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Lord Stoddart of Swindon: My Lords, I congratulate my noble friends Lady Castle and Lady Turner on tabling these two amendments. I was pleased to add my name to the first of them.

I listened to the noble Lord, Lord Goodhart, and felt he made an excellent case in favour of the amendments. I can only say that I am extremely sorry that his vote will not follow his voice in true parliamentary tradition. However, there is still time for he and his colleagues to change their minds before the vote takes place and I sincerely hope they will do so.

I support the new clause which, if accepted by the Government or agreed by the House, will be welcomed not only by pensioners, but also by most other people. They believe that pensioners have not been well treated over a long period of time. I have to tell the House that the prospect of an increase of only 73p on the basic pension this year is causing outrage. It will do the Government and the Labour Party no good if they persist in putting that forward. I hope that they will change their minds.

I had a conversation yesterday with a Labour MP in the House of Commons. He said that he was receiving lots of letters from pensioners regretting that the

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contract which they believed was made between the Government and pensioners in 1948 was not honoured by the Conservative Party and they are extremely sorry that it is not now to be honoured by the Labour Party. That was a contract to ensure that pensioners had a good and continuing standard of living. In fact many people are worried about this and are writing to MPs and to Members of your Lordships' House.

The new clause is very modest. It does not seek to backdate the link between pensions and incomes to 1981. It simply proposes that it should be reinstated from now. So in fact the pensioners are being asked to make a big sacrifice; make no mistake about that. As we have heard, they have lost so much in the past 19 years. I recall, as one or two of my noble friends will recall, the excitement and the satisfaction of the 1975 Act which not only kept pensions in line with the cost of living but also ensured that pensioners shared in the rising standard of living reflected in people's incomes. The Labour Party was proud of that Act. We believed that we had put pensions on a sound and permanent footing.

We are asking now to go back to that Act, of which we were so proud--not to reinstate the amounts that have been lost, but to go back to what was a great scheme put forward by my noble friend Lady Castle, who is as great a person as Lloyd-George and Beveridge. She has contributed so much to this country and to the pension situation.

It is shameful that the link between pensions and incomes was broken by the previous government. For most of our time in opposition, the Labour Party demanded--I was part of the demand, as was my noble friend sitting on the Front Bench--the restoration of that link. However, it seems that things have changed now that new Labour is in office. I suppose the Prime Minister will regard people like me as part of the forces of conservatism for wanting to restore the link--a link fought for by the last Labour government. Apparently the progressives are now those who destroyed the link in 1980--the noble Baroness, Lady Thatcher; a progressive!--and those who do not want to restore it are also progressives.

Those who wish to reduce the value of the state pension, vis-a-vis GDP and living standards, are those who are supposed to be progressive, while those like myself who wish to restore the link and to maintain the living standards of the pensioners are apparently conservatives. That is complete and utter nonsense. Indeed, if that is being conservative, I suppose I must own up on this issue to being conservative. But how odd it is that the noble Baroness, Lady Thatcher, whose government broke the link, are apparently now considered to be the progressives, while my noble friends Lady Turner and Lady Castle and others, including myself, are the new conservatives.

I suppose I must not be too hard on Cabinet Members. After all, the Prime Minister, Mr. Brown, the Chancellor of the Exchequer, Mr. Straw, the Home Secretary, and Alistair Darling, the Social Services Secretary, were not even Members of Parliament at the time of the 1975 Act. I am not even sure that the Prime

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Minister was a member of the Labour Party. So they must be forgiven for not being part of that great fight for decent pensions in 1975. They may not feel the same sense of obligation to pensioners that those of us who fought that Bill through the House of Commons feel, and feel very deeply. They may not understand that those of us who voted for the Act--I was a Whip and helped to Whip it through in 1975--believe that it was a fine Act, designed to remove poverty in retirement by giving pensioners a decent pension by right and not by means test. We believed that fervently, and I still believe that.

This is the time to restore the link and add a little dynamic to the basic pension to bring it up to £75 a week as some compensation for the losses incurred since the breaking of the link in 1980. There will never be a better time. The economy is booming. Living standards are rising. Inflation is steady. The budget is in surplus by at least £5 billion and likely to remain so for as long as income is buoyant from taxation as well as national insurance contributions. As we have heard, the National Insurance Fund is in surplus of £3.8 billion this year. So there is no need to increase contributions or taxes to fund what is being proposed. But even if it did mean a rise in contributions--I say this to my noble friend and indeed to the Conservative and Liberal Democrat parties--or even taxes, the people of this country would be prepared to pay if it meant that pensioners received a decent and ensured standard of living.

Our pension contributions as a percentage of GDP are much lower than those in Germany, France, the United States, Japan or Canada. Further, we do not have the same problems, and are not likely to have such problems, as some of our continental neighbours whose deficits on their pension schemes are horrendous. Indeed, we have no such problems. Therefore, I appeal to the House and I appeal to those in the Conservative Party to redeem themselves. This is the opportunity to redeem the awful mistake they made in 1980. If they want to restore their reputation among pensioners, this is the opportunity to do so. They were the ones who destroyed the link. I ask noble Lords opposite to come with us on this because it is fair and decent. I understand that Conservatives believe that they are decent people, despite what some people may say--though I shall not mention any names. This is the opportunity for them to come along with us.

