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The Secretary of State for Social Security (Mr. Alistair Darling): The pension credit will provide a cash addition to reward saving for single pensioners with incomes up to £135 a week and for couples on incomes of £200 a week. The credit will ensure that it will pay to save.
Mr. Hope: I thank my right hon. Friend for his reply.A number of former steelworkers in my constituency receive occupational pensions that lift their incomes above the level of the minimum income guarantee. They visited my surgery and, being good Labour supporters, they supported the work that we are doing for the poorest pensioners. However, they were concerned about the way in which the system operates at the moment, whereby they are always being penalised for having saved for their retirement while they were working. We know that the Tories' proposed tax relief on savings would not benefit them at all, but will my right hon. Friend tell us how the pension credit will help those with small occupational pensions that take their income above the level of the minimum income guarantee? Will he also tell us whether, when it is introduced, it will be simple to understand and easy to claim?
Mr. Darling: My hon. Friend raises a point that I suspect will be familiar to most Members of the House. We have all met people with a modest amount saved in a bank or building society and, perhaps, a small occupational or works pension who think that, under the system that we inherited, they are not being helped through the social security system. The pension credit will ensure that if people have put money by, they will not be penalised for having done so. There will be no tariff income--the notional income that the social security system assumes pensioners receive from their savings. Indeed, from April, we are increasing the capital limits as a first stage; as a result, people who are already on the minimum income guarantee will be some £6.30 a week better off.
The object of the pension credit is to ensure that those who have saved are rewarded for their saving by receiving an additional cash top-up. As part of our proposals, some 3 million pensioners will gain because of the tax changes that we are making as we introduce the credit itself.
Mr. Julian Brazier (Canterbury): Does the Secretary of State acknowledge no inconsistency at all between stripping £5 billion out of occupational and personal pension schemes and making such a small repayment subject to filling in a hugely complicated set of forms? Will he confirm that the savings ratio is close to a 40-year low?
Mr. Darling: One of the consequences of making the changes to corporation tax to which the hon. Gentleman refers is that we have been able to reduce corporation tax to its lowest-ever rate and, I think, the lowest rate among all our major competitors. The Conservatives never did that.
The credit will not be complicated. As the hon. Gentleman knows, all pensioners have to be written to when they retire to let them know how much pension they have accrued over the years. At the same time, we can calculate how much credit they are due, to reward them for their thrift. I cannot understand why he and his hon. Friends want to maintain a system under which, if people have saved and done exactly what successive Governments have told them to do over the years, they get punished for it. There cannot be any sense in that. The pension credit will mean that, for the first time, those who save money will get a cash top-up--a reward from the state--and that must be the right approach to encourage saving.
Mr. Andy King (Rugby and Kenilworth): I am glad that my right hon. Friend has clarified the issue in relation to income from savings because, like my hon. Friend the Member for Corby (Mr. Hope), many visitors to my surgery have said, "I have lost out time and again because I live off some capital. I am just above the social security threshold." How many additional pensioners who lose out because of the capital thresholds will benefit from the pension credit?
Mr. Darling: More than 5 million pensioner households will gain as a result of the credit, but the issue is pretty clear. Under the system that we are introducing and under the pension credit, those who save money and who have a modest occupational pension or other income will be rewarded for their thrift; under the Conservatives, they would continue to be punished. I cannot understand the logic in the Conservative position.
Mr. Darling: That brings us back to the point that we have made over and over again. The Conservatives oppose means-tested benefits because people are getting more money. The minimum income guarantee would never have been introduced under a Conservative Administration. If there were to be a Conservative Government, there would be no minimum income guarantee.
We wanted to eradicate pensioner poverty, which is why we introduced the minimum income guarantee. We also wanted to ensure that the vast majority of pensioners who had saved money and had a little in the bank were rewarded for their thrift. It is surprising that the Conservatives should find that a laughing matter. Most of us believe it to be a matter of concern. We want to reward thrift, not punish it. The divisions between the two parties are abundantly clear: if we are returned to government, pensioners will be rewarded for their thrift; if the Tories get back in, the same system will continue year after year after year.
The Secretary of State for Social Security (Mr. Alistair Darling): About 2 million of the poorest pensioner households are now at least £15 a week, or£800 a year, better off in real terms as a result of Government measures introduced since the last election. The Pension Service, which I am announcing today, will also help the Government's drive to eradicate pensioner poverty.
