, my hon. Friend pointed out in social security questions that the Manchester local authority will have to find an extra £30 million. Cornwall will have to find an extra £35 million and Staffordshire an extra £75 million. That will have an effect on pensioners' council tax, which is already increasing because the Government are downloading their stealth taxes on to local authorities.

Pensioners are being hit also by the fuel duty increase. They wait and wait for their NHS appointments and operations. Poor pensioners who have saved in shares can no longer reclaim tax. They are now hit by a 75p increase in their pension, which they think is measly. To add insult to injury, the Department of Social Security is saving itself money. It estimated a 1.3 per cent. increase in the state pension but it is paying out only 1.1 per cent. It could at least pay, as we would, the invalid care allowance to new carers over 65 years of age. That would cost about £20 million and would be of direct help to many elderly people, as it would recognise the reality of looking after an elderly husband or wife.

Mr. Webb

Will the hon. Lady give way?

Mrs. Lait

I hope that the hon. Gentleman will excuse me for not giving way on this occasion. Doubtless there will be many opportunities to discuss these matters in the coming weeks.

Pensioners will receive a 75p increase in their pensions, out of which they will pay the increased fuel duty, increased transport costs and their increased council tax. Doubtless many of them will pay these increased costs out of their £100 heating allowance. Is that what the Government really wanted?

4.42 pm
Mr. Jim Cunningham (Coventry, South)

I am aware that many Members on both sides of the House want to speak in this short debate. My first observation, in response to the hon. Member for Northavon (Mr. Webb), the Liberal Democrat spokesman, is that I accept that many Labour Members signed an early-day motion on the 75p a week increase. We had a perfect right to indicate to the Government that, although we appreciate what they have been doing for pensioners, we want them to go a step further. There is nothing wrong with that, and signing the motion should not be seen as a criticism of the Government. I for one will not be in the Lobby with the Liberal Democrats this evening. I wish to clear up that point straight away.

The hon. Member for Northavon referred to statistics going back to the period after the second world war. Anyone who worked in industry after that war will be aware of the various changes that have taken place in terms of pensions and so forth. In the early 1970s, not many people had occupational pensions. They have come on to the scene fairly recently, over the past 10 or 15 years. However, I can tell the official Opposition spokesman, the hon. Member for Beckenham (Mrs. Lait), that I remember when the previous Government— the Thatcher Government—were encouraging people, through tax incentives, to get out of state earnings-related pension schemes and into private pension schemes. We all know the story. There were certain instances of people not benefiting from those schemes because of some of the abuses that took place under the Conservative Government. Those abuses were never addressed by that Government. We have had many debates in the House about that.

It is interesting that the hon. Member for Northavon wants to use the surpluses from the social security budget. Many of us would like to take a good look at that proposal. We must be careful when we start to spend surpluses. If the hon. Gentleman knows anything about local government expenditure, he will be aware of the need to keep money for a rainy day. It is necessary to be careful also about money that is put away and to ensure that inflation does not lead to greater problems further down the road. Consideration should also be given to the economic situation and the country's circumstances at a given time.

In general terms, the pensions issue has been a minefield over the past 20 or 25 years.

Dr. Peter Brand (Isle of Wight)

I am listening with great interest. Does not the hon. Gentleman share the Prime Minister's confidence that we shall continue to become a wealthier nation? Is he betraying the tendency that I so often see in older people—that of not recognising when a rainy day has arrived? The plight of pensioners is now such that they are in the rain and should be helped.

Mr. Cunningham

I learn lessons from the pensioners: always prepare for a rainy day. That is good housekeeping. I have complete confidence in the Prime Minister's analysis of the economy. If the hon. Gentleman wants to increase taxes, he must first ensure that the economy is prosperous and, secondly, that he does not set loose another bout of very high inflation that erodes benefits to pensioners. He should take such factors into consideration when making interventions.

The official Opposition accused the Government of using stealth to off-load costs onto local authorities, but nobody was more adroit at that than the previous Government, who implemented cuts in housing benefit and in local authorities' administrative costs in respect of housing and other benefits, thus making central Government savings. That was one of the reasons they claimed they were able to reduce taxation. The Opposition spokesperson must be reminded of the millions of pensioners under her Government who had to rely on local authorities, which were left to try to fund free travel or to compensate pensioners for travel. This Government have made an attempt to address those matters.

I deal now with some of the matters that concern pensioners in Coventry. One is the relationship between pensions and earnings. It would be wrong of me not to mention it; I have regularly received representations on it. I recognise that the Government, through their package of measures, to which I shall come, are doing a number of things for pensioners. Over this Parliament, they will start to address such concerns.

Pensioners are also concerned about the future of the welfare state. Only last week, the Social Security Secretary indicated that there would be a two-tier pension, which was part of our manifesto. There was also a commitment to the continuation of SERPS—in contrast to the suggestion of the hon. Member for Northavon, who seemed to imply that there was some hidden agenda to abolish SERPS. I have seen no such agenda. The Secretary of State implied that we would not only honour our election pledge, but retain SERPS. The hon. Gentleman, who I am sure was present for that exchange, should know that.

More must be done on the funding of care in the community. The Government have begun the work; they have described certain measures that they are prepared to take. There is also the matter of the cost of sheltered accommodation, which affects many pensioners. I know that the Government will also consider that.

We should not forget that, although we have had difficulties in the national health service, the Government have begun to pump in the £21 billion for the next three years, which is vital.

Let us consider what the Government are doing for pensioners. The Opposition spokesperson derided free eye tests because someone had written her a letter saying that it apparently costs £10 every so often. I remember that when free eye tests were abolished, many in the Tory party were up in arms about it. Regardless of whether the figure in the letter is right, such a move created much consternation.

The other part of the package that shows that we are trying to do something for pensioners—it has been raised many times in the House—is the provision of free television licences for the over-75s. That is an important step—perhaps not for some people, but certainly for pensioners. I remember, one Friday morning, the previous Government's bitter opposition to what we used to call winter chill payments. This Government have taken the matter into consideration and provided £100 a year for help with fuel payments, which is certainly welcome among many pensioners whom I know. In addition, they have reduced VAT on fuel.

I do not want to go on too long, because I am conscious of the fact that a number of hon. Members from both sides of the House want to speak. I realise that this is a limited debate, but I thought that I should raise certain points of importance to some of the constituents whom I represent.

4.50 pm
Mr. David Heath (Somerton and Frome)

It is a great pleasure to be able to contribute to the debate. Like many hon. Members, I believe that the safety of pensioners' incomes is crucial, and that it is vital that we debate it. I was a co-sponsor of the early-day motion on which the wording of the motion is based.

I do not entirely accept the assertion of the hon. Member for Workington (Mr. Campbell-Savours), who is no longer in his place, that the content of his postbag suggests that pensioners are no longer interested in the state retirement pension. The experience of many hon. Members will be different from his. Perhaps pensioners as a class are suffering from exhaustion—sick and tired of making the same points throughout 18 years of Conservative Government and almost three years of Labour Government. They are beginning to despair of ever being given a fair deal.

I could go into great detail about the plight of pensioners, but I do not want to over-egg the pudding. I do not want to suggest that the situation for every pensioner is dire: that transparently is not so. On the way to the House today, I listened to an interesting discussion on my car radio about a television advertisement that seems to be shown every five minutes, depicting an elderly lady doing her exercises while watering her plants. I shall not mention the private company that it promotes, but the interesting discussion on the radio was about whether the image of elderly people that the advertisement portrays was appropriate. There are arguments on both sides, but it is clear that none of us should give the impression that all pensioners are in desperate financial straits, because they are not.

That does not alter the fact that some pensioners are in dire straits. Some of them live in great poverty, and their situation worsens year by year. There is a second group of pensioners who cannot be classed as poor under the general definition of that term, but whose incomes are being eroded, and the increases that they are being offered in the retirement pension package are insufficient to meet their increasing needs as individuals trying to lead their lives.

To be fair to him, the Minister accepted that there is a clear differentiation in the average figures. Pensioner wealth may be increasing because more people who are slightly better off are entering the system and more people who are in considerable poverty are leaving it for one reason or another. However, the relative wealth of the individual pensioner entering the system may decrease year by year, which is why we have strongly advocated the need for different treatment of the more elderly pensioner who has different needs.

I was concerned by the Minister's response. He knows that I have enormous respect for him—I have told him that on other occasions and on different subjects. However, elements of the right hon. Gentleman's speech were disingenuous. He set up a series of straw men that it was convenient to knock down. He contended that my hon. Friend the Member for Northavon (Mr. Webb) was suggesting that the majority of pensioners were wholly and solely reliant on the standard state pension. My hon. Friend never said that; it is not in the motion; and no one is suggesting that it is the case. While increases in the state pension form a significant part of the calculations that any pensioner will make in regard to the affordability of what he or she will need in the following year, no one is suggesting that a huge number of pensioners live solely on the state pension—although some do.

The Minister suggested that we were dealing with the absolute level of pension payments, rather than the increase in the absolute level. That, too, is an important distinction. If the year-on-year increases do not match a realistic rate of inflation for pensioners, pensioners, relatively, are becoming poorer, and no amount of fiddling with the figures will alter that basic fact. The question that we must consider is whether it is right for pensioners to be getting poorer while the country is getting richer. Our position is plain: we believe that that should not be the case, and that pensioners can and should expect a better deal from the country.

Mr. Bercow

I am listening intently to the hon. Gentleman's speech. Is he aware that, between 1979 and 1996, the proportion of pensioners in the bottom fifth of national income distribution fell from just under half the total to just under a quarter? To aid us in considering what he has to say, can he tell us what proportion of pensioners fall into the bottom fifth of national income distribution in the constituency of Somerton and Frome?

Mr. Heath

It will not surprise the House to learn that I do not have the answer to that specific question before me, and possibly the Minister does not either. I can say, however, that to talk of proportions as the hon. Gentleman does disguises the truth of the situation. If the number of pensioners falls as a proportion of the total number of people receiving benefits, such as the unemployed, of course the proportion will fall. Most of us recall the massive increase in the number of unemployed people under the Conservative Government. I suggest that what the hon. Gentleman has said actually means very little, and that it certainly does little to benefit debate if, having researched a specific bit of information, an hon. Member then presents it as a genuine interrogation of another hon. Member who has the Floor and is trying to pursue an argument.

The Minister made too much of reliance on other pension payments. He was at pains to tell us about all the other potential sources of income for pensioners, and how buoyant they were. That, too, avoids the basic issue in the motion, which is the increase in the basic state pension. The right hon. Gentleman failed to be quite so forthcoming in answering an important question put by my hon. Friend the Member for Northavon about the measure by which pensions are indexed. It is transparently clear to anyone who has examined the position that the present basket of costs making up the measure of indexation is wholly inappropriate to pensioners. Nothing could illustrate that more clearly than mortgage interest payments, which have a hugely distorting effect.

I agree with the hon. Member for Islington, North (Mr. Corbyn). Why do we not look at the package of payments to which pensioners are subject, especially the payments demanded by public authorities for services that pensioners need in their daily lives? Why is that not taken into account in establishing the basis for indexation? Such a system would at least approach a fair assessment of what the increase in costs is likely to be over the following year, rather than producing an arbitrary figure bearing little relation to the real lives of real pensioners.

