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Baroness Castle of Blackburn: As an 89 year-old it is obvious that this amendment has superficial attractions for me, if I understood what it committed the Government to do. As has been pointed out, it is totally vague and gives the Government a blank cheque to do nothing. However, I am sure they would seize on that avidly.

The mover made it clear that he considers the amendment to be an alternative to restoring the earnings link, but it seems to me that it is a device for distracting attention from the division in the Liberal ranks. As I said on Second Reading, a large contingent of Liberal Democrat Members in the other place joined Labour rebels in supporting an amendment to restore the earnings link. I do not think this amendment would satisfy them as an alternative and it certainly does not satisfy me, so I would not dream of voting for it.

Baroness Carnegy of Lour: The noble Baroness has taken most of the words out of my mouth and said them very much better than I would have done. I hope that the problems of older pensions will not be discussed in terms of gimmicks. The amendment, with its free television licences and a heating allowance of £150, would help me every bit as much as pensioners who are much poorer. The benefits are not targeted. Perhaps the noble Earl could tell the Committee how it would be funded and how older pensioners could plan their retirement, when they would have no idea of the amount decided by the Secretary of State and at what age; otherwise, one cannot take the amendment seriously.

The problems of older, poorer pensioners are great, as I know from a number who live near me. They are extremely grateful for a free TV licence and a heating allowance but wish to plan--and they will always want to watch television and it will always be cold in Angus. I do not believe that the amendment is the right way to assist pensioners. The public may regard its provisions as somewhat cynical. Pensioners want certain, targeted help so that they know what is ahead. I am sure that any serious government will have to think about that--including the present Government. If the

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Liberal Democrats really aspire to govern us, I do not think that they should table such an amendment. I am really quite shocked by it.

Baroness Greengross: There is a strong argument for any increases in state pensions to be for all older people, rather than targeting particular age groups. However, the benefits system already recognises the greater needs of the oldest, which is why income support is more for older pensioners and why rates of attendance allowance are higher according to need, which is often age-related. The Government have recognised that greater need in their provision of free TV licences for the over-75s, and that is what was behind the original 25p age addition on the state pension at age 80. That has been allowed to wither to such an extent that it has become an insult. Older people point out regularly to me and others that one cannot even buy a first-class stamp for 25p. It would be better either to resurrect the addition meaningfully or to get rid of it altogether.

Today's oldest pensioners, especially women, are the poorest and would benefit particularly from the amendment. My concern is where to draw the line and at what level to pitch any extra help. More research is required into what is needed by older people at different ages. I shall return to that aspect when we debate Amendments Nos. 132 and 133.

Earl Russell: I shall respond briefly to the noble Baroness, Lady Castle. The amendment as drafted allows for regular uprating. I am sure that the noble Baroness would be the last person to query the importance of that opportunity. In Committee on the Welfare Reform and Pensions Bill last year, it was said that while we were not going to adopt the earnings link, it would be necessary in good years for earnings to be above the level of prices. Nobody knows how much above that level we might be able to uprate in future years. We would like to leave available the option of generosity where that is financially permissible.

As to what was done by my right honourable and honourable friends on Report, I do not think that the noble Baroness understands the difficulties of being a third party in the other place, where there is no guarantee, as there is here, of being able to table amendments and vote on them. Our amendment in another place was not selected, so voting for the earnings link was the only way we could vote in favour of an increase in pensions. We thought that principle so important that it justified departing from our normal practice and policy. That may have been an unusual way of deciding the issue but in view of the concerns that we share, I hope that the noble Baroness will forgive us.

I am sorry that the noble Baroness, Lady Carnegy of Lour, is so easily shocked. I shall not advert to incidents in past Parliaments. The noble Baroness knows that I could, but I shall not bother.

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5.45 p.m.

Lord Haskel: My noble friend Lady Castle is being a little hard on the Government in accusing them of doing nothing. They have uprated pensions, introduced a minimum income guarantee, and given better heating allowances and free TV licences.

