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Lord Goodhart: My Lords, to some extent I believe that the Minister and I, in the course of this debate, have been ships that pass in the night. Our arguments may not have impacted on each other. This amendment is not just about helping those with the lowest incomes. Indeed, I understand that those who receive an amount of MIG which is larger than the amount of the proposed age addition will receive nothing. This amendment is about helping older pensioners who have income just above MIG or, in the 120,000 cases of those who will be taken off MIG by the proposed age increases, it is about getting them out of the need to fill in the forms and to go through what is a serious issue for older people of having to make those applications. Furthermore, the great majority of those 120,000 will receive additional benefits from the age additions we propose.

So long as we have a contributory system, pensioners expect, and have a right to expect, that they will be treated fairly. That means that they should have been promised at least a small part of the vast sums which the Chancellor of the Exchequer dished out yesterday. The Minister said nothing about the derisory benefits provided for pensioners in the spending review and, indeed, there was little she could have said.

If we divide on this amendment, we do not expect to win; we shall not receive support from the Conservatives. However, it seems to us that this is a simple but vital matter of justice for pensioners and, whatever the outcome, I shall take the opinion of the House.

8 p.m.

On Question, Whether the said amendment (No. 2) shall be agreed to?

Their Lordships divided: Contents, 25; Not-Contents, 108.

Division No. 2


Alderdice, L.
Barker, B.
Carlile of Berriew, L.
Clement-Jones, L.
Craigavon, V.
Falkland, V.
Geraint, L.
Goodhart, L. [Teller]
Greaves, L.
McNally, L.
Mar and Kellie, E.
Miller of Hendon, B.
Palmer, L.
Park of Monmouth, B.
Phillips of Sudbury, L.
Roper, L.
Russell, E. [Teller]
Shutt of Greetland, L.
Thomas of Gresford, L.
Thomas of Walliswood, B.
Tope, L.
Tordoff, L.
Wallace of Saltaire, L.
Watson of Richmond, L.
Willoughby de Broke, L.


Acton, L.
Ahmed, L.
Alli, L.
Amos, B.
Andrews, B.
Archer of Sandwell, L.
Bach, L.
Bassam of Brighton, L.
Berkeley, L.
Bernstein of Craigweil, L.
Billingham, B.
Blackstone, B.
Blease, L.
Borrie, L.
Brennan, L.
Brett, L.
Brooke of Alverthorpe, L.
Brookman, L.
Burlison, L.
Carter, L. [Teller]
Chandos, V.
Clarke of Hampstead, L.
Cohen of Pimlico, B.
Crawley, B.
Davies of Coity, L.
Davies of Oldham, L.
Dean of Thornton-le-Fylde, B.
Desai, L.
Dixon, L.
Donoughue, L.
Dormand of Easington, L.
Elder, L.
Evans of Parkside, L.
Evans of Watford, L.
Falconer of Thoroton, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Fyfe of Fairfield, L.
Gale, B.
Gavron, L.
Gibson of Market Rasen, B.
Gilbert, L.
Goldsmith, L.
Gordon of Strathblane, L.
Gould of Potternewton, B.
Graham of Edmonton, L.
Grenfell, L.
Hardy of Wath, L.
Harris of Haringey, L.
Harrison, L.
Haskel, L.
Hayman, B.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Howells of St. Davids, B.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Chesterton, L.
Hunt of Kings Heath, L.
Jay of Paddington, B. (Lord Privy Seal)
Judd, L.
Kennedy of The Shaws, B.
King of West Bromwich, L.
Kirkhill, L.
Layard, L.
Lea of Crondall, L.
Lipsey, L.
Lockwood, B.
Lofthouse of Pontefract, L.
Macdonald of Tradeston, L.
McIntosh of Haringey, L. [Teller]
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
Mallalieu, B.
Massey of Darwen, B.
Mitchell, L.
Molloy, L.
Morris of Castle Morris, L.
Nicol, B.
Patel of Blackburn, L.
Peston, L.
Ponsonby of Shulbrede, L.
Puttnam, L.
Ramsay of Cartvale, B.
Rea, L.
Rendell of Babergh, B.
Renwick of Clifton, L.
Rogers of Riverside, L.
Sainsbury of Turville, L.
St. John of Bletso, L.
Sawyer, L.
Scotland of Asthal, B.
Shepherd, L.
Simon, V.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Thornton, B.
Tomlinson, L.
Turnberg, L.
Walker of Doncaster, L.
Warner, L.
Warwick of Undercliffe, B.
Watson of Invergowrie, L.
Whitaker, B.
Whitty, L.
Wilkins, B.
Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.

19 Jul 2000 : Column 1096

8.9 p.m.