The Government's official response in their amendment to what is a simple and easy-to-understand proposition from the Liberal Democrats is almost an essay on all the novel means of funding that they have devised to avoid doing something about the old age pension. Most of those are in the form either of one-off payments or of hypothecated measures. The Government talk about hypothecated taxation, but I did not realise that that meant that, through the benefits system, they would hypothecate what the recipient did with the taxation. That seems to be what the Government are trying to do in the case of pensioners: to determine what pensioners should do and give them money that is directly related to an activity irrespective of whether they wish to partake of it.

The amendment draws attention to some measures that I welcome. A long time ago, I was an optician, so I welcome the reintroduction of free eye tests, although I question whether the Government have extended them to the people who are most vulnerable in ophthalmic terms—40 to 50-year-olds, who are most likely to suffer glaucoma or retinopathies—but that is a separate issue. It is a good measure, which I personally applaud.

The television licence measure has introduced new anomalies to the system. That is one criticism of it, although, in intention, it is not a bad measure. However, we keep on coming back to the point: why do we have all these tactics to divert us away from the basic critical element—the retirement pension and how we even start catching up after the disastrous effects of the Conservative Government's decisions? How do we start to make progress in catching up so that pensioners get back to something like the position that should exist?

I understand the Minister's position when he says that to try to catch up in one go is beyond the Government's capability. Of course, we all understand that. We know that we cannot simply replace—

Mr. Rooker


Mr. Heath

It looks as if the Minister would like to intervene. I am happy to give way.

Mr. Rooker

What the hon. Gentleman has just said gives me an opportunity to correct something that I said earlier. I said that catching up in one go would cost £13 billion. That figure is correct, but I also said that catching up meant £20 a week on the single pension. I managed to subtract £67.50 from £97.45 and make it £20, instead of £30, for which I apologise. I hope that Hansard will take due note of that. However, the cost of catching up in one go would still be £13 billion net.

Mr. Heath

The Minister has now removed one of the lines from my speech, but it was clearly a slip of the tongue. It does not alter what he said about the £13 billion. Of course, we accept that such a huge sum will not be spent at once, but what worries many Liberal Democrats and a significant number of Labour Members is that we have not even begun catching up.

I believe that that was what pensioners expected from the Government. They did not expect a change of Government but not a change of policy. That is the problem that most of us have with the Government's performance. We are still waiting for a fair deal for pensioners. Pensioners constantly express to us their grievous disappointment with what has happened to date. They are not ungrateful for what has been done, but they believe that it is not enough, is not coming soon enough and is not dealing with the basic issue of the state retirement pension, the erosion of which continues.

That is why the motion is important. It is a great shame that we cannot develop the cross-party support that I know exists.

Mr. Vernon Coaker (Gedling)

May I ask the hon. Gentleman a simple question which generates significant debate in pensioner meetings when I ask it? What answer does he get when he asks his pension groups, "Do you think rich pensioners should get as much help as poor pensioners, or do you think that the Government are right to try to target help at poor pensioners first?"

Mr. Heath

My answer would be that I have a curious devotion to the principle of progressive taxation. That is a useful way in which to deal with that issue, although perhaps that view is not now widely shared in the House.

Today, we had the opportunity of assembling that cross-party coalition of interests that really might have made a significant point to Ministers on this issue. As my hon. Friend the Member for Northavon said, if that coalition had been assembled, it would have hugely reduced the Government's majority. He used the word "decimated" to describe the reduction, but was immediately challenged by Conservative Members on the word's meaning. However, I thought that he used it correctly, as the 10 per cent. of hon. Members who stayed loyal to the Government—rather than the 90-percent majority who were prepared to express their view—would have paid the price. That cohort should have been grateful for the opportunity to express their opinion on a very important matter.

After hearing the speech of the hon. Member for Beckenham (Mrs. Lait), I think that the most confusing aspect of today's debate lies in determining what on earth Conservative Members' position on the issue might be. Although the hon. Lady did not allow interventions late in her speech—so that hon. Members were not able to clarify the position—we were expecting to be told Conservative Members' opinion on a crucial issue and their answer to a very simple question: is the 75p increase adequate or inadequate? We still do not know their answer to the question, as the hon. Lady seemed happy to speak about anything other than the motion on the Order Paper.

Such reticence was unexpected, given the brief letter to my right hon. Friend the Member for Ross, Skye and Inverness, West (Mr. Kennedy), the leader of the Liberal Democrats, from the right hon. Member for Richmond, Yorks (Mr. Hague), who, in the last paragraph, states: As to our voting intentions on the up-rating statement, we will make our position clear nearer the time. If we are to learn the official Opposition's position on the matter, we really are going to have to run to the wire on it.

Conservative Members simply cannot decide whether 75p is adequate or inadequate. Is it a difficult answer to give? I think that it is not. The Government say that the increase is adequate; Liberal Democrat Members say that it is inadequate; Conservative Members do not know. The official Opposition's position is that they do not know whether it is adequate. If they choose to abstain in the vote at the end of the debate, the British people will have the clearest demonstration possible of why the official Opposition simply cannot provide a credible opposition on behalf of the many pensioners who were expecting their support today. I say that pensioners were expecting Conservative Members' support today, although after 18 years of Conservative Government perhaps they were not.

It is important that we have had this debate, and I look forward to hearing the Minister's reply to it. I also hope that we have been able to make a point on behalf of British pensioners—which is simply that we do not believe that it is right that, year after year, their pension entitlement should suffer from erosion, they should get poorer, and that, in town and country alike, they should find themselves in miserable conditions. Let us not forget that rural pensioner poverty is a very real issue and that many pensioners in rural areas do not have access to the services that those in urban areas expect.

If we cannot have a debate on the subject that is sensible, addresses the issues and produces results, Parliament is failing those who deserve our support.

5.8 pm

Mr. Roger Berry (Kingswood)

I suppose that recently many of us have been reflecting on the previous century. One of the great unsung achievements of that century is the fact that the number of people of retiring age has increased dramatically. In the century's first census, in 1901, about half a million people were over 75; at the century's last census, the figure was more than 4 million. The increase is hardly surprising. In 1908, when the old age pension was first introduced, for people over 70, average male life expectancy was a mere 48 years.

The previous century witnessed a dramatic improvement in longevity. That is something to be celebrated. We often forget that major achievement of the past century, which has left us with about 11 million pensioners in this country—about one in four of the electorate. The majority lead active lives, participating fully in the community and living independently with their friends and neighbours.

It is shocking when people talk about the demographic time bomb, as if there were a problem with more people living longer than we can afford. Not only is that an inaccurate description of current plans for funding retirement, but it is deeply offensive to 11 million people and their friends and relatives.

The situation that the Government inherited, as set out in the Government amendment, is characterised by two obvious facts. First, the number of pensioners living in poverty was increasing—the figure stood at one pensioner in four at the time of the election. Secondly, pensioners had a growing dependence on means-tested benefits. The new Labour Government had to address those two key problems.

I congratulate the Government on their significant achievements in addressing the needs of today's pensioners. The minimum income guarantee has resulted in record increases in income support of three times normal levels. There is a commitment that those levels will rise in line with earnings. The Government are also committed to a take-up campaign. It is slightly overdue, but no doubt that is because they are determined to get it right. I have close relatives who are almost certainly entitled to income support and I am concerned that accurate information should be made available. It is better to spend a little time on the take-up campaign and ensure that it works, but it has to be a priority. I hope that the Government will consider retrospective payments to those who have missed out so far because they have known nothing about the minimum income guarantee.

I welcome the free eye tests for pensioners, the increase in the winter fuel payments and the free television licences for those over 75. In case anyone has any doubts, the Liberal Democrats welcome them too. The hon. Member for Northavon (Mr. Webb) and I share a parliamentary boundary. We also happen to have all or part of our constituencies within the area covered by South Gloucestershire county council. Last year, the Liberal Democrats on that council voted for a resolution that included the following: the council therefore welcomes the current Labour Government's commitment to pensioners as demonstrated by its fivefold increase in winter fuel payments, free eye tests for pensioners and cutting VAT on domestic fuel to 5 per cent., the lowest level allowed and notes the current Labour Government's effort to start to address this problem"— the problem of poverty, that is— by introducing a minimum income guarantee for pensioners which will be uprated in line with earnings rather than prices from April 2000. Liberal Democrat and Labour councillors from my local authority pointed out: On present estimates, it will mean that the poorest pensioners will be getting nearly £800 a year more as a couple and nearly £500 a year more as a single pensioner, than they did in 1997". I am pleased that there is common ground in congratulating the Government on their significant measures to address the needs of pensioners.

However, along with my hon. Friend the Member for Coventry, South (Mr. Cunningham), I admit that I signed early-day motion No. 73, the words of which are exactly the same as the motion today. The motion may have been tabled for reasons about which one could speculate, but as a matter of fact, I believe that April's 75p increase is inadequate. I believe that there should be a real-terms increase in the basic retirement pension. If I did not believe that, I would not have signed the motion. Having done so—and not taken my name off the motion—I still believe that. My position would otherwise be rather difficult.

I believe that 75p is not enough—first, because that is overwhelmingly the view of the public. My constituents who have contacted me and stopped me at the post office—pensioners have discovered that this is an effective way of getting their point across to their Member of Parliament—have made it clear that a real increase in the pension, and not just one to match inflation, would be warmly welcomed. I have no doubt also that every organisation representing pensioners would welcome a real increase in the basic retirement pension. I am convinced that every trade union would take the same view, not least because their members are future pensioners.

I would go so far as to say that if the Government had decided to increase the basic state pension by slightly more than inflation, I suspect that there would not have been much opposition from Labour Back Benchers. People would not have said, "In principle, this is the wrong thing to do." I suspect that there might have been a fair amount of support.

Secondly, at present, a real increase in the basic state pension is the only way to help the poorest 750,000 to 1 million pensioners who are entitled to income support but do not claim it. It is the only way to improve their incomes and to relieve their poverty.

Thirdly, increasing the basic state pension would reduce the number of people dependent on means testing, which is a clear objective of Government policy. Fourthly, it would increase saving. Everyone has acknowledged that means testing penalises saving. That is why the Government, rightly, are reviewing the capital limits. We all know of many people who, because of their modest savings, are just above the income support level and cannot access significant improvements in their income unless the basic state pension improves.

The final reason why I signed the motion—and why I have left my name on it—is that its proposals are entirely consistent with Labour's election commitment. At the election, we said that the basic state pension will be retained as the foundation of pension provision". It is difficult to envisage how the basic state pension can be that foundation unless in some way it keeps up with rising living standards. We said also that the basic state pension would increase at least in line with prices". We did not say that it would increase only in line with prices. Along with my colleagues, I signed an early-day motion that was entirely consistent with the policy on which we fought the election.

I shall support the Government amendment tonight. However, I cannot, in all conscience, vote against the Liberal Democrats' motion—for the very simple reason that I support it.


Mr. Edward Leigh (Gainsborough)

It is always a pleasure to follow the hon. Member for Kingswood (Mr. Berry), who does his career no good by speaking from his heart; I am glad that he, for one, will stick to his guns on the motion that he signed.

The Government have two defences against the motion moved so ably by the hon. Member for Northavon (Mr. Webb). I do not always agree with what he says, but he always adduces strong arguments in support of his case. The Government say that they simply cannot afford to restore the link with earnings and that it is better to concentrate resources on those who need them most. Those are understandable arguments.

There is the TINA argument—the old Thatcherite argument that there is no alternative—that we cannot restore the link because it would cost us up to £8 billion over 10 years. No one argues that we would go bankrupt, because we are such a wealthy country, but it is argued that the public finances would be seriously affected.