I share the concern of my noble friend Lord Brett. Although I welcome the Government's improvements to reduce pensioner poverty, my concern is that pensioners should claim the benefits to which they are entitled and that they should not be made to feel that they are receiving charity. Recent figures show that there is much variation in poverty within each group of pensioners. Offering the same benefits to all will not eliminate poverty. The only way to do that is to target the poorest pensioners and to make sure that they claim the benefits to which they are entitled.

Baroness Hollis of Heigham: The amendment relates to the increase in the basic retirement pension, known as the age addition, paid to people over the age of 80. The practical effect would be to remove the specified age from primary legislation and allow it to be specified by the Secretary of State in regulations. The amendment would also permit regulations to specify different rates of age addition.

As the noble Baroness, Lady Greengross, said, it is difficult to defend the current level of age addition. The sum of 25p a week is nonsensical by anyone's reckoning. However, although I appreciate the desire to help the oldest in society, the amendment presents real difficulties. Our mixed strategy is more effective. The noble Earl's amendment overlooks the cohort effect, and the method of paying for it would undermine longer-term policies.

My noble friends Lord Brett and Lord Haskel referred to the minimum income guarantee. We already have age-related premiums in the MIG and believe that that is the quickest and most effective way to help those in need. Through MIG, we increased income support for pensioners last year by three times the rate of inflation. This April it was increased in line with earnings. So, for example, a couple over 75 are getting through MIG nearly £18 more than they would under the retirement pension; and a single person over 80 is getting through MIG nearly £20 more than the retirement pension--and, incidentally, £9 more than a 65 year-old would get on MIG. We again expect to increase this by earnings next year. We shall further enhance the amount of the premium that older pensioners receive through MIG over other pensioners.

We have invested much in the minimum income guarantee, but, as my noble friend Lord Brett rightly said, it is not worth a jot unless people claim it. So through the late spring and all summer we shall be writing to more than 2 million pensioners to tell them about MIG. The campaign will be supported by TV advertising and, for the first time, pensioners will be able to claim MIG over the phone by ringing the new MIG Telecentre in Newcastle. They do not need to go into a benefits office; they can claim it from the comfort of their home.

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We believe that providing help through MIG is the most effective way to help those most in need immediately. In the longer term, our radical pension reforms--in particular the introduction of stakeholder pension schemes and the state second pension--will ensure that everyone with a lifetime of work behind them will build up rights to a pension on retirement which will take them above MIG and ensure that they have an income above that level for longer.

Over and beyond that, we have introduced other benefits--for example, the winter fuel payments, which are tax free and worth £150 to eligible householders from next winter; the introduction of concessionary bus fares; the free eye tests for the over 60s; the reduction of VAT on fuel; the tax changes which have cut the starting rate of tax to 10p; and the free television licence. As a result, we are spending an extra £6.5 billion on pensioner income this Parliament. Put broadly, half of that money is going on the poorest 3 million pensioners.

Against this, I should like now to engage, as seriously as I can, with the propositions in the amendment of the noble Lord, Lord Goodhart. I take them very seriously. The noble Lord should consider that extending the payment of the age addition in this way would have a net annual cost of around £660 million. That is not my problem. My problem is, as was hinted at by my noble friend Lord Haskel, that the noble Lord--by repeating some of the proposals spelt out in much greater detail by his honourable friend, Mr Steven Webb, from another place, which were based on statistics produced by the last two pensioner surveys of the DSS--is assuming that age cohorts are an appropriate proxy for picking up the poverty of pensioners.

It is true that older pensioners are poorer than younger pensioners--for example, they become poorer over time because they are less likely to be earning, as 65 to 70 year-olds often do; they are likely to have spent more of their capital; and it is likely that their occupational pension will have not kept pace with the general wealth of the country. But the offset against that is that we have seen across the country a huge increase in the number of occupational pensions over the past 20 years, as well as the higher state pension benefits and better housing. But it is true that older pensioners are poorer than younger pensioners.

However, it is also true that women pensioners are poorer than men pensioners; and it is also true that single pensioners are poorer than couples. By using only the age proxy--which is what the noble Lord seeks to do--we will have exactly the same problems as we had with City Challenge and urban regeneration projects.

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