Baroness Castle of Blackburn moved Amendment No. 3:

    Before Clause 36, insert the following new clause--

19 Jul 2000 : Column 1097


(" . The Government Actuary or the Deputy Government Actuary shall report to the Secretary of State his opinion on the effect on the level of the National Insurance Fund, and the effect which might be expected on the rates of contributions, in each year up to and including 2005-06 of annual increases in the basic pension by the percentage increase in the general level of earnings; and the Secretary of State shall lay a copy of the report before Parliament.").

The noble Baroness said: Amendment No. 3 stands in my name and that of my noble friend Lady Turner. As I was about to say to the Minister when I was so rudely interrupted during our last debate on this Bill, her statistics, as always, are dazzling. But I am afraid that, as always, they are also incomplete and therefore misleading.

It is essential to the understanding of our pensions arguments in this House to get the figures right. One of the things the Minister omitted to point out to the House, which is part of the argument, was that if the earnings link had been introduced when this Government came into office in 1997, it would today have added £9.70 to the basic pension.

I know the Minister will say, "But you are proving my case"--the case which she had been arguing with such felicity during our last discussion on Amendment No. 2; namely, that that increase would shockingly go all the way up the line. I should point out to her that that happens to be the nature of insurance schemes. Insurance schemes do not add a means test for beneficiaries. If we subscribe, we are entitled to the results of those contributions. And the Minister's total indifference to the strengthening of the basic pension arises from the fact that not only she, but also the Government, abandoned the principle of state insurance altogether.

I remind the Minister of what we said in our manifesto for the last election. We said that the basic state pension would be the building block of our pensions policy; and it would be without means test. But her whole theme now is targeting, which was, of course, Margaret Thatcher's theme: you should target your resources on the poorest pensioners. She can become very eloquent about it--by cutting off this assent of the basic state pension to a reasonable level through the earnings link, we will have more money to target the poorest pensioners.

It really is a vital decision that this movement is making in this Bill. I should point out to her that the cost of restoring the earnings link does not fall on the British taxpayer. It is not a bit of welfare: it falls on the National Insurance Fund, which is financed and fed by the contributions of employers and employees. That has been a central part of our provision of security in retirement ever since the war. No government have sought to destroy that up till now. If we always say that you cannot do justice to the contributor to an insurance scheme because you must use your money to target, we are getting perilously near to the old poor law--are we not?--and to the destruction of what has always been the foundation of our policy on this side of the House.

19 Jul 2000 : Column 1098

The other thing that the Minister has also omitted to point out is that the cost, which falls on the contributors, is always offset by rising contributions because this is an insurance scheme. The contributions are earnings related, but the pension that people receive is not. But that does not seem to worry her. I find that a little unfair. However, if that is accepted and we get a more complete statistical picture from the Minister, we find that all the time the revenue coming into the fund is going up along with the cost. In fact, the revenue is far outstripping the cost at present, as we argued last time. I do not intend to go over the old ground.

The Minister loves to put on the frighteners. "Oh!", she said, "Look at the cost of restoring the earnings link. It would be £1 billion this year". She did not mention that the Chancellor in his Budget this year took away £1.35 billion from the National Insurance Fund to help the employers by reducing their contributions, as a sweetener to them to accept other levies that he wanted to place upon them. So it is the recipients of the pension from the National Insurance Fund who have paid for that sweetener to the employers. That is something that I am surprised she does not find rather distasteful. £1 billion this year, that is nothing. But she said that, by 2010, the cost will have increased to £7 billion and we will not be able to cut taxes. We should not believe that: it is nothing to do with taxes. It is the increased number of people you put on the means test that the taxpayer has to finance at an increased administrative cost. I should have thought that this House would have liked to weigh that in the balance of other arguments.

This figure was alluded to in another place last March when Oona King tabled a parliamentary Question. She began by asking what would be the increased cost of restoring the earnings link to 2010. The Answer, as the Minister said, was £7 billion. But again today the Minister has not said what is coming in to offset it. So Oona King tabled a second Question. She asked what would be the increased revenue coming automatically into the National Insurance Fund by the year 2010. The Answer was £11 billion. So at least until 2010 there would be a surplus in the fund. That is a very important point.

Do not the Government care about the insurance principle? They seem to be doing their best to destroy it, denying to the contributor to the fund the treatment that they will give to those on means testing--MIG. It is a new passion for means testing. This Government do not believe in insurance; they believe in targeting. I do not think that this House believes that. Speeches have been made which show that we are unhappy about that.

The Government Actuary strengthens my argument in that regard. The Social Security Select Committee has now turned its attention to pensioner poverty. The Government Actuary was asked what increase in contributions would be necessary to secure the measure that we seek. That may be considered part of taxation by some people who are not as literate as we all are in this House. It appears that over the next five years no increase in contributions would be required

19 Jul 2000 : Column 1099

because of the surplus in the National Insurance Fund due to the fact that contributions are earnings related but the payments are not.

