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Pensioners (Taxation)

5. Mr. John Bercow (Buckingham): What plans he has to review the taxation of pensioners. [159878]

The Chief Secretary to the Treasury (Mr. Andrew Smith): As a result of our policies, seven out of 10 pensioners pay no tax or pay tax only at the 10p rate. As my right hon. Friend the Chancellor said, following our personal tax and benefit changes, pensioner households will be £600 a year better off on average since 1997.

Mr. Bercow: Given that the savings ratio has fallen to its lowest level since 1963, that millions of pensioners face billions of pounds worth of extra taxes, and that half of all pensioners are set to be on means-tested benefits by 2003, why does the right hon. Gentleman not increase the age-related personal allowance by £2,000 and take 1 million pensioners out of tax altogether? Those are Conservative policies to help people who work hard, who save hard, who try to be independent of the state and who believe in this country.

Mr. Smith: We are helping all pensioners with the increase in the basic state pension and the introduction of the minimum income guarantee, giving greatest help to the poorest pensioners. We introduced the winter allowance, which Conservative Members opposed and would abolish. We will not adopt their proposals because they would do nothing to help the majority of pensioners. The distribution effects show that more than 90 per cent. of the benefit goes to the richest third of pensioners in the country, confirming yet again that the Conservatives stand for the few whereas we stand for the many.

Mr. Tony Worthington (Clydebank and Milngavie): The pensioners in my constituency who face the greatest difficulties are those who were badly affected by the scandalous collapse of Chester Street Holdings and who suffer from asbestos-related diseases. As this is the last Treasury Question Time before the election, does my right hon. Friend have any news for those people?

Mr. Smith: I shall be setting out details in a written answer shortly, but I am delighted to confirm to my hon. Friend that we have reached agreement with the insurance industry that the claims of Chester Street victims will be met by the industry using appropriate policyholder protection schemes. I am grateful for the flexibility shown

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by the insurance industry in helping to cut through what was an extremely complex legal situation. I congratulate my hon. Friend and other hon. Friends on their campaign, which has ended the uncertainty that was hanging over the victims and their families.

Mr. Nicholas Winterton (Macclesfield): May I do something that is extremely relevant at Question Time? On this occasion, I thank the Minister for that reply to the question from his hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington). I, too, have campaigned with Members on both sides of the House to obtain justice for those who are dying from asbestos- related diseases--in particular, my constituent, Mr. Donald McCreery, who has only a few months to live. The announcement, in the dying hours of this Parliament, will bring great happiness to him and his family. I thank the Minister and the Government for the work that they and Back Benchers have done to bring about justice. Surely, that is what the House is about.

Mr. Smith: I thank the hon. Gentleman for his generous remarks. As he says, there was an all-party commitment to resolve the matter. I am only too pleased that, as he says, in the dying hours of this Parliament we have been able to achieve that security and justice for people suffering from terrible diseases, who, with their families, would otherwise have been left in unendurable anxiety. I am pleased that they can look forward to the compensation to which they are entitled.

Mrs. Anne Campbell (Cambridge): The 13,240 pensioners in my constituency are extremely grateful for the extra income that they have received under the Labour Government after 18 very hard Tory years. Will my right hon. Friend give wide publicity to his plans for the pensioners tax credit, which will reward those pensioners who have been thrifty and saved hard all their lives?

Mr. Smith: Yes, my hon. Friend can look forward to extensive publicity promoting the benefits of the pensioners tax credit during the coming weeks and, thereafter, along with the other extra help that we have given pensioners, which is ensuring real increases in their living standards and real investment in the services on which they depend.

Mr. Richard Ottaway (Croydon, South): Does the Minister recognise that pensioners feel worse off under Labour? They resent the indignities of the means test, and they want to decide for themselves how their pension is invested. In the circumstances, will he support our policy of cutting tax on pensioners, of cutting tax on hard-earned savings and of reforming the annuities rule? In short, is not the best advice that he could give pensioners for the next election: vote Conservative?

Mr. Smith: The hon. Gentleman was cranking up the spending commitments like nothing on earth. However, the truth is that the Conservatives cannot pay for their proposals because they cannot identify the savings on which they claim those proposals depend. Their proposals would leave a black hole in the national insurance fund. As my right hon. Friend the Chancellor pointed out, the shadow Chancellor--when challenged this morning about where he would find the money--could say only that he

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would talk to financiers, that it might be bonds or that it might be any other system. What it certainly would be is borrowing, which would destabilise the economy, push up interest rates, cut real living standards for everybody and hit pensioners worst of all.

Mr. David Winnick (Walsall, North): Will my right hon. Friend give a commitment today that the winter fuel allowance and free television licence for those aged 75 and over will remain tax-free? Can he explain why, before the Government took office, not a single penny was given to pensioners for heating, whereas under the present Government such assistance was given from the beginning?

Mr. Smith: I congratulate my hon. Friend and thank him for the work that he did on the campaign on television licences. The answer to his question is yes, we can guarantee that those will be free of tax and, yes, it is true that when the Conservative party was in government it did nothing to help pensioners in those ways. That summarises clearly the difference between the parties and the choice facing the people in the general election. We are standing up for pensioners' interests, keeping our promises and delivering rising living standards and better services, but all that would be at risk under the Conservatives.