There is a universality argument: that such would be the reaction of taxpayers to an increase in public expenditure that there would be pressure for the basic state pension to be means-tested; there is also a demographic argument, that we are an increasingly greying population; and there is the argument, to which I am sympathetic, that people's willingness to invest in private pensions would be affected. There is also a ratchet effect argument, but that is so complex, and we have so little time, that I had better leave it for another day.

Everyone seems to accept those arguments, but I am not sure that they are as strong as people make out. The Government actuary, in his quinquennia] review, said: Real earnings growth will result in working people being relatively better off in future even if National Insurance contribution rates were to be increased to meet the cost of increasing flat-rate benefits in line with earnings. Based on gross pay and real earnings growth of 1.5% per annum, real earnings relative to prices will, in the year 2060, be approximately 2.5 times the corresponding level in 1999/00. Allowing for higher National Insurance contribution rates and earnings limits, someone on average male earnings would still have real net earnings, after National Insurance contributions, of approximately 2.4 times current levels. That means that, because our economy is growing so well, we could afford to restore the link and people in work would still be better off.

Before the Social Security Committee, the Government actuary said: The point is that those who are working and contributing would still be a lot better off than they are today even if we were deducting contributions to enable the earnings link to be maintained. I am not arguing that we should restore the link but emphasising the fact that such is the wealth being generated in our economy that we could do more to help the basic state pension. It may have been right to break the link all those years ago, but we could consider being more generous now. There are also other ways in which we could help with pensions in the private sector to avoid means testing.

The Government argue that they are concentrating resources on the pensioners who are most in need and that there is no point in spreading the butter very thinly all over the place. The Department of Social Security has published an interesting research summary in its report No. 100. It has conducted research into the attitudes of those who should be claiming income support but are not. It says that 48 per cent. of pensioners still appear to be "entitled non-recipients" of income support.

The report says that people who are entitled to the means-tested benefits of the minimum income guarantee are not claiming them because there is "an attitudinal component"—I apologise for the social-security speak that runs through the document, but it is the Government's document and that is why I am quoting it— which here is broadly described as the 'stigma' dimension. The pensioners wished to remain independent and self sufficient in older age, they expressed a concern that claiming IS could be a threat to their pride and independence. The second reason is a process dimension, consisting of objections to, or negative perceptions of, various aspects of the claim process. For some these negative images were based on past memories and images of the history of the social security system. Images of those claiming benefits tended to be negative, viewing claimants as 'spongers' or 'scroungers'. Although the Government would argue that we have left behind the workhouse mentality of the 19th century and pensioners who have not made adequate contributions for their futures are not forced into workhouses, pensioners feel forced into some sort of mental workhouse when they are told that they must apply for certain benefits. Many pensioners do not want to do so.

Mr. Coaker

If there is such a problem with means-tested benefits, why is it that in my surgeries claims by pensioners for means-tested benefits such as housing benefit or council tax benefit are not affected? There is an attitudinal problem, but debates in which we continue to talk about stigma and income support will not help.

Mr. Leigh

I cannot accept that. I am not making the facts up: they come from the Government's document. Those applying for means-tested benefits are often younger people, many of whom are out to get every benefit they can. There is nothing wrong in that, if they are entitled to the benefits. However, those younger people are very different from the older people who were brought up in a fine tradition and who are proud to be pensioners. They feel that they have paid their debt to society, worked all their lives and looked forward to retiring. They feel that it is a judgment against themselves to have to apply for means-tested benefits and they do not want to do so. I am not making the situation worse by talking about it, because we have to be honest and address it. There is something wrong with our social security system.

On the other hand, our pensioners are generally doing very well. The statistics come pouring in, but they show that the richest pensioners have become some 80 per cent. better off over the past two decades. Even the poorest pensioners, thanks to means-tested benefits, are a third better off. In material terms, pensioners may be better off, but whether they are happy about how that has been achieved is another question.

Mr. Webb

I am grateful to the hon. Gentleman for his introductory remarks. Does he accept that the statistics are misleading, because they do not follow an individual pensioner over time? Over time, individual pensioners see their incomes maintained or falling, as inflation erodes the real value of their income, but the averages include the fact that the poorest old pensioners have died and the newly retired ones have whopping great occupational pensions. The averages shoot up, but any given pensioner is seeing not 30 per cent. rises but steady real-terms falls.

Mr. Leigh

The hon. Gentleman makes a fair point. We should be very cautious about accepting the many statistics that are given to us. The statistic that I have just cited has appeared in many briefing notes over the years and is a good little quotation to bring up in defence of the Government of the day, but it may not accurately reflect the experience of an individual pensioner.

Mr. Bercow

Do not poor take-up rates underline the need for Governments to do everything in their power to minimise unavoidable pensioner costs? Would not one effective way in which to do that be for the Government to work to the maximum to change fundamentally that charter for amoral pilfering otherwise known as the common agricultural policy?

Mr. Leigh

I shall not go down that route, Mr. Deputy Speaker, as I know that you would take me to task. However, my hon. Friend is right to say that our country has a tradition of fair and uncorrupt Government.

The Liberal Democrats may be right to say that it is an insult to pay pensioners an April increase of only 75p for the year, when the economy is supposed to be doing well. Perhaps we could afford £1, although I do not want to go too far. As the Minister said, pensions have not always increased in line with inflation: sometimes they have risen by more, sometimes they have not moved at all. No hard and fast rule states that the 75p increment cannot be changed.

The case can be argued in terms of what can be done immediately to help pensioners, and what can be done in the long term. Our room for manoeuvre for helping existing pensioners may be limited, but the long-term prospects are much more exciting and interesting because the future allows more room for manoeuvre.

The previous Government succeeded in changing people's attitudes. Philip Booth, in Economic Affairs, said: The OECD looked at long-term budget deficits and national debt figures for various countries, on the assumption that their state social-insurance schemes remain intact. The estimates were based on the assumption of 1995 policies continuing. By 2030, Germany was projected to have a budget deficit of 9 per cent. of GDP and a debt:GDP ratio of over 100 per cent. Figures for France were similar. Italy was projected to have a budget deficit of 30 per cent. and a debt:GDP ratio of 120 per cent. The UK had a projected budget surplus and a projected debt:GDP ratio of below 10 per cent. One of the Conservative Government's greatest achievements was to increase dramatically the resources put into private pensions and occupational pensions. I want that sort of response to continue.

I am talking about the long term, and what I propose will not have any direct benefit for today's pensioners. However, I hope that the next Conservative Government will build on the work of this Labour Government, who are trying to create a basic pension system that raises people above means-tested benefits. The Government argue that that is what the stakeholder pension and the second pension will do, but there are more creative ways to give people a choice about where their money should be invested.

People's money should be invested in their own personal funds. People should be allowed to retain those funds in the public sector. They should have the right to insist on that. Alternatively, they could go into a mutual friendly society, or into a private insurance scheme. The result would be a personally funded system, which the Government could not attack as they have attacked the SERPS principle. However, I accept that that is a long-term solution and that it does not help the immediate problem.

Earlier, I talked about the workhouse. I have often noted that Labour Members of Parliament explain their calling by referring to a novel—"The Ragged Trousered Philanthropists", by Robert Tressell—that moved them in their youth. I read the book last year, as in the House it is important to know one's enemy. It is a very good book, and I commend it, although there are some boring passages about socialist ideology. If Robert Tressell were alive today, I am sure that Alastair Campbell would give him a quick telephone call to say that he had never written the novel.

The hon. Member for Islington, North (Mr. Corbyn) is in his place. He has read the novel, and approves of it. One character is called Jack Linden, formerly a fine worker but now old and unable to work. He is thrown out of employment and has no money, so he has to ask the local community for help. The book says that on a Wednesday the secretary of the Organized Benevolence Society called at the House, and on the Friday Jack received a letter from him to the effect that the case had been duly considered by the committee, who had come to the conclusion that as it was a 'chronic' case they were unable to deal with it, and advised him to apply to the Board of Guardians. This was what Linden had hitherto shrunk from doing"— he was a pensioner of 67— but the situation was desperate. They owed five weeks' rent, and to crown their misfortune his eyesight had become so bad that even if there had been any prospect of obtaining work it was very doubtful if he could have managed to do it. So Linden, feeling utterly crushed and degraded, swallowed all that remained of his pride and went like a beaten dog to see the relieving officer, who took him before the Board, who did not think it a suitable case for out-relief, and after some preliminaries it was arranged that Linden and his wife were to go into the workhouse, and Mary"— their daughter— was to be allowed three shillings a week to help her to support herself and the two children. As for Linden's sons, the Guardians intimated their intention of compelling them to contribute towards the cost of their parents* maintenance. Those appalling conditions existed in this country at the beginning of the last century. I am not, of course, arguing that the Government are forcing anybody into a workhouse. We live in a prosperous society, in which people are helped through means-tested benefits. But many pensioners feel that they are being forced into a workhouse—they have paid their way all their life, yet when they retire at the age of 65, they find that they have to go cap in hand, just like Jack Linden, to ask for a means-tested benefit. That is simply not fair or right.

5.36 pm
Ms Oona King (Bethnal Green and Bow)

I am pleased to have the opportunity to speak in the debate, because I represent a constituency where the gap between the needs of pensioners, and the support that they receive, is one of the widest. If any Opposition Member doubts the effects of 18 years of Tory slash and burn on our public services, I invite them to come with me to visit Bethnal Green, Whitechapel, Wapping, Bow or Stepney. Pensioners in those areas—which were, incidentally, bombed in the second world war—spend much of their time in my constituency surgeries telling me of the gap between their needs and the support that they receive.

Deprivation in Tower Hamlets is not confined to young families living in damp, overcrowded flats, with no one in work and little prospect of employment. In fact, I would say that social exclusion is felt most acutely by my elderly and vulnerable constituents who spent their whole lives working, looking forward to retiring with comfort and dignity. Of course, they do not have the opportunity, as younger constituents do, to benefit from the Government's new deal for the unemployed, although they benefit from many of the new measures that the Government have introduced, to which I shall come.

It remains the case, however, that many pensioners have no chance of enjoying a retirement in the comfort and dignity that they hoped for. We must be honest and recognise that, for many, retirement continues to be a daily struggle to make ends meet. There is certainly little left over at the end of each week to enjoy the things that many of us in the working population take for granted. I will never forget an elderly constituent who came to one of my first constituency surgeries and said, "I must speak with you, because my rent has gone up from £29.50 a week to £29.70." My maths is not great at the best of the times; however, it was obvious that this man had queued for four hours to tell me that his rent had gone up by 20p a week. Most of us in the Chamber might drop a 20p piece on the floor and continue walking—we certainly would not queue for four hours to speak to our Member of Parliament about losing that amount. So I hope that this debate will take into account the reality of many pensioners' lives.

We must also recognise that many pensioners sit at home in fear. They are afraid not just to go out because of crime, but to stay in their own homes because of crime, so often linked to drugs. They are afraid of becoming ill or disabled and of needing long-term care that they cannot afford.

The Government have taken essential and well-publicised steps to address the needs of pensioners through many measures. Those include the £100 increase in winter fuel allowance, the restoration of free eye tests, the introduction of free television licences for the over-75s, increased funding for the health service and for local authorities' social services departments and, most importantly, the introduction of the minimum income guarantee for pensioners.

I was going to discuss my concerns about the increased investment that we want over the next two years in the health service but, in the light of the Prime Minister's welcome commitment to increase health spending year on year until the proportion of our gross domestic product spent on health is in line with the proportions in other western countries, I will confine myself to the amount of money that pensioners have to live on.

