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Lord Goodhart moved Amendment No. 2:


("Age addition
AGE ADDITION

. For section 79 of the Social Security Contributions and Benefits Act 1992 there shall be substituted--
"Age addition.
79.--(1) A person who is above the age of 75 and who is entitled to a retirement pension of any category shall be entitled to an increase of the pension to be known as the "age addition".
(2) A person who is in receipt of a pension or allowance payable by the Secretary of State by virtue of any enactment or instrument (whether passed or made before or after this Act is passed), and who--
(a) is above the age of 75, and
(b) fulfils such other conditions as may be prescribed,
shall be entitled to an increase of the pension or allowance, also to be known as the "age addition".
(3) A person who is above the age of 80 and is in receipt of age addition shall be entitled to an increase in the age addition, to be known as the "further age addition".
(4) Age addition and further age addition shall be payable for the life of the person entitled, at weekly rates to be determined by the Secretary of State in regulations."").

The noble Lord said: My Lords, this is a very important amendment. It is one which we were unable to vote upon at the Report stage because it did not come on for debate until nearly 10 p.m.

What we are proposing here is that there should be a substantial addition to the basic state pension for pensioners who reach the age of 75, and a further and equally substantial addition on reaching the age of 80. This would, of course, replace the present absurd addition of 25p a week at the age of 80.

The amendment does not specify the amount, for the obvious reason that the actual rate will need to be varied from year to year by regulations made by the Secretary of State. A recently published Liberal Democrat policy paper on ageing has proposed that there should be a £5 addition at 75 and a further £5 addition at the age of 80. Those are the figures we have in mind.

The policy paper also proposes that there should be a £5 per week increase in the basic state pension for all pensioners as well as the age additions for the older pensioners. This amendment is confined to the age additions.

We are particularly concerned with the older pensioners because older pensioners have, in some respects, greater needs. They need more heating and warmer clothes. They may need special food. They may need to use more expensive local shops because they cannot travel to the supermarket and bring back a heavy load of groceries.

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More important than that, old people as a group have lower pensions than younger pensioners. Occupational pensions are linked to earnings, in general, at the date of retirement, but after retirement they are subject at best to an increase in line with the retail price index. That increase may in many cases be capped at 5 per cent. Therefore, so long as real earnings continue to increase, those who retired the longest time ago will have the lowest pensions. Furthermore, the same will be true of the state second pensions. It is also, of course, a fact--and this is a significant fact--that the older pension cohort consists disproportionately of women--who live longer than men--and of pensioners living on their own, because so many of them are widows or widowers. Indeed, we know that some 40 per cent of people over the age of 80 do not have adequate state, occupational or personal pensions and have to rely on the minimum income guarantee to supplement their pension.

The Minister has said many times before--and will no doubt say again this evening--that age is not a good test of need. She will say that disparity of incomes between older pensioners as a group and younger pensioners as a group is much smaller than the disparity of incomes between richer and poorer pensioners within each age cohort. That statement is, of course, perfectly true. I do not contest it for a moment.

The Minister will say that we should therefore concentrate extra money on the poorest pensioners through the minimum income guarantee. Of course I welcome the minimum income guarantee. It plays--and will in any foreseeable circumstances continue to play--an important part in ensuring that the poorest pensioners have the means to secure a basic standard of living. However, the logical conclusion of that argument, which we have heard from the Minister, is that we should get rid of the right to a basic pension altogether and should concentrate only on the poorest among the elderly.

But concentration on the minimum income guarantee ignores the fact that people who have contributed to their parents' pensions through their own national insurance contributions feel--and rightly feel--a need to be fairly treated when they come to draw their own pensions. They do not see an increase in the minimum income guarantee as fair if those who are not on the minimum income guarantee get no benefit for themselves

The reaction of pensioners to last year's 75p a week increase in the basic pension shows what happens when pensioners feel that they are being treated unfairly, as I believe they plainly were last year. Yesterday we had a spending review promising extra expenditure of £43 billion a year. What do the pensioners get out of that? I will tell you exactly what they get out of that, they get a new telephone service to make it easier for them to contact the Benefits Agency. That is all that they get out of the spending review.