Maria Eagle: Does my right hon. Friend know how much the winter fuel payment is appreciated in my south Liverpool constituency? Unlike Conservative Members, pensioners there view it not as a gimmick or as window dressing, but as a guarantee of warmth without worry during the winter months. What assurance can my right hon. Friend give that a Labour Government will retain and build on that payment--unlike the Conservatives, who, if they were returned to power, would sneer at it and abolish it?
The fact is that 11 million winter fuel payments have been made this year. The payment has proved immensely popular, which is presumably why the hon. Member for Havant (Mr. Willetts), the Conservative spokesman on social security, had to revise his policy sharply. He is now in the unhappy position of finding that the pensions policy that he announced last May is in tatters, and instead is offering us a bureaucratic nightmare that would require every pensioner household to seek an accountant's advice before deciding whether to take the winter fuel payment in cash or to have it consolidated.
We have made it clear that eradicating pensioner poverty, and dealing with pensioner fuel poverty, is of the utmost importance. That is why we introduced the winter fuel payment. I think people are pretty clear about what the Tories really think of the payment, and what would happen to it if they were returned to power.
Mr. Steve Webb (Northavon): The hon. Member for Liverpool, Garston (Maria Eagle) called on the Secretary of State to build on the winter fuel payment. Will he confirm that his departmental expenditure plans show that spending on the payment will fall by a quarter next winter, because it will be cut from £200 to £150? Is that what he means by "building on it"?
Mr. Darling: I never cease to be amazed by the Liberal Democrats' views on these matters. We have delivered far more for pensioners than the Liberal Democrats have ever promised, even with the extra penny on income tax that was to be spent on this, that and the other.
The hon. Gentleman will know that every autumn we announce the uprating for pensioners, and at the same time announce the amount of the winter fuel payment.I have every confidence that pensioners who support us will have their faith in us amply rewarded yet again.
Mr. Lawrie Quinn (Scarborough and Whitby): My right hon. Friend knows only too well how many pensioners in my constituency have been helped by the Government's initiatives, but he also knows of my concern about pensioners who are not claiming their full entitlement. How does his Department propose to ensure that there is clear, easily understood information, so that pensioners can claim what is right for them--which is an entitlement and not, as the Conservatives would suggest, a handout?
Mr. Darling: The new Pension Service, which will be a dedicated service for pensioners, will, among other things, focus on how better to get across to people what is their entitlement. As a first step, the minimum income guarantee claim form, which was more than 40 pages long when originally introduced, has now been shortened to just 10 pages. Pensioners can also claim their entitlement by telephoning, and in future will be able to do so by other means as well.
We are anxious for two things to happen: we want pensioners to receive their entitlement, and we want that entitlement to be there in the first place. We will ensure that both the minimum income guarantee and the winter fuel payment, as well as other measures, are available to boost pensioners' incomes in retirement. That is crucial not just to Labour Members but, I believe, to the country as a whole.
Mrs. Jacqui Lait (Beckenham): The Government introduced stakeholder pensions to try to eradicate future pensioner poverty. Has the Secretary of State seen the Prudential's estimate that 46,000 employers are not planning to offer such pensions? What methods of persuasion does he plan to use--or will he rely entirely on the fines of up to £50,000 that would bring the Treasury between £2.3 billion and £4 billion, representing about 2p on the basic rate of tax? Who will be responsible for enforcing the fines: the Department, the Benefits Agency or the Revenue? Is this the friendly face to business of the Labour Government or is it the overweening arrogance of the state?
Mr. Darling: The hon. Lady was right on one point: stakeholder pensions will help to reduce the number of pensioners dependent on means-tested benefits at or near to retirement. I hope that she can find it in her heart to support stakeholder pensions, because they provide a very good option for people who do not at present have a funded pension option.
The hon. Lady asked what we were doing to ensure that employers are aware of their obligations. Their obligation is straightforward: if they employ five or more people, they simply have to designate a stakeholder pension scheme. The Government have written to people and advertised, and companies have pointed out to employers the advantages of providing good-quality pension schemes. The combination of all those actions will have an effect, but the best way of selling any pensions product is for people to see that it works. As stakeholder pensions begin to be sold and people become more aware of their advantages, many more employers will want to ensure that their employees get the benefit of them.