I wholeheartedly welcome the introduction of the minimum income guarantee, which fulfils our manifesto commitment to help the poorest pensioners. I particularly welcome the commitment made by my right hon. Friend the Chancellor of the Exchequer to ensure that the guarantee will rise in line with earnings, rather than inflation. Many hon. Members meet pensioners who do not realise that they are entitled to an income support top-up to bring them up to the amount of the minimum income guarantee. I pay tribute to Tower Hamlets Age Concern and other organisations that raise awareness of the guarantee and help to guide my constituents through the benefits maze to ensure that they receive their entitlements. I hope that all hon. Members will remind pensioners who come to see them that the minimum income guarantee can be claimed in writing or by telephone. Complicated application forms often put pensioners off making claims, and I am certain that the Government's improvements will help.

Other pensioners, particularly the oldest, who remember the means tests of the 1930s, are often put off claiming minimum income guarantee because a stigma is attached to income support. I was pleased to hear my right hon. Friend the Minister assure the House last week that the forthcoming Government-sponsored take-up campaign would include a partial rebranding of the guarantee to try to remove some of that stigma.

The challenge before us is to introduce measures that ensure that all pensioners share in the growing prosperity of the nation. However, despite the Government's best efforts, it is true, both in perception and in reality, that many pensioners are not sharing that prosperity. That is why I should like an increase greater than inflation in the basic state pension. Because of the panoply of measures that I have mentioned, it would be untrue to imply that the Government are giving pensioners only 75p extra, but it would be equally untrue to say that the country could not afford to pay pensioners more in basic state pension. The abolition of the link between basic state pension and average earnings and the later entrenchment of that decision were among the meanest and most disgraceful acts of the Thatcher and Major Governments. Restoring and backdating the link would carry an astronomical financial cost, which I shall turn to shortly.

Putting extra money into the basic state pension would not target those pensioners most in need, and, as with any universal benefit, some money would go to relatively rich pensioners. Stakeholder pensions and second state pensions will improve matters for many pensioners in future, particularly those who have been overlooked in the past, such as women and carers. I cannot help but point out that I am one of only two women Members in the Chamber at present. No woman Conservative Members— indeed, hardly any Tories at all—are here, and only one of the three women Liberal Democrats is present. It is quite obvious why women have been overlooked by the Department of Social Security and by almost every other Department: we are not present to make our voices heard. That is clearly shown in this Chamber today; I am sick to death of it.

Most pensioners in my constituency—both men and women—have never had an opportunity to contribute to occupational or private pension schemes. They paid then-stamp throughout their whole working life in the expectation that they would receive a decent pension from the state. They deserve more than they are getting at present. They certainly deserve the £30 a week extra for single pensioners and the £30 to £45 a week extra for couples that they would receive if the earnings link were restored. However, that is pie in the sky in our current political situation. How much would it cost? My right hon. Friend the Minister mentioned a cost of £13 billion net. In response to questions, I have been reliably informed that it would mean 6p on basic income tax. Which politician, from any party, will stand up and say, "Six pence on income tax, vote for me"? No politician will say that. And which pensioner will expect their children to vote for it? We are all dishonest if we do not remain in the real world.

Despite that, I sincerely hope that Ministers might signal their good intentions by reviewing next year's inflation-linked increase, so that we accelerate the allocation of the share of the country's income that is directed at pensioners. It was right and proper that the Government's overall strategy was first to direct our efforts towards the poorest pensioners. I hope that we shall now turn our attention to those pensioners who do not qualify for the minimum income guarantee. Those people are not necessarily rich; indeed, many of them only just manage to keep their heads above water. It is unfair that those who have worked hard all their lives and have savings, or a small occupational pension, which take them just above income support, should end up being worse off because they do not receive other passported benefits, such as housing benefit or council tax benefit.

Although people with savings should be expected to make use of them in retirement, and should not live off only the interest, some pensioners who visit me do not accept that. We must realise that there is still a disincentive to save; we should do more to ensure that people with savings and occupational pensions do not lose out.

I am delighted that the Government have extended the new l0p income tax starting rate to savings. That will help pensioners with savings—as will next year's 22p standard rate. I was also delighted to note the announcement by my right hon. Friend the Chancellor, in his pre-Budget statement, that the personal allowance for the elderly would be raised by £310 for those aged between 65 and 74 and by £380 for those aged 75 years and over. That increase has a phenomenal meaning. No pensioner aged between 65 and 74, who has an income of £110 or less a week, will pay income tax. When I say "phenomenal", I mean that, as a result of the measures, few pensioners in Tower Hamlets, for example, will pay income tax on any of their income. Many pensioners will surely be grateful to the Government for that.

I remind anyone who genuinely cares about getting a better deal for pensioners that only this Labour Government are delivering that. Only this Labour Government will deliver an even better deal in the future. As we know, if they had to, the Tories would sell the clothes off their grandmother. As for the Liberals, they are always talking about putting lp on income tax. [Interruption.] Liberal Members have no doubt changed their policy on that as well, judging by their remarks. That lp on income tax would raise approximately £2 billion. Let us suppose that the Liberals were going to direct half of that—£1 billion—to pensioners. By the end of this Parliament, Labour will have spent £4 billion extra on pensioners. If people examine the facts, they will recognise that only Labour has both the moral commitment and the financial ability to meet pensioners' needs.

I hope that the Government will do more. I hope that they will direct more money towards pensioners. But let us remember that the Labour Government are doing more to meet the needs of pensioners than the Tories or Liberals could ever hope to offer.

5.50 pm
Mr. Ronnie Fearn (Southport)

I speak for the town— Southport—that has the second-highest proportion of pensioners in Great Britain. We are beaten only by Bournemouth.

A fortnight ago, I spoke to a meeting of 200 pensioners. Beforehand, I had sent out a little memo which said, "If you have a particular gripe, bring it to the meeting." Of course, the insult of the 75p pension increase was high on the agenda; everyone spoke about that. However, when they spoke, pensioners were also looking at the other part of the chitty that I had sent, which asked how much the price of their average basket of groceries, bought from a supermarket or small store, had increased in the past three years. The answer that came back—people had not got together to discuss the subject—was, between £2 and £2.50. They compared that with the mere 75p increase that the Government have graciously allowed them, which pensioners say is not enough.

I do not meet pensioners at the post office, but I knock on doors, as we all do. Recently, I have had to knock on 500 doors because there is to be a by-election in Ainsdale ward. I have also knocked on doors in my ward, because I am still a member of the local authority, Sefton. When asked, "Have you anything to say to a politician?" most people go quiet and do not say much. This time, though, people were very vociferous on two issues. The minor issue was the lack of sports facilities for young people in Southport, but people were also asking, "Why is this insult of 75p being thrust upon us, as pensioners?" That was the major issue.

I mentioned to people that we had opposed the provision. I said that we would also express our opposition to it today, in the motion, and people were grateful for that; but, in the end, it is the Government who decide. We have said that we shall make our case forcefully, but the Government must decide whether the 75p increase is enough.

I happened to be in the House in 1988, when I was speaking on health for my party, and a disastrous vote took place. The Conservatives wanted to introduce charges for eye testing and dental charges, and we, with the Labour Opposition, voted against the provision. It was passed by only six votes, much to the regret of myself, the country and pensioners. Some pensioners over the age of 80 and various others on benefit did not need to pay that charge, but the majority of pensioners did have to pay, so they were delighted when we voted, with the new Labour Government, to remove the charge. That pleasure has been completely destroyed by the increase of only 75p.

At the recent meeting, the pensioners acknowledged that eye tests were now free but asked me, "Have you seen the cost of spectacles?" They were paying an average of between £50 and £90 for spectacles or lenses. That cost has been increasing. Although their eye test is free, that saving has not counterbalanced the increased charges.

In my constituency, Mersea Travel led the way—with Sheffield—in granting a free pensioners travel pass. That pass is still available and there are no complaints but, when I speak to groups elsewhere, a very strong case is made that travel is not free. The concessionary pass does not exist; tokens are available, which pay for only part of the journey. We may be lucky in my part of Southport, but throughout rural areas, for instance, the pensioners pass has not yet reached the standard set by the two authorities that first offered the free pass.

Travel benefits pensioners. Pensioners who can get out and travel around keep fitter, saving the NHS money. Therefore, the pensioners pass is essential. I hope that the Government will take a broad perspective, and remember those people who are not capable of moving beyond their home.

Another group of poor pensioners is emerging very strongly in my constituency and in many other seaside resorts. That group consists of pensioners who were left as widows by husbands who thought that they had left them well-off in dividends, shares, and money in building societies. All those pensioners have seen their income shrivel over the past few years—not two years, but the past few years—so much so that, now, the majority of visitors to my surgery, and to the citizens advice bureau in Southport, have debts incurred because of property repairs.

Last week, a widow—quite well-to-do, I supposed— visited my surgery and said that she was desperate. Her income had shrivelled so much that, although the roof was going, she had no money with which to repair it. These, the new poor, are arriving very sharply in this country. Anyone who speaks to the CAB or visits any Member's surgery will find that that is so.

If the pensioner has been connected, or the husband was connected, with the forces, they can be advised—as I advise them—to go to the Soldiers, Sailors and Airmens Families Association, which is very good indeed, or to the Army, Navy and Air Force benevolent funds. However, only part of the cost of repairs can be paid by that organisation or organisations, and it is a means-tested affair. The forces are doing their bit for the pensioners— they are elderly pensioners now—but we should not have to rely on benevolent funds to ensure that pensioners get an adequate living.

The standard spending assessment is not what local authorities expected, so every authority is struggling to make ends meet. They now find that increases have not kept pace with inflation and that unexpected matters arise which require purchase and expense. Costs of care are increasing. Those costs include the cost of home help. At the moment, that service is drifting into private enterprise. About 30, 40, 50 and, in some cases, 70 per cent. of that care help has been privatised and, because of privatisation, costs are increasing.

Dr. Brand

Has my hon. Friend come across one of the consequences of privatising home care? Many pensioners now have to pay VAT on the services that they receive at home. Is it not disgraceful that the Government penalise pensioners twice?

Mr. Fearn

I agree with my hon. Friend. Such cases have been brought to my surgery and to the citizens advice bureau, which actually passes its cases on to me when it cannot find an answer.

Mr. Berry

I thought that it was the other way round.

Mr. Fearn

We do both. However, I write to Ministers and Government officials and receive answers that are not always terribly helpful. They sometimes are, but from the point of view of giving, their response is normally parsimonious.

Some people say that they are tired of pensioners saying, "I fought for my country and now look at how I am being treated with an increase of only 75p in my pension." However, I admire the pensioners who say that. They have done their service for the country not only when they fought, but as members of this great country's work force. They are being kicked in the teeth as regards pensions.

When the Minister replies, will he clarify the position of the minimum income guarantee for older women? We certainly know that they make up one category that does not collect what it is due. That is not because such women are too proud to claim, but because the benefit is not that well known. What briefing and encouragement will the Minister give to induce them to apply for the benefit?

6.2 pm

Mr. John Grogan (Selby)

I shall confine my brief remarks to four matters of particular relevance to pensioners. I will follow many hon. Members in discussing concessionary television licences; I will follow the hon. Member for Southport (Mr. Fearn) in considering concessionary bus passes; and I will follow the hon. Member for Gainsborough (Mr. Leigh) in considering the take-up of income support by pensioners, and the minimum income guarantee. I will quote the same Government research document as did the hon. Member for Gainsborough, but I cannot promise to quote from "The Ragged Trousered Philanthropists". It must be the first time in the long history of Parliament that that book has been quoted by a Conservative Member.