The Minister may try to hide behind the technical defence that social security benefits are annually managed expenditure and the review deals with

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something different, which is departmental expenditure limits. But, let me say now that that will not do. Page 5 of the spending review makes it clear that the £43 billion is based on the assumption that social security spending will increase in real terms only by 1.2 per cent a year up to the end of the year 2001-02. That amount is already almost entirely committed to the increase in the spending on the working families' tax credit and in effect leaves nothing for improvement to basic pensions beyond a rise in line with the cost of living.

I predict that the fury of pensioners at their 75p per week increase last year is as nothing compared with what will be their fury when they realise that they are excluded from the goodies handed out by the Chancellor of the Exchequer yesterday. The Minister may, of course, say that if more of that £43 billion goes to pensioners it means there will be less for other good and worthy causes. My answer to that is, so be it. The Chancellor yesterday poured out a cornucopia of gifts, but what he gave to pensioners was no more than a tiny crumb. The additions which we propose are the minimum that is required to do justice to pensioners. I beg to move.

7.30 p.m.

Baroness Carnegy of Lour: My Lords, the noble Lord has made a clarion call for pensioners and as somebody who is over 75, I am extremely sympathetic. However, he does not say what the age addition should be, so we have no idea what sort of sum of money is involved. I should think it would be a very large sum indeed. It is entirely inappropriate for this House, as revising Chamber, to suggest such a thing.

Of course, it is an excellent idea from the point of view of pensioners. I am not in a position to judge whether or not age is a good criterion but I know that the Government consider that it is not. I do not believe that this House should attempt to pass such an amendment.

Lord Higgins: My Lords, after the events of yesterday and the speech which we have heard from the noble Lord, Lord Goodhart, it is clear that we on these Benches are certainly the most prudent of the three parties in terms of economic management. For that reason, I do not feel able to support the amendment in the name of the noble Lord, Lord Goodhart. However, I draw his attention to the recent statements which have been made by my right honourable friend the Leader of the Opposition as regards our own proposals on the subject.

But, like the noble Lord, Lord Goodhart, I thought it appropriate, before taking a view on the amendment, to see what happened in the spending review announced yesterday. It is not insignificant that that is now entitled "Spending Review 2000" rather than "Comprehensive Spending Review". No doubt the Minister will tell us why it is not called the "Comprehensive Spending Review". Our view is--and this was mentioned by the noble Lord, Lord Goodhart--that it is probably because pensioners seem to be excluded to a remarkable extent.

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I thought that that might be a rather cynical view and felt that I should see exactly what was said in the spending review. So I looked under "Departmental Reviews", which refers to Section 18, Department of Social Security, DSS, page 81. However, page 81 refers to the Ministry of Agriculture, Fisheries and Food. The pensions statements seem not to be there at all. I carried out further intensive research and found that there is a Department of Social Security Section 18 on page 87. I am not quite sure how that happened.

At all events, the noble Lord, Lord Goodhart, is right to say that the reality of the situation is that all there is for pensioners is a new phone line which is to be established. Perhaps in passing the noble Baroness will tell us whether that will be a freephone number.

What are pensioners likely to find if they ring up and ask various questions? I suppose someone could ring up and ask whether it is the case that quite a lot of the vast amount of money which the Chancellor is now proposing to spend is as a result of the changes previously made to advance corporation tax, which deprived pensioners of some £5 billion or more.

Alternatively, pensioners may wish to inquire into a number of other matters. In particular, they may wish to clarify what was meant by the Chancellor in the four lines which he devoted to this subject yesterday, when he said:


    "I can also confirm that, in the autumn, the Government will publish our proposed plans for a new pensioner credit, with a view to further announcements on a Budget timetable".--[Official Report, Commons, 18/7/2000; col. 224.]

Of course, we are not in the least bit clear as to what the position will be in relation to a new pensioners' credit. What seems highly likely is that the Government will fiddle the figures in the same way that they did for the working families' tax credit by not conforming with internationally accepted standards for such matters to be treated as public expenditure or as a tax reduction. But clearly, it is the case that this should be treated as a public expenditure increase. But there is no sign of that whatever in the so-called spending review.

Therefore, we hope that the Minister will clarify those matters, because they are all clearly relevant to the proposals for increased public expenditure which have been made by the noble Lord, Lord Goodhart, in his amendments. We look forward to hearing her defence of the Government's position as regards the overall expenditure situation.


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