I hope that the amendment we move today will appeal to all sides of the House. We were prevented on the previous occasion by a sleight of hand from resubmitting the earnings link question in the form that the measure then took. Although I agree with a good deal of what the noble Earl, Lord Russell, said, I do not agree that that is out of play. Today we ask the Secretary of State to instruct the Government Actuary to report on the annual adjustments to contributions that would be made necessary by the introduction of the earnings link, and then to report that to the House. If we do not want dazzling statistics but the objective truth, how can we reject such an amendment? The amendment seeks facts. We are not playing a political game of statistical cleverness; we are trying to get at the facts for the sake of all the pensioners who look to us for help. I entirely agree with what the noble Earl, Lord Russell, said about the hostility to means testing that is deeply rooted in pensioners.

Only yesterday morning a pensioner said to me, "They have even changed the name of the National Insurance Office to the Social Security Office." Why should we label honest contributors as paupers who rely on our charity? There is an important principle here. The Minister need not try to hide the fact that the Government now view this as a matter of charity. In 1974, for the first time since the Beveridge report was introduced, we laid a statutory obligation on the government of the day to uprate pensions annually and to lay down the principle on which they should be uprated. That took the uncertainty out of the matter. I lived through that period and for part of that time I was a member of the Cabinet. Every year there was a kind of jostling for public sympathy. People used to say, "Oh, the poor pensioners--is it not time we gave them a bit?" I do not think that that is worthy of a civilised society today. I believe that we are in danger of undermining the automaticity of adjustment to the pension introduced after the war which we thought had been established for ever.

I do not want to go back to 1948; I go back merely to 1978. However, I am a little worried when the Minister dismisses my arguments on the grounds that those decisions were taken years ago and the world has changed. I am glad that she is not the Minister of Health because our National Health Service is still rooted in the principles of 1948. I go back to 1997 and to what we could have done to strengthen the basic pension since then but have not done. Let us have the courage at least to establish the facts.

There have been references to the Chancellor's Statement on his latest Comprehensive Spending Review. I do not know what the credit that he mentioned will involve. That is another thing we have to take on trust when we legislate in this place. However, if our amendment were to be carried, this House would have a regular opportunity to consider the financial situation year by year. I should have thought that is the kind of control we should like to have.

19 Jul 2000 : Column 1100

I salute the Chancellor on his Statement which was a good Statement in most respects. However, the failure to mention pensioners was a little obvious. It took our renowned parliamentarian Mr Dennis Skinner to say to the Chancellor nicely, "We all welcome the fact that there is to be 4 per cent over inflation on this and 4 per cent on that. I am therefore confident that my right honourable friend will tell us that pensioners will get a 3, 4 or 5 per cent increase over inflation as part of the deal". The Chancellor replied, "My honourable friend is trying to get me to anticipate the further consultation which is now going to take place. I ask him to be patient. You have been patient for 22 years; you can wait a few more days or a few more weeks--not until November". What did he mean by that? Will he wait until we are all safely packed off for the summer holidays? What did he mean by a few more days or a few more weeks? Are we to be the only people who do not have a word to say? Cannot we say in this Bill that we want the Government Actuary to report on the cost of this measure year by year? We can then decide what we think should be done for our pensioners.

Will the Minister tell the House what has been the success of the £15 million persuasion programme in which the Government have indulged to persuade those who qualify for the minimum income guarantee to take it up? I received a leaflet informing me that I may be entitled to the minimum income guarantee and how to apply for it. Presumably that leaflet has been delivered to millions of homes. What has been the increase in take-up of the minimum income guarantee since then? That is important. I refer to the £9.50 or £9.70 by which the basic pension would have been increased under this Government if we had reverted to the policy of 1974. We must remember that there are people whose income is just above the level necessary to qualify for MIG. They would bless her. They are excluded, so apparently we are going to hike it up a little bit. The Chancellor will come along--though why it cannot be part of the whole thing I do not know--and we will be told that some steps are going to be taken to offset a situation in which people who have saved and invested in another pension find themselves above the MIG limit. We are going to add a little bit of credit for them.

That is what we are asking for with the amendment; that we should be told, year by year, in an official report--not ministerial figures--what is the current situation: how many are not taking it up; how many are excluded; who will benefit. To hear the Minister talk, you would think there were only 1.5 million to 2 million pensioners on income support. But that is out of 11 million pensioners; what about the others who are looking for some relief?

I hope that the Minister will accept my amendment. The Government should accept it. If the matter is now going to further consultation, let us give them the opportunity to consult us. I beg to move.

19 Jul 2000 : Column 1101

8.30 p.m.

Lord Higgins: My Lords, the noble Baroness--

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