I preface my remarks by pointing out that in my constituency, as in many others, retired and older people play a key role in maintaining many voluntary organisations, church organisations, much of local government and many political parties. I observed the Conservative party conference, and it seems that retired people play a disproportionate role in maintaining the major Opposition party. Nevertheless, their enthusiasm, energy and experience keep many community organisations going.

My father was 75 on 12 November last year. He is lucky enough to receive a teacher's pension. Three days before he was 75, my right hon. Friend the Chancellor of the Exchequer announced that, from this year, all 75-year-olds would get a free television licence. At last, my dad has to admit that I must be a man of some influence to arrange that three days before his birthday. Seriously, however, there is no issue that causes greater argument among pensioners and between pensioners and politicians than the operation of the current concessionary television licence scheme, which applies to some forms of sheltered housing.

The Davies committee that considered the funding of the BBC concluded that the current concession generally goes to poorer pensioners and that those that receive it are more likely to be single pensioners. Therefore, there is a rough and ready distributional justification for the scheme. However, the logic of giving extremely welcome free television licences to those over 75 will, and should, ultimately be extended to all pensioners. It costs £300 million to give free licences to those over 75, and it would cost a further £400 million to give it to all pensioners, as is the case in Ireland. I hope that, in time, we shall do that.

Even though one-off payments, such as winter fuel payments and free television licences, are often criticised, they benefit all pensioners. They benefit pensioners who claim income support and do not benefit from pension increases, and they benefit pensioners who are entitled to income support and do not claim it. In time, the free licence scheme should be extended to all pensioners.

If there is one subject that causes more debate among pensioners than the concessionary television licence, it is concessionary bus passes. That is particularly true in border areas between two concessionary fare regimes. My constituency is in such a border area. The hon. Member for Southport referred to bus tokens; in Tadcaster, pensioners receive £8 worth of bus tokens a year. A return journey to Leeds costs £3.50, so pensioners can make two journeys into Leeds and have £1 of tokens left. When the half-fare bus pass is introduced for pensioners in Tadcaster next year, a couple going into Leeds once a week could make a big saving of £180 a year.

However, there are several issues that the Government must consider. In particular, they must consider reciprocal arrangements between different authorities and the mutual recognition of bus passes. In some areas, such recognition takes place and is usually co-ordinated by the county council. For example, in Sussex and Devon, a bus pass from one district will enable a pensioner to receive concessions in any other district in those counties.

West Yorkshire passenger transport authority gives mutual recognition to the concessions given to pensioners in Manchester. Therefore, if pensioners with a West Yorkshire bus pass travel to Greater Manchester, they can receive the concessions that are available there. If West Yorkshire passenger transport authority gives concessions to Lancastrians—albeit pensioners—the very least that should happen is that, once other councils in Yorkshire start to introduce such schemes, there should be mutual recognition across the county; otherwise, what will happen to pensioners from Tadcaster who go to Leeds and catch a bus to St. James's hospital to visit relatives or one to an out-of-town leisure centre so that they can go for a swim or play bowls? Are we suggesting that they should not receive the 20p concession that is available to pensioners in the West Yorkshire area and that they should have to pay the full fare for the second journey? Details of such schemes need scrutinising.

On pensioners' take-up of income support, I refer, as I said I would, to the research published by the Government in October and to the press releases that came out in December. This valuable research was based in nine different areas and the December press release says that its aim was to examine the most effective and cost efficient ways of identifying pensioners who were entitled to IS but were not claiming … and, having identified them, to examine the most effective and efficient ways of encouraging them to claim. Roughly 9,000 pilot schemes were run in the nine areas, and four ways were used to get in touch with pensioners. They were: telephone; visit; postal (long form), and postal (short screening form). As was said earlier, the most effective way of contacting pensioners to encourage them to take up benefit was to send them the long form and an accompanying letter.

It is worth while considering the detail of the research to show the type of problems with which the Government have to deal. It points out that 32 per cent. of the pilot cases contacted by the Benefits Agency did not respond to an intervention, as it is described in the document, and that 15 per cent. said that they did not want to make a claim. Therefore, almost 50 per cent. of the pilot cases were lost at that stage. Indeed, only 5 per cent. of the pilot cases ultimately resulted in a successful claim for income support.

What lessons can we learn from the research? Possibly, we can learn that it is difficult for the Benefits Agency to be the most effective mechanism for take-up campaigns.

Its job is to process efficiently and calculate benefit claims. Problems of stigma, for example, are particularly difficult for the Benefits Agency to overcome. Other lessons that we can learn are identified in the Government's press release. It states that the main barriers to claiming are attitudes about being an Income Support claimant and its perceived stigma and the physical process of making a claim". It continues: More specifically, these involve pensioners misunderstanding the criteria for entitlement; the complexity of the application form … the need to reveal financial details; the terminology used, eg benefit, support. I look forward to the Government's forthcoming announcement about how to encourage take-up among pensioners. Will that be by simplifying the form, or reinforcing the notion of entitlement, which is referred to in the Government's press release, and getting endorsement from authority figures? I do not know whether that will be Victor Meldrew. However, such moves will be welcome.

The real solution is buried away in the press release, where it is referred to as an option. It is the option of making Income Support an automatic payment without a need to claim". That was certainly envisaged by the Commission on Social Justice, which was set up by the late John Smith. The commission was probably the first body to popularise the idea of a minimum income guarantee for pensioners. It certainly envisaged ultimately that in making a claim for a state pension, pensioners would be asked at that stage what other income from pensions they received. If that did not add up to the minimum pension guarantee, they would automatically receive that payment. That is the only sure-fire way of ensuring that all pensioners who are entitled to the minimum income guarantee are paid it.

Buried away in the research document is a sentence that I shall bring to the attention of the House. It states: Populous urban areas with the highest levels of deprivation and income support receipt had more extensive provision of advice and advocacy services. More rural areas (with the exception of York) had poor provision of information and advice. Assessing the overall impact of welfare rights activity was difficult. Little robust, systematic evaluation of take-up activity was found in the areas. I suggest that pensioners, especially those in rural areas such as North Yorkshire, suffer a double whammy in terms of the benefits that should be available to them. First, advice centres are not nearly comprehensive enough in rural areas, although I accept that some of the advice services are very good, as they are in North Yorkshire. As a result, take-up levels for income support in rural areas, including attendance allowance and disability living allowance, are much lower than in urban areas. It reinforces the so-called stigma that attaches to them if fewer people claim them.

Secondly, local authorities, which depend for their funding, as North Yorkshire county council does—and particularly its social services departments—on the number of claimants, among pensioners, of income support, attendance allowance and disability living allowance, lose out through lack of grants. In terms of the provision of home helps and meals on wheels services, many people in rural areas suffer.

The North Yorkshire county council Labour group, although in a minority, has undertaken some research on these matters. It has found that only 11.1 per cent. of pensioners in North Yorkshire claim successfully for attendance allowance and disability living allowance, which are non-means-tested benefits. The England average is 14.5 per cent. The average among county councils is 13.3 per cent. Even though the group is a minority, it has successfully persuaded the county council to give corporate priority this year to the improvement of welfare benefits advice. I leave the House with the thought that central and local government have a key role in ensuring that pensioners receive the benefits to which they are entitled.

6.14 pm
Mr. Paul Goggins (Wythenshawe and Sale, East)

The impact of the current virus is such that my speech will be delivered in perhaps softer tones than would be customary. None the less, I hope that it will contribute something to the debate. It is a pleasure to be able to take up the remarks of my hon. Friend the Member for Selby (Mr. Grogan), who made several interesting proposals and suggestions—not least the need for joined-up government across the Pennines on transport policy.

When I read the motion I was disappointed with its scope. When I first saw the subject for the debate— meeting the needs of pensioners—I thought that we would have a much more wide-ranging debate than one that focused narrowly on the 75p increase in the state retirement pension. However, the state retirement pension is clearly important. My right hon. Friend the Minister of State reminded the House earlier that the state pension remains the bedrock of Government pensions policy.

Government policies for Britain's 11 million pensioners must be as wide-ranging as their different needs and characteristics demand. Our 11 million pensioners are not a homogeneous group; they are very different people.

It must be acknowledged that many pensioners now are better off than could have been dreamed of 30 or 40 years ago. Before coming to the Chamber, I opened the latest report on households below average incomes. I knew that the hon. Member for Northavon (Mr. Webb) was to propose the motion and that he is something of an expert on this series of reports, which he demonstrated this afternoon.

The tables in the report tell us a great deal about the poorer members of our society. They tell us also a thing or two about some of the richer members of it. For example, 5 million of our 11 million pensioners are members of the richest 60 per cent. of the population, and 1 million are members of the richest 20 per cent. Most of us know from our family and friends and our own experience that that is the case.

My hon. Friend the Member for Selby brought as evidence the position of his father, and I do the same. My father is 70 and he is not one of the super rich, but, like my hon. Friend's father, he was a teacher. He has an occupational pension and lives a quite comfortable life. During this interesting debate on the state retirement pension, my father has been sunning himself in Tenerife, along with thousands of other pensioners in Britain who take themselves abroad at this time of year for some warmer weather.

I do not make that point to belittle the plight of pensioners who still face poverty. It is a scandal that so many pensioners still do face poverty. I make the point to put the pensioner question into context. The rich-and-poor divide that scars our society affects pensioners as well as people in all other sections of society. I believe that different policies are required for these different groups to deal, first, with the immediate pressures that come with poverty and, secondly, and just as important—more important in the long term—to deal with the factors that cause poverty in our society in the long run.

Against that background, I believe that the Government's approach is absolutely right. The measures that will help today's pensioners—the minimum income guarantee, the winter fuel allowance, free eye tests, free television licences for the over-75s and all the other measures that were welcomed by my hon. Friend the Member for Kingswood (Mr. Berry) with, as he said, admirable assistance from the Liberal Democrat councillors on his local authority—mean that the poorest pensioners in Britain are now £;10 a week better off if single, and £16 in the case of a pensioner couple.

The second crucial piece of Government policy is the action that we are taking to prevent poverty in future generations of pensioners. We are dealing with the causes, not just the symptoms. The Government are introducing the state second pension and the framework for stakeholder pensions so that we can avoid poverty in future.

Pensioner poverty is a huge problem and no one should underestimate that fact. The statistics on households below average income tell us that, between 1991 and 1997, a quarter of all single pensioners lived in poverty, not just for one of those years but for all six. They were trapped in poverty, with no prospect of an escape route. That has a severe impact on the life and quality of life of those pensioners.

Nowhere is that seen more graphically than in terms of health and life expectancy. In Manchester, a typical man who is reaching the age of 65 can expect to live until he is 78—a further 13 years. However, he will spend only about seven of those years in good health. In Surrey today, a typical man reaching 65 years of age can expect to live until he is 80—a further 15 years—and enjoy 10 of them in good health.

We must first accept that there are people in poverty who live in Surrey, just as there are reasonably well-off people who live in Manchester. The example brings two important points to our attention. First, people in better-off areas enjoy longer life and can expect healthier life, too. Secondly, pensioners in poorer areas need extra support from public services. The man from Manchester will die earlier but will require an extra year of support from the national health service, the local authority, the voluntary sector and so on. Pensioner poverty is about much more than 75p a week; it is about lifetime chances and public services, as well as income.

