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Kali Mountford: Sadly, I am not surprised to hear that, although I am disappointed. The demographic changes in society present a problem and imagination has to be used to solve it. We have an aging population with growing needs, but a simplistic approach is not the answer. One simple answer that needs to be understood is that people who need benefits sometimes need to know the route to those benefits. That is why VAT on fuel is so important and why I welcome the reduction in VAT on fuel. I expect that Conservative Members were disappointed in it, given that they welcomed the opposite when their party was in government.
Let us consider the effect of reducing VAT on fuel, blunt instrument though it may be. It allows pensioners to keep their heating on in the winter. Help the Aged reported that pensioners were having to make decisions between food and fuel. That is why it welcomed the introduction of the £20 and the £50 for fuel this winter--another blunt instrument, but a blunt instrument that gets to the point. If pensioners have to wait for weeks on end to see how cold it gets to find out whether they will be entitled to extra support, it makes life very difficult for them, especially as the rules in relation to income support and cold weather payments were complicated. At least this winter--it has been a mild winter--pensioners have had the cash to pay their heating bills without all that rigmarole. That is important.
Our aging population faces some difficult issues and problems. A group of pensioners came to see me on Saturday. They brought me a letter from their pensioner action group about what they thought was most important. They wanted to see an increase in the basic state pension; there is no surprise in that. So they would have been disappointed by the previous Chancellor's reduction in the increase.
Mr. Gibb:
Did those pensioners request that the hon. Lady's Government means-test the basic state pension? If not, why is the hon. Lady not asking the Secretary of State to confirm whether she intends to means-test it?
Kali Mountford:
The issue of means-testing was not raised by that group of pensioners. They concentrated on
Miss Kirkbride:
I wonder whether the hon. Lady explained to her pensioners why her Labour Government, who pleaded so much on behalf of poor pensioners, were not prepared to restore the link with earnings.
Kali Mountford:
The hon. Lady obviously has not been listening to the debate. After 18 years of Tory government and the erosion of the basic state pension, we have a long way to go from a low base. A great deal of imagination is needed. The most important people are those on incomes below income support level. The point of income support is that it marks the point of poverty. If people are below that point, they are making difficult choices in managing their families' budgets. To keep harping on this issue, which misses the point about pensioners, does them no favours at all.
We need to make decisions about our priorities. Conservative Members keep talking about actuaries and private pension funds--
Kali Mountford:
The hon. Gentleman should allow me to finish. Conservative Members have missed the point about basic priorities. We must start with those in greatest need. The Secretary of State is absolutely right to look into providing second pensions and increased pensions. That process needs to be inclusive and consultative. The Conservative party bludgeoned people into decisions without properly consulting. At least at the end of our process of consultation, a consensus will emerge on how future pensions are to be provided. It is the pensioners of today who are not on income support who must be the main focus of our attention.
Mr. Steve Webb (Northavon):
I brought with me to the Chamber tonight a secret--a secret concerning how the Conservatives are planning to win the next general election--[Hon. Members: "Tell us."] I note a greater than
The Tories spent 18 years ripping the heart out of rural Britain, and they now pretend to be the friends of the countryside. They spent 18 years squeezing higher education, but now pretend to be the friends of the students. After spending 18 years slashing future spending on state pensions and creating a shambles over private pensions, they now claim to be the friends of pensioners. It just does not add up.
The motion claims to deal with the failings of the present Government. We shall assess those claims in a moment; meanwhile, it is important to remember that the real problems with pensioner incomes have arisen not just since 1 May but since 1979.
Mr. Ian Taylor (Esher and Walton):
Before we all join the hon. Gentleman in suffering from amnesia, will he recognise that no Government will change the rules linking pensions to prices rather than earnings; and that, if Labour ever did that, the Government would be unable to provide the expenditure for health and education that they want to?
The Conservatives' proposals on pensions just before the election would have increased expenditure on them by £7 billion a year, at the peak, in order to bring our pension system under better long-term control. Why did not the hon. Gentleman welcome those measures--or perhaps he has not yet worked out what Liberal Democrat party policy is on the issue?
Mr. Webb:
The hon. Gentleman is quite right to say that the Government will not link the basic state pension to earnings again. I would be most surprised if they did, but I am sure they will not. Nor would the official Opposition; and I would be greatly surprised if our party policy, as it is reviewed, came up with that idea, either. It is true that all the parties seem agreed on that.
The motion suggests that everything that is wrong with pensioners' incomes started to go wrong on 1 May. That is simply not true. Pensioners who retire in the new millennium will have far less to live on, not as a result of this Government's policies but as a result of Conservative policies. The basic state pension will have been eroded, by the breaking of the earnings link, to a level which Michael Portillo once famously described as nugatory. SERPS pensions will be worth less than half what they would have been under the pre-Conservative system.
How many billions did those Conservative measures take off pensioners? The answer is: not the £5 billion that the Government have taken from pension funds, but tens of billions of pounds. Yet now the Conservatives have the gall to criticise the Labour Government for taking £5 billion out of the system. That is small beer by Conservative standards.
It is not as if the private sector fared any better. Was it not a Conservative Chancellor, Mr. Lamont, who first spotted that tax credits were a wheeze for raising £1 billion? It seems that a few years ago that was right when the Conservatives did it; now, when the Labour party does its famous trick of following Conservative
policies, the Opposition criticise it for doing so. How implausible it is when the Conservatives pretend to be outraged when the Labour Government follow their lead.
What about the debacle over personal pensions, which is still only slowly being unravelled? The Labour Government may not have done much for pensioners so far, but they have at least tackled this one scam with a great deal more energy and urgency than it ever received from the Conservatives. Indeed, I pay tribute to the Economic Secretary to the Treasury for all she has done and for the energy that she has devoted to that campaign. We wish her well with it.
What of the Government's record on pensions? For today's pensioners, they have cut VAT on fuel from 8 to 5 per cent.--no doubt a move welcomed by pensioners. But Labour Members should not get carried away into thinking that that will make a big difference to elderly people. The Government announced the cutting of VAT on fuel in July. That had the advantage of feeding into the September retail prices index, which meant that pensions next April will go up by less than they would have without the cut in VAT. Taking account of that, a recent written answer stated that a typical married pensioner will get about 25p a week from the cut in VAT on fuel--not unwelcome, but scarcely a king's ransom.
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