Economic and Monetary Union

7. Mr. Owen Paterson (North Shropshire): When he expects that his five economic tests for British participation in EMU will be fulfilled. [159881]

The Chancellor of the Exchequer (Mr. Gordon Brown): The Government's position on the five economic tests for the euro was set out in a 1997 statement to the House. The Government have said that the assessment will be made early in the next Parliament, so that British business is prepared for the introduction of euro notes and coins in 2002 in the euro area. I am today in consultation with business, publishing additional case studies showing how British businesses across a range of sectors have prepared for the introduction of the euro, thus helping British business to compete effectively in the single market, whether we are in or out of the euro.

Mr. Paterson: Last week, the Chancellor got into the most terrible huff when the European Commission criticised his conduct of the economy. We all know from the Gould memo and from indiscretions on television that the Prime Minister wants to bundle us into the euro, against the wishes of the British people. As that will reduce the role of the Chancellor of the Exchequer of the United Kingdom to that of office boy for the European Commission, will he now go through each of the five tests and give his interpretation of where we stand today?

Mr. Brown: The Government's position is as set out on previous occasions. While we see the benefits in principle of the single currency, we shall subject it to five economic tests, which will be rigorously made early in the next Parliament. If we were to recommend that we join the single currency, we would report to Parliament, and then the people of this country would have the final say.

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The difference between our two parties is that we are prepared to say that we support the single currency in principle, but will subject it to tests. The Conservative party cannot tell us whether it supports it in principle or is against it in principle. Indeed, some of those in the Conservative party support it in principle and some are against in principle. During the election campaign, they will have to make up their mind.

Mr. Denzil Davies (Llanelli): When my right hon. Friend comes to consider the five economic tests, particularly the question of whether the British economy is converging with that of the euro area, will he take into account the effect of enlargement on the economy of the euro area, and specifically the possible effect of enlargement on the value of the single currency?

Mr. Brown: All matters that are relevant will be taken into account in making the assessment, and we shall consider the effects on investment, employment and financial services. We shall consider whether we have the flexibility and we shall consider whether there is sustainable convergence. Those are the economic tests for Britain.

What the country will not support is a Conservative party that appears to want to rule out a single currency on grounds of dogma and is not prepared to examine what is in the national economic interest. I believe that, at the end of the day, people will want this decision to be taken on the basis of the national economic interest. By refusing even to support preparations by business, the Conservative party is not only the anti-European party in this country but the anti-business party.

Mr. Christopher Gill (Ludlow): In advocating the single currency, will the Chancellor make sure to remind the British people that every time that we have been on fixed exchange rates, unemployment has increased astronomically? Will he also tell the British public that the choice of rate at which we would join the single currency is not left to this country to decide, because under article 109 of the treaty it has to be decided in conjunction with other countries? In other words, we cannot pick a rate to suit this country and the economy of this country.

Mr. Brown: The hon. Gentleman's problem is that while he appears to be subjecting the single currency to the tests of employment and everything else, he has ruled out the single currency as a matter of dogma. His position is not to support it if the economic tests are met but to oppose it under all circumstances.

The Conservative party will have to make up its mind. The shadow Chancellor told Welsh Conservatives on one occasion that his policy was to keep our options open on EMU. He also said that a single currency would mean giving up the government of the UK. The Conservative party must make up its mind in this campaign. Is it against a single currency in principle, and therefore for ever, or against it only for one Parliament?

Mr. Dennis Skinner (Bolsover): Is my right hon. Friend aware that one reason why he is in a position to tell the Commission and anybody else, including the International Monetary Fund, to get stuffed is that we now have the most successful economy in all my 31 years as

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a Member of Parliament? When the election is fought, one thing will be certain: we shall not need any lectures from people who were experts in building deficits. This Government have managed not only to wipe out the debt left by the Tories, but to create a successful economy, which will provide more money for the health service, more money for schools and more money for the welfare state. I look forward in the next four or five years to more redistribution of wealth from the rich, who are represented by the Tories, to the many, who are represented on the Labour Benches.

Mr. Brown: I am grateful to my hon. Friend and thank him for his campaigning, particularly on behalf of pensioners.

Any Conservative party claims to economic competence have been undermined not only by what it did in government, but, today, by a manifesto that is unaffordable and not properly costed. When it comes to the campaign, the deputy Director General of the CBI has said that the Tory party's more eurosceptic view is not one that most CBI members would feel comfortable with, and that it is not in our commercial interest to have a eurosceptic Government. He also said that the CBI was once considered the corporate arm of the Tory party, but that most businesses would take their hat off to this Government for getting Britain's message across better. In other words, the Conservative party is not just the anti-euro party but, indeed, the anti-business party.

Mr. Howard Flight (Arundel and South Downs): Given the Chancellor's objections to and embarrassment at receiving orders from Brussels to cut his overspending plans, why does he continue with the silly pretence that a Labour Government's decision to join the euro would be based on objective economic criteria? The country well knows that the issue is a fundamental constitutional one, not least whether Britain should retain the ability to manage its own economy.

Mr. Brown: That really sums it up. I asked whether the Conservatives are against the single currency on principle or owing to the national economic interest. The hon. Gentleman has now proved that he is against the European Union altogether. It is hardly surprising that he had to apologise for calling for a renegotiation of our membership of the European Union. At this election, as I have seen from the Conservative party's manifesto issued this morning, it is against not only a single currency and helping business prepare for its introduction, but the treaty of Nice and single majority voting--and the hon. Gentleman is against the EU altogether. It is no wonder that businesses oppose the Conservative party.

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