I have been to many pensioner meetings, as have my hon. Friends and some Opposition Members. I am in no doubt that, if the Government were to increase the state retirement pension in line with earnings rather than prices, it would be extremely popular with a number of pensioner organisations and groups, not least those in my constituency. However, I do not favour that approach because I do not believe that it would help us tackle the problem of pensioner poverty now.

We have heard several examples of the sums involved if the state retirement pension were increased—I think £13 billion was the figure given for an increase of £30 a week. The hon. Member for Gainsborough (Mr. Leigh) generously proposed an increase of £1 a week. An increase in the state retirement pension of £5 a week would mean, first, extra Government expenditure of £2.5 billion a year, which would of course be built on year on year, and secondly, a boost to the incomes of better-off people. The one group that such an increase would not benefit would be the poorest pensioners, who would lose every pound of that £5 in withdrawal of means-tested benefits. They would see the advantage taken away from them.

There have been some interesting contributions to the debate on the issue of means testing—not least from the hon. Member for Gainsborough who follows the social security debate, and especially means testing, assiduously—but I grow impatient over it. The Government are often accused by their critics of taking measures that increase it.

If the Government are to help the least well-off people, and if we leave aside, for the time being anyway, the fact that their long-term aim is to implement measures such as the state second pension and stakeholder pensions, to give carers, the low paid and people with disabilities the chance of a second pension that would take them above the poverty line in the long term, we must recognise that there has to be some measure of income and resources.

No party or Government can run away from that fact. We may hear much rhetoric on the issue, but no other party has made a firm proposal to abolish means testing as part of their overall strategy. All parties have a responsibility to help to develop a different approach to the testing of income and resources—to try to foster a new mindset among the public.

When means testing was operating in the 19th century and then in the 1930s, most people were poor, and the process was demeaning and stigmatising. However, times have changed; most people today are not poor. Together we should be able to create a new attitude to the testing of income and resources that reduces the stigmatisation process.

Three measures could be helpful. First, the branding of the minimum income guarantee as a guarantee—an entitlement—is very helpful. It begins to get us away from the handout mentality. Secondly, it is extremely helpful that the year-on-year increase is in line with earnings rather than prices. Its value will therefore increase year on year.

Many people do not claim means-tested benefits because they are of only marginal advantage. A lady came to my advice bureau the other day—not about pensions but in relation to another benefit—who had in the past claimed family credit and been only marginally better off. In the end, she had given up claiming. A few years went by; we introduced the working families tax credit, she made a new claim and now finds herself £70 a week better off. As people see a substantial difference by virtue of making a claim—it is worth their while—they will be more likely to claim. More pensioners will claim benefits as the minimum income guarantee increases.

The third reason for optimism is that anybody who retires from 2010 will have no memory of times before the second world war. Perhaps the images of the 1930s and further back will therefore dim in the public's minds. We must be honest: no party will get rid of the means test. It is a necessary test of income and resources, and we need a more positive attitude towards it.

I said that I was somewhat disappointed by the narrow nature of the motion. I certainly hope that we have other opportunities in the near future to debate other issues that affect pensioners. I was very pleased that the hon. Member for Southport (Mr. Fearn) introduced the issue of housing as it affects pensioners, because it is extremely important.

In the Manchester part of my constituency, two thirds of pensioners live in rented accommodation—much of it local authority owned, some of it housing association property, and some private. Many of those pensioners are unhappy with the house in which they live. Some have medical problems and need adaptations to their houses, which take for ever to be made. If they need alternative accommodation, what is available is often unsuitable for their needs. Some have family living outside the area, but transferring to suitable accommodation can be difficult. Sometimes, their houses are too big, but often smaller and more suitable accommodation is not available. Pensioners' housing need is an issue that we must all address.

One extremely important issue that has not been raised in this debate is the fact that 300,000 pensioners in Britain do not have access to a telephone. That is not necessarily a matter for the Government; it is one for telephone companies. Last week, a gas company announced that it would be abolishing the standing charge and restructuring its charging system to take account of that. If a gas company can do that, surely telephone companies can do something to connect the 300,000 pensioners who are isolated. It is great that pensioners are using the internet, but not if 300,000 of them cannot pick up a telephone to call for help when they need it.

I was glad to hear my right hon. Friend the Minister of State promise that the issue of capital limits will be dealt with in this Parliament. That is so important. It is 12 years since the limits were set, but they have never been changed. Much can be done to help the poorest pensioners as and when the limits are altered.

Complaints about the 75p increase in the state retirement pension pale into insignificance when compared with what the Government are doing for pensioners generally and for poorer pensioners in particular.

6.28 pm
Mr. Paul Burstow (Sutton and Cheam)

I apologise to the one or two hon. Members who have been unable to speak in this debate.

This has been a very useful debate. Liberal Democrats make no apologies for focusing on the derisory 75p increase in the basic state pension which is to come into effect in April. All I want to do is to seek clarity on the stance of the official Opposition and of the many Labour Members who signed the early-day motion to which my hon. Friend the Member for Northavon (Mr. Webb) referred.

I shall try to address a few of the points made in the debate, starting with the comments of the hon. Member for Kingswood (Mr. Berry), who rightly said that the supposed demographic time bomb is a myth. The royal commission on long-term care and, indeed, the Select Committee on Health, have comprehensively scotched that argument. If there was a time-bomb at all, it went off in the 20th century, and we managed to afford the costs of it. It is important to bear in mind the fact that we not only afforded a massive increase in the number of pensioners but were able to put in additional resources to improve the basic state pension. We should not forget that fact, to which my hon. Friend the Member for Northavon drew our attention.

The Minister referred in his opening remarks to the fact that we had changed our policy since the general election in respect of our manifesto commitment on the uprating of the basic state pension. That is true. It is fine and appropriate to consider policies and to keep them under review. It is a strange proposition that at no point should a party re-evaluate its position. The position that we have outlined sets us clearly apart from the other parties on the issue of pensioners and how to improve their circumstances.

We have made it clear that we want a new £3 age addition to the basic state pension at 75, and we want to build on and increase to £5 the miserly 25p age addition at 80. Those are the first steps in improving the lot of the poorest of our pensioners.

We should consider how to index the basic state pension to the basket of costs that pensioners face in reality. The hon. Member for Islington, North (Mr. Corbyn) and others referred to the costs that are not properly factored into the calculation of the retail prices index, which is the current basis for uprating.

The Minister spent quite some time talking about averages. He talked a lot less about the poorest of our pensioners. As we have established in this debate, although it is undoubtedly true that average pensioner incomes have increased, the figures ignore the situation of the long-term retired, whose incomes have declined because all too often they are uprated in relation to prices rather than earnings—whether occupational pensions or the basic state pension. Inflation has eroded the value of pensions, and has left pensioners in an increasingly difficult and hard-pressed situation.

Where do the Conservatives stand? Very few of them stood in this debate. [HoN. MEMBERS: "Where are they?"] They obviously had engagements elsewhere. Perhaps they were consulting pensioner constituents to find out their views. In a speech lasting 14 minutes, their spokeswoman, the hon. Member for Beckenham (Mrs. Lait), did not elucidate their policy or give the official Opposition's view of whether the basic state pension uprating this April is adequate. My hon. Friend the Member for Somerton and Frome (Mr. Heath) was right to pose that question, but the Conservatives did not answer it. They do not seem to want to say what their policy is.

My hon. Friend the Member for Southport (Mr. Fearn) rightly made the link between health equalities and the level of pensions. That was drawn out by the Government's own report—the Acheson report—in September 1988, which made it clear that there is a definite link between low incomes and poor health outcomes, to which several hon. Members referred.

The proposition that we have put to the House tonight is that the 75p increase in the basic state pension is derisory. It will do nothing to meet the real costs of living with which pensioners are confronted every day. For most pensioners, the pension increase will be consumed by, for example, the council tax increase. The poorest pensioners will be hit the hardest. Indeed, 870,000 people who are entitled to claim the so-called minimum income guarantee do not claim it. The hon. Member for Gainsborough (Mr. Leigh) referred to the Government's research on take-up. A factor that he did not mention, which I think is highly relevant, is that 36 per cent. of the people who responded to the Government's research said that they would not claim the benefit: they would refuse to take up a means-tested benefit and would thus continue to live in poverty. The Government must consider that seriously. It is right that we urge people to take up the minimum income guarantee, and I hope that the campaign that the Government are about to launch is a success.

Another 600,000 people are disqualified from the minimum income guarantee because they have savings of £8,000 or more. My hon. Friend the Member for Southport rightly talked about this new category of poor pensioners who live in properties which their income is no longer sufficient to maintain. That is a serious challenge for all hon. Members to think about: there is now no reward for thrift. The Government made matters worse when they decided to abolish the tax credit on dividends, as a result of which many pensioners lose £75 per annum.

The largest group of pensioners who are missing out on the income guarantee are older women who, as a result of broken contribution records, often do not receive full basic state pensions. Currently, 1.5 million pensioners need income support. In the Green Paper that the Government published last year, they said: People who work all their lives should not have to rely on means tested benefits. On the Government's own figures, at least another 1 million people will require means-tested income support by 2050.

For some 1.4 million people, the minimum income guarantee will make no difference—those 600,000 who are disqualified because of the capital thresholds and those who have not claimed the benefit. That means that the minimum income guarantee is no guarantee at all.

All the evidence shows that the poorest pensioners are the oldest pensioners. For example, by the Government's own definition, 80 per cent. of the over-80s live in fuel poverty. We want far more money to be put into the basic state pension. A more effective way of targeting money would be to target it on the basis not of means but of age. That is why we believe that the extra 25p that is added to the basic state pension at the age of 80, which has not been uprated since 1971, should be raised for the first time for many years to at least £5, and that there should be an age addition at the age of 75 of at least £3.

The hon. Member for Bethnal Green and Bow (Ms King) referred to the proposal for 1p on income tax for education on which my party has campaigned. She was the first person in the debate to mention that, but to listen to her, one would have thought that it had been the substance of many speeches by Liberal Democrats. It is not our policy to use the 1p on income tax for education to fund pensions.

The hon. Member for Coventry, South (Mr. Cunningham) questioned us about our proposal to use the surplus on the national insurance fund. My hon. Friend the Member for Northavon outlined in some detail how that would work, but I shall recap. Currently, there is an accumulated balance on the national insurance fund of £15 billion. Every year, £1 billion is added to that surplus. Our proposals for age additions would cost about £0.5 billion per annum—modest increases targeted to help those most in need. That is the difference between our approach and the Government's.

The hon. Member for Bethnal Green and Bow was right to say that the country could afford to do more for pensioners through the basic state pension. That applies to the current generation of pensioners, but how will future pensioners fare? The Government's solution is to scrap the state earnings-related pension and put in its place the state second pension. The first full state second pension will not be paid until 2047. Eighteen-year-olds might have some hope that a state second pension will come to their aid when they retire, but only once they have been in the work force for 40 years, and only if they pass the relevant qualifying tests for credits.

The Government are introducing the state second pension at such a slow rate that it makes snails look positively fast. By 2025, the state second pension will put in people's pockets an extra £1.30 a week. After 40 years in the work force, will the state second pension lift its beneficiaries out of the means test, which is what the Green Paper said it should do? The answer is no. The minimum income guarantee will very quickly overtake the combined sum of the basic state pension and the state second pension.