I say this to Labour Members. I believe it is their duty today to restore that link which Labour gave. Let us not forget that it was a Labour Act. It is for Labour Members today, assisted, I hope, by other Members in the House, to help to restore that link. I also say this. There are Members of Parliament along the road who are dying for the opportunity to have another go at restoring the link. So by voting for these amendments, my noble friends would not only be voting to help the pensioners. They would also be voting to help elected Members of Parliament do their duty. Above all, they would be helping the pensioners of this country have a decent and rising standard of living, which it is our duty to give them and which is something everyone else enjoys.

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5 p.m.

Baroness Park of Monmouth: My Lords, I have a particular interest because there was a very distinguished woman called Eleanor Rathbone, whom I think the noble Baroness, Lady Castle, may remember, who sat as a Member for the combined universities. She was one of the first to begin work on just these issues. Therefore, I have a particular interest. I am not an actuary, as are so many noble Lords, so I cannot produce the impressive figures that have been put forward. However, I do know that the honour and the dignity of old people matters not only to themselves but also to their families.

Many people now living alone would at one time have been living in a family environment where the grandmother played a valued part by looking after the small children. None of that--or relatively little--happens now. There are many people who are as concerned for their old aunts, uncles, fathers and brothers as they are for themselves. They care about the dignity and well-being of those people.

On a more practical issue, the health budget is a very large one. I believe that it could be a great deal smaller if people had more money to spend--modest money--to keep warm, to avoid stress and to look after small ailments before they become big ones. That is something which should be in the power of any one of us to do. We should not have to turn to the state for what is, basically, charity, especially if we have spent our whole lives paying into the scheme. I cannot think of any other business or industry into which you would pay and invest and get nothing back. If that was the case, you would be saying that it was bust business and not very impressive.

I strongly support these amendments. I feel that there is a question of human dignity involved here. I conclude my remarks by saying that I am very proud to call the noble Lord, Lord Stoddart of Swindon, a friend; indeed, I would love to call him a noble friend as well.

Lord Bruce of Donington: My Lords, most of us in this House who are members of the Labour Party, of whatever stream we might conceivably belong to, remember quite well the anxiety that was felt at a certain time. We were naturally very pleased that our Government had been returned, but we were under no illusion. Times were going to be difficult before we were able to correct many of the trends that had established themselves in the previous Conservative administration.

We were well aware--even those of us in your Lordships' House--that hard choices would have to be made. I believe that most of us were extremely cautious as to the rate of progress that could be achieved in the years that followed. However, as time has passed--there are many reasons for this, not all of which are disagreeable or disreputable--my party and my colleagues have not made quite as much progress in the direction to which they have normally pointed their political actions. We find that there has been an increasing tendency for hard choices to be made by

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people who have no power to make any choice at all. The hard choices have to be made by them, yet they have no power. Indeed, there are thousands, nay, millions of them, in the United Kingdom.

Therefore, when my noble friend Lady Castle, with whom I have had the privilege of being associated over many years--way back to 1945--came forward with this proposal to insist that my party honoured the obligations which it willingly undertook I naturally thought that she would pursue the campaign that she has. She has done so with courage, tenacity, eloquence and deep feeling for people who are less fortunate than herself.

I was trained as an accountant. I tried to look at the real nature of the contract originally entered into by the state and by the population in 1974. What was that contract? Subject to certain qualifications, clearly laid down in the Act and explained in Parliament at the time, the contract was that employees generally were to make an insurance contribution, which was fixed. Employees had no particular part in framing the rules; they were there and were accepted. In return, employees were offered a pension on retirement--not means tested--which was upgraded year by year in accordance with earnings rather than with prices. That was the contract.

In my view, an insurance contract is a contract of the utmost good faith. I believe it is called in legal terms uberrimae fidei. At least that was what I was told when I had what smattering of legal education it was my fortune to receive. I naturally expect contracts, particularly contracts of insurance, to be carried out. No upward limit was laid down, nor any minimum limit, but the rules were quite clearly there. I expected that to be carried out and, quite frankly, I expect it to be carried out now because it was a contract entered into in good faith.

I willingly concede that circumstances can occur--some national catastrophe or some unforeseen economic misfortune that is manifestly no fault either of the state or of the population of the country--which mean that some possible revision has to be undertaken in spite of undertakings that have been given. But that is a matter for public debate; that is what Parliament is all about--the Parliament which is progressively being stripped of such powers as it once had. This is where my noble friend has pursued her campaign.

What national catastrophe has occurred to justify the breaking of the insurance contract? My noble friend Lord Haskel must make up his mind: either we are prosperous or we are not. It is my understanding that Her Majesty's present administration say that we are doing well. However, I have reservations about that. But has there been anything to justify the state dishonouring a contract that it entered into with the most vulnerable section of our population, the least articulate section of our population and, unfortunately sometimes, the least educated section of our population? In my view nothing has occurred to justify that.

We must now have even greater regard--especially the day after we made an historic decision with regard to the composition of this place which will have

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profound effects upon the whole of the constitution of the United Kingdom--to the esteem in which we are held by the other place, the notice that it is prepared to take of what we say, the authority by which we speak, and the regard in which we are held by the public. These are also important considerations.

I have listened carefully to the arguments. I have been present throughout most of the proceedings on this Bill although I have been silent as this is not my normal subject. I pay tribute to my noble friend the Minister for the great care she has taken in presenting the figures. However, with our national record of public expenditure, our record of investment and so on, there can be no possible reason why the Government whom I have the honour to support should not honour the obligations that were freely entered into.

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