The Government's amendment refers to people retiring on incomes above means-tested levels "in due course." That is a never-never land promise—it will never be redeemed by this or any Government. It prompts the question, when will the state second pension lift people above means-test levels? As it is currently framed in the legislation, it will not.

Liberal Democrats believe that the 75p increase in the basic state pension from this April is a disgrace, derisory and an insult to the pensioners of this country. That is why tonight we shall go through the Lobby to vote for our motion, and we hope that other Members who feel the same way will do so as well.

6.39 pm
The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley)

The hon. Member for Northavon (Mr. Webb) gave a passable impression of a "desiccated calculating machine" as he bombarded us with statistics and with facts and figures. It was just the kind of passionate, almost addictive, number crunching that Nye Bevan would have held in disdain.

I have no doubt that the hon. Gentleman is well informed. The problem with his argument is its assumption that other people, both in the House and outside, are less well informed than he is. His argument demands total credulity: it asks us to believe every word that he says now. It also demands collective amnesia: it asks us to forget everything that the Liberal Democrats have said before.

The motion states that uprating the basic state pension in line with the retail prices index is inadequate, yet, as my right hon. Friend the Minister of State said earlier, just over two years ago the Liberal Democrat election manifesto said: The basic state pension will remain indexed to prices. Moreover, the Liberal Democrats gave a perfect description—in glowing terms—of the minimum income guarantee that the Labour Government have introduced. They said that they would Guarantee everyone an acceptable minimum standard of living in retirement. We will create an additional top-up pension for pensioners below the Income Support level. This will be indexed to earnings". As most hon. Members know, the Liberal Democrats made those promises in a manifesto which—despite the ability of some of them to play with figures—displayed their inability to do basic sums. It contained spending pledges that would have cost some 5p in the pound in additional income tax, or some £600 per family. The Liberal Democrats promised to raise revenue, and to fund their pledges across the broad spectrum of Government expenditure, by putting 1p on income tax—should it prove necessary: they did not even give a guarantee that they would do that. We have heard confirmation this evening that not a scrap of the money raised from that 1p would go to pensioners. Every bit would support the Liberal Democrats' education plans—plans, incidentally, which have been funded to a far greater extent by this Labour Government.

Mr. Chris Pond (Gravesham)

My hon. Friend will have heard the hon. Member for Northavon (Mr. Webb) suggest earlier that Governments since the war had done more than link pensions to earnings. He may wish to stress that the present Government have done much more than that: indeed, the earnings link in itself may have been the easy option. Has he the shadow of a suspicion that, had this Government simply linked the basic pension to earnings, we would today be debating an Opposition motion demanding that we introduce a minimum income guarantee and increase it in line with prices?

Mr. Bayley

My hon. Friend is well versed in these matters, and he is absolutely right. Had we restored the link with earnings, the increase in spending on pensioners from the social security budget would have been less than it will be in the lifetime of this Parliament. By the end of the current Parliament, this Labour Government will be spending some £4 billion more per year on pensioners.

As my hon. Friend suggests, had we restored the earnings link—as the Liberal Democrats now imply that we should have—there would have been the same cost inflation. That is what Liberal Democrat policies would have brought about. The problem is that the Liberal Democrats produced a manifesto in which their sums did not add up, and they have now added yet more expenditure by promising more to pensioners, without explaining how—[Interruption.]

Mr. Deputy Speaker (Mr. Michael J. Martin)

Order. Hon. Members must not shout at each other across the Floor.

Mr. Bayley

If the Liberal Democrats wish to increase expenditure, they owe it to the public, and to pensioners in particular, to explain how they are going to do that.

Pensioners are bright. They are too bright to be taken in easily by a bit of flexible arithmetic. During the last Parliament, I went to a public meeting to talk to the York pensioners association, which I had established. It was one of the first things that I did after being elected. I went to the meeting days after the Labour party had decided, in policy terms, to opt for targeting rather than raising the basic state pension in line with earnings—which had been our policy hitherto, as hon. Members know.

To be blunt, I expected a pretty rough ride. After I had said my piece, a woman pensioner stood up and said, "I am glad you said that, Mr. Bayley. When the Labour party promised the earth, I rather wondered where they would find the money." When a party makes promises without explaining how they will be funded, it has no credibility.

My hon. Friend the Member for Kingswood (Mr. Berry) did not argue that the Government should restore the link between the basic state pension and earnings, but he did argue that they should do more than provide price indexation for pensioners as a whole. Similar points were made by my hon. Friends the Members for Coventry, South (Mr. Cunningham) and for Bethnal Green and Bow (Ms King).

All my hon. Friends recognise that the Government are doing substantially more for the poorest pensioners through the minimum income guarantee, but we are also doing more than simple price indexation for all pensioners. We are doing more by means of services such as eye tests, and the concessionary fares proposal that my right hon. Friend the Secretary of State for the Environment, Transport and the Regions will introduce in legislation during the current Session; but we are also doing more by introducing, for instance, the winter fuel supplement, which applied to all pensioners.

Initially, the winter fuel supplement was to be higher for pensioners on low incomes. It was to be £50 for pensioners receiving income support, and £20 for other pensioner households. However, partly in response to arguments such as those advanced by my hon. Friend the Member for Kingswood—for instance, the argument that all pensioners should receive increases that are more than merely price indexed—this year we were able to announce a fivefold increase in the value of the winter fuel addition to £100. That is nearly £2 per week, in addition to the 75p. It is entirely wrong to suggest that the Government are leaving all pensioners with a mere 75p; we are providing additions for all pensioners on top of that.

I know, and every member of the Government knows, that many pensioners want us to do more. Many want us to restore the link. As my hon. Friend the Member for Gravesham (Mr. Pond) pointed out, if it were just a matter of spending, it could be said that the Government had done more than meet the cost of restoring the link. An extra £800 million has been added to social security expenditure on pensioners as a result of the introduction of the winter fuel addition and the minimum income guarantee for pensioners— £800 million more than would have been the cost of uprating pensions in relation to earnings over the three years during which we have been in government so far.

Of course, the Government have a choice. If we deemed it right, we could spend the money on an equal increase in the basic state pension for all pensioners; alternatively, we could target more on the pensioners who need help most.

The Government are serious about reducing poverty. When we published our first poverty report in September, many people, including most of the commentators in the newspapers, were taken aback at the boldness of our commitments and at the transparency of the indicators that we intend to use to monitor our success in reducing poverty. We put ourselves on the line and for a simple reason: we are committed to reducing poverty. If we are going to meet those ambitious goals, we will have to ensure that we target resources on those who need them most: the poor.

Think of the Government's inheritance when they came to office just over two and a half years ago. Pensioner incomes increased significantly between 1979 and 1997, a point that was made by hon. Members from the official Opposition. Indeed, over that period, average pensioner income rose faster than average earnings, yet, at the same time, the gap between the incomes of the poorest pensioners and other pensioners increased dramatically. Our priority is to direct more help to those who have been hardest hit through the 18 years of Conservative pension policy.

Mr. Webb

The Minister refers to those who have been hardest hit. Presumably, the small saver would come into that category. Will he explain why the Government have for three years retained the Tory capital limits—they have frozen them each year? He has promised action by the end of the Parliament. Why do pensioners have to wait that long? A year ago, the Government promised action soon. Why are we having to wait?

Mr. Bayley

The Government have promised to address capital limits. We will do so during the lifetime of the Parliament. The Liberal Democrats, who promise the earth without taxation commitments to pay for their promises, ask for yet another promise. Each year—pensioners understand the policy—the Government have introduced benefits for pensioners over and above price indexation. Each year, we have done things that have reduced the costs that pensioners face and that have increased pensioner incomes. The hon. Member for Northavon is wrong to shake his head because we have reduced the fuel costs that pensioners face; we have provided fuel supplements for all pensioners. During the lifetime of the current Parliament, we will continue to do that year by year. We have made an absolutely fundamental commitment—which, incidentally, the Liberal Democrats did not make—to deal with capital limits during the lifetime of the Parliament. That we will do.

If we increased the basic state pension in line with earnings, every pensioner would gain, except those on income support. Those on income support would lose every pound of the pension rise from their income support payment—from the minimum income guarantee. Instead, by targeting that money on the minimum income guarantee, we are helping the poorest pensioners substantially.

My hon. Friend the Member for Kingswood also raised the capital limits issue. He did so to explain why he put his name to the early-day motion that has been discussed by quite a number of hon. Members on both sides of the House. I hope that my hon. Friend will be reassured by the commitment that the Government have given to address the issue. We are looking at the issue now and we will address it during the current Parliament.

My hon. Friend the Member for Selby (Mr. Grogan) made a lot of important and useful points about the importance of a take-up campaign to ensure that pensioners who are entitled to the minimum income guarantee take it up, but he made one suggestion that I should like to discuss a bit further: that perhaps the take-up campaign should be run by any organisation other than the Benefits Agency because it was a tarnished commodity and would put people off claiming.

My hon. Friend is aware that we have changed the law to enable organisations other than the Benefits Agency to take information and to process a minimum income guarantee application. If someone is applying for housing benefit, for example, that other organisation could take information from the local authority. That is a welcome step forward, but I counsel against writing the Benefits Agency out of the equation. One of the problems with the Benefits Agency that we inherited was that it was simply a passive payer of benefits, rather than an active part of the welfare system. We need to ensure that the image of the Benefits Agency changes and that it is involved with a wide range of other agencies in spearheading the campaign.

The hon. Member for Southport (Mr. Fearn) made the point that additional help is needed for older pensioners. He asked whether the minimum income guarantee should be changed to achieve that. The minimum income guarantee already provides higher rates of guaranteed minimum income for older pensioners. As most hon. Members will know, for a single pensioner, the minimum income guarantee guarantees an income of £75 a week at current rates, but for a single person aged over 75, the rate is £95.60 a week. For a single person aged over 80, it is £101.30.

Mr. Fearn

I asked the Minister to come forward with priorities, so that the 37 per cent. of older women who are not claiming at the moment do claim.

Mr. Bayley

The Liberal Democrats have a simple choice. Either they put whatever resources are available in the hands of all older pensioners, in which case there is not much money to go round, or they target it at the poorest older pensioners. If their objective is the same as the Government's—to reduce poverty among older pensioners on the lowest incomes—they will applaud what the Government are doing and agree with us that the minimum income guarantee is the right way to provide dignity to people in retirement who have not been able to put aside resources for private pension provision. If the Liberal Democrats want to abolish poverty, they should join us and ensure that the minimum income guarantee works.

Hon. Members have not spoken much about the need to create a pension system that ensures that people do not need to fall on means-tested benefits, but the Government are creating such a system with legislation that we passed last year to create stakeholder pensions and with the Child Support, Pensions and Social Security Bill, which is currently before the House. That will create the state second pension and reform the state earnings-related pension to provide a better return for people on the lowest earnings. For those earning under £9,500 a year, the state second pension will provide twice the pension on maturity that SERPS provides at the moment.

The problem with the state earnings-related pension lies within the name itself: it is earnings related, so it is the poorest people at work who get the lowest pensions. We are reforming that with a state second pension. We are also providing credits to carers and to disabled people whose employment record has been disrupted by their state of health.

For today's pensioners, we are providing substantially more than simple price indexation. We abolished VAT on fuel, as we promised we would. We reduced it to the lowest level allowed under legislation that the Conservatives agreed with Brussels.

The Government have abolished the gas levy. We have introduced the winter fuel allowances, and increased them fivefold to £100 per household—which is almost £2 per week on top of the indexation to be introduced from next April.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 41, Noes 300.

Division No. 27] [7 pm
Allan, Richard Keetch, Paul
Ashdown, Rt Hon Paddy Kennedy, Rt Hon Charles (Ross Skye & Inverness W)
Baker, Norman
Ballard, Jackie Kirkwood, Archy
Berth, Rt Hon A J Llwyd, Elfyn
Brake, Tom Maclennan, Rt Hon Robert
Brand, Dr Peter Michie, Mrs Ray (Argyll & Bute)
Breed, Colin Moore, Michael
Bruce, Malcolm (Gordon) Oaten, Mark
Burstow, Paul Öpik, Lembit
Cable, Dr Vincent Rendel, David
Campbell, Rt Hon Menzies (NE Fife) Sanders, Adrian
Smith, Sir Robert (W Ab'd'ns)
Chidgey, David Stunell, Andrew
Cotter, Brian Taylor, Matthew (Truro)
Dawson, Hilton Tonge, Dr Jenny
Fearn, Ronnie Tyler, Paul
Foster, Don (Bath) Webb, Steve
Harris, Dr Evan Wigley, Rt Hon Dafydd
Harvey, Nick Willis, Phil
Heath, David (Somerton & Frome) Tellers for the Ayes:
Hughes, Simon (Southwark N) Mr. Bob Russell and
Jones, Nigel (Cheltenham) Mr. Edward Davey.
Abbott, Ms Diane Best, Harold
Adams, Mrs Irene (Paisley N) Betts, Clive
Ainger, Nick Blears, Ms Hazel
Ainsworth, Robert (Cov'try NE) Boateng, Rt Hon Paul
Allen, Graham Bradley, Keith (Withington)
Anderson, Donald (Swansea E) Bradley, Peter (The Wrekin)
Armstrong, Rt Hon Ms Hilary Bradshaw, Ben
Ashton, Joe Brinton, Mrs Helen
Atherton, Ms Candy Brown, Russell (Dumfries)
Atkins, Charlotte Browne, Desmond
Banks, Tony Burden, Richard
Barron, Kevin Burgon, Colin
Bayley, Hugh Butler, Mrs Christine
Beckett, Rt Hon Mrs Margaret Campbell, Ronnie (Blyth V)
Bell, Martin (Tatton) Campbell-Savours, Dale
Benn, Hilary (Leeds C) Cann, Jamie
Bennett, Andrew F Caplin, Ivor
Benton, Joe Casale, Roger
Bermingham, Gerald Caton, Martin
Cawsey, Ian Heal, Mrs Sylvia
Chapman, Ben (Wirral S) Henderson, Doug (Newcastle N)
Chaytor, David Henderson, Ivan (Harwich)
Clapham, Michael Hepburn, Stephen
Clark, Rt Hon Dr David (S Shields) Heppell, John
Clark, Paul (Gillingham) Hill, Keith
Clarke, Charles (Norwich S) Hodge, Ms Margaret
Clarke, Rt Hon Tom (Coatbridge) Hoey, Kate
Clarke, Tony (Northampton S) Hood, Jimmy
Clwyd, Ann Hope, Phil
Coaker, Vernon Howarth, George (Knowsley N)
Coffey, Ms Ann Howells, Dr Kim
Cohen, Harry Hoyle, Lindsay
Coleman, Iain Hughes, Ms Beverley (Stretford)
Colman, Tony Hughes, Kevin (Doncaster N)
Connarty, Michael Humble, Mrs Joan
Cook, Frank (Stockton N) Hurst, Alan
Cooper, Yvette Iddon, Dr Brian
Corbett, Robin Illsley, Eric
Corston, Jean Jackson, Helen (Hillsborough)
Cousins, Jim Jamieson, David
Cranston, Ross Jenkins, Brian
Crausby, David Johnson, Alan (Hull W & Hessle)
Cryer, John (Hornchurch) Johnson, Miss Melanie (Welwyn Hatfield)
Cunningham, Jim (Cov'try S)
Curtis-Thomas, Mrs Claire Jones, Rt Hon Barry (Alyn)
Dalyell, Tam Jones, Helen (Warrington N)
Darting, Rt Hon Alistair Jones, Jon Owen (Cardiff C)
Darvill, Keith Jones, Dr Lynne (Selly Oak)
Davey, Valerie (Bristol W) Kaufman, Rt Hon Gerald
Davidson, Ian Keeble, Ms Sally
Davies, Rt Hon Denzil (Llanelli) Keen, Alan (Feltham & Heston)
Davies, Geraint (Croydon C) Kelly, Ms Ruth
Dean, Mrs Janet Kennedy, Jane (Wavertree)
Denham, John Khabra, Piara S
Dismore, Andrew Kidney, David
Dobbin, Jim King, Andy (Rugby & Kenilworth)
Donohoe, Brian H King, Ms Oona (Bethnal Green)
Doran, Frank Kumar, Dr Ashok
Dowd, Jim Ladyman, Dr Stephen
Dunwoody, Mrs Gwyneth Laxton, Bob
Eagle, Angela (Wallasey) Lepper, David
Eagle, Maria (L'pool Garston) Leslie, Christopher
Edwards, Huw Levitt, Tom
Efford, Clive Lewis, Terry (Worsley)
Ennis, Jeff Liddell, Rt Hon Mrs Helen
Field, Rt Hon Frank Linton, Martin
Fisher, Mark Lloyd, Tony (Manchester C)
Fitzpatrick, Jim Love, Andrew
Fitzsimons, Lorna McAvoy, Thomas
Flint, Caroline McCabe, Steve
Flynn, Paul McCafferty, Ms Chris
Follett, Barbara McDonagh, Siobhain
Foster, Rt Hon Derek Macdonald, Calum
Foster, Michael Jabez (Hastings) McFall, John
Foster, Michael J (Worcester) McGuire, Mrs Anne
Fyfe, Maria McIsaac, Shona
Galloway, George McKenna, Mrs Rosemary
Gapes, Mike Mackinlay, Andrew
Gardiner, Barry McNulty, Tony
George, Bruce (Walsall S) MacShane, Denis
Gerrard, Neil Mactaggart, Fiona
Gibson, Dr Ian McWalter, Tony
Gilroy, Mrs Linda McWilliam, John
Godsiff, Roger Marsden, Gordon (Blackpool S)
Goggins, Paul Marsden, Paul (Shrewsbury)
Golding, Mrs Llin Marshall, David (Shettleston)
Griffiths, Jane (Reading E) Marshall-Andrews, Robert
Griffiths, Nigel (Edinburgh S) Martlew, Eric
Griffiths, Win (Bridgend) Maxton, John
Grocott, Bruce Meale, Alan
Grogan, John Merron, Gillian
Hain, Peter Miller, Andrew
Hall, Patrick (Bedford) Mitchell, Austin
Hamilton, Fabian (Leeds NE) Moffatt, Laura
Harman, Rt Hon Ms Harriet Moran, Ms Margaret
Morley, Elliot Savidge, Malcolm
Morris, Rt Hon Ms Estelle (B'ham Yardley) Sawford, Phil
Sedgemore, Brian
Mountford, Kali Shaw, Jonathan
Mowlam, Rt Hon Marjorie Sheerman, Barry
Mudie, George Sheldon, Rt Hon Robert
Mullin, Chris Simpson, Alan (Nottingham S)
Murphy, Jim (Eastwood) Singh, Marsha
Murphy, Rt Hon Paul (Torfaen) Smith, Rt Hon Andrew (Oxford E)
Naysmith, Dr Doug Smith, Angela (Basildon)
Norris, Dan Smith, Rt Hon Chris (Islington S)
O'Brien, Bill (Normanton) Smith, Jacqui (Redditch)
O'Brien, Mike (N Warks) Smith, John (Glamorgan)
O'Hara, Eddie Smith, Llew (Blaenau Gwent)
Olner, Bill Snape, Peter
Organ, Mrs Diana Soley, Clive
Palmer, Dr Nick Southworth, Ms Helen
Pearson, Ian Spellar, John
Pendry, Tom Squire, Ms Rachel
Perham, Ms Linda Starkey, Dr Phyllis
Pickthall, Colin Steinberg, Gerry
Pike, Peter L Stevenson, George
Plaskitt, James Stewart, David (Inverness E)
Pond, Chris Stewart, Ian (Eccles)
Pound, Stephen Stinchcombe, Paul
Powell, Sir Raymond Stoate, Dr Howard
Prentice, Ms Bridget (Lewisham E) Strang, Rt Hon Dr Gavin
Prentice, Gordon (Pendle) Straw, Rt Hon Jack
Prosser, Gwyn Stringer, Graham
Purchase, Ken Stuart, Ms Gisela
Quin, Rt Hon Ms Joyce Sutcliffe, Gerry
Quinn, Lawrie Taylor, Rt Hon Mrs Ann (Dewsbury)
Rammell, Bill
Reed, Andrew (Loughborough) Taylor, Ms Dari (Stockton S)
Reid, Rt Hon Dr John (Hamilton N) Taylor, David (NW Leics)
Robinson, Geoffrey (Cov'try NW) Temple-Morris, Peter
Roche, Mrs Barbara Thomas, Gareth R (Harrow W)
Rogers, Allan Timms, Stephen
Rooker, Rt Hon Jeff Tipping, Paddy
Ross, Emie (Dundee W) Todd, Mark
Rowlands, Ted Touhig, Don
Roy, Frank Trickett, Jon
Ruane, Chris Turner, Dr Desmond (Kemptown)
Ruddock, Joan Turner, Dr George (NW Norfolk)
Russell, Ms Christine (Chester) Turner, Neil (Wigan)
Ryan, Ms Joan Twigg, Derek (Halton)
Salter, Martin Tynan, Bill
Sarwar, Mohammad Walley, Ms Joan
Ward, Ms Claire Wood, Mike
Wareing, Robert N Woodward, Shaun
Watts, David Woolas, Phil
White, Brian Worthington, Tony
Whitehead, Dr Alan Wright, Anthony D (Gt Yarmouth)
Wicks, Malcolm Wright, Dr Tony (Cannock)
Williams, Rt Hon Alan (Swansea W) Wyatt, Derek
Williams, Mrs Betty (Conwy) Tellers for the Noes:
Wills, Michael Mr. Mike Hall and
Winterton, Ms Rosie (Doncaster C) Mr. Greg Pope.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House notes that the Government inherited a situation where increasing numbers of pensioners were living in poverty and where, if nothing had been done, one in three people would have retired on to means-tested benefits by the middle of this century; congratulates the Government on the start it has made in dealing with these problems; applauds in particular the introduction of the Minimum Income Guarantee, benefiting one and a half million pensioner households, and welcomes the Government's commitment to raising it in line with earnings for the rest of this Parliament and to conducting a take-up campaign to ensure that pensioners get what they are entitled to; supports the Government's commitment to helping pensioners, including the restoration of free eye tests and the new winter fuel payments, which benefit over seven million pensioner households and will be paid every year from now on; welcomes the Government's commitment to extending further help with pensioners' needs, including free television licences for people aged 75 or over from next autumn and the extension of concessionary public transport fare schemes; supports the Government's commitment to letting pensioners benefit more from their savings through the minimum tax guarantee which now means that two thirds of pensioners now pay no income tax; and welcomes the Government's plans to reform pensions, through the new stakeholder pensions and second state pension, so that everyone who puts in a full life of working or caring will in due course be able to retire on an income above means-tested levels.