Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

Elderly Persons (Nottingham)

Part of the debate – in the House of Commons at 2:37 pm on 25th March 1988.

Alert me about debates like this

Photo of Mr Michael Portillo Mr Michael Portillo , Enfield, Southgate 2:37 pm, 25th March 1988

The second occasion. I congratulate the hon. Gentleman on it and on his many other interventions.

In, the previous debate, the hon. Gentleman referred to the glamour of debates in the Chamber. I am not sure whether he and I together constitute a glamorous debate, but we shall do our best.

I take issue with the hon. Gentleman on a number of points. I begin by addressing myself to one that was foremost in what he said — the living standard of pensioners. He will recall that in our last manifesto we pledged ourselves to continue to maintain the value of the retirement pension. We also said: retired people value their independence. They do not want to rely on the state alone for their income. nor, increasingly, are they doing so. We share Beveridge's original goal of a good basic pension from the state, together with a second income from occupational and personal pensions and savings. Over the past nine years we have worked steadily along the lines of that pledge. We have protected the value of the basic state pension, and it will rise again in a few days' time by £2·65 for a couple and £1·65 for a single person.

More important, through our economic policies we have provided a climate of growth for the non-state portion of pensioner's incomes. Unlike the Opposition, we have always sought to recognise that only half of pensioners' incomes comes from state provision. The pensioners can be done no good by increasing the state pension and ignoring savings and occupational pensions that are now such an important part of their income. That was tried by the Labour Administration, and I remind the House of its results.

Between 1974 and 1979 pensioners' total incomes rose by a miserable 3 per cent. in real terms. In this Government's first six years pensioners' total incomes rose by 18 per cent.—almost as much every year as during the entire period of the Labour Government. Pensioners have improved their position relative to the working population as well, whereas under the Labour Government their relative incomes fell. Those contrasting figures help to put the hon. Gentleman's remarks into context.

The growth that we have prompted in pensioners' incomes applies fairly evenly to all groups of pensioners, younger, older, less well off and better off. We have every expectation that the trend will continue as more and more pensioners retire with second pensions. Seven out of 10 newly retired married couples have occupational pensions now, as do half of all pensioners. The steps that we have taken to stimulate the development of occupational pension schemes will, we hope, further increase the proportion with this form of additional income. Already more than 85 per cent. of pensioners have pensions from work, or savings income, or both. We look forward to a society in which every elderly person has income in retirement over and above the state pension.

I thought that the hon. Gentleman's European comparisons were misplaced. Spending on the elderly in the United Kingdom is now the third highest in the European Community as a proportion of gross domestic product, at 9·6 per cent. that is based on 1983 figures, which are the latest definitive ones that we have. However, the partial figures for 1984 show that spending in the United Kingdom was rising as a proportion and falling in other countries. The comparisons on that basis of GDP are the only measure of pensioner support that the European Statistical Bureau can confirm as accurate.

It is in the light of some of those figures, and the reduction in inflation that has enabled pensioners to benefit so much from their savings, that we must view the reforms in social security to which the hon. Gentleman alluded. He called them a counter-revolution. In the coming year we shall be spending almost £1 billion a week on social security, which is not a counter-revolution in the sense that he meant. It may go further than Beveridge had in mind, but it is not a counter-revolution.

We shall be spending rather more, in effect, on income support—the benefit that replaces supplementary benefit — than on supplementary benefit, which is a complicated benefit with more than 20 extra weekly additions that depend on detailed questions about individual personal circumstances. It is a confusing, outmoded benefit and it does not have many friends left among the public or staff who try to administer it. Income support is a simpler system that gives better service to the public. It directs resources more effectively to the groups of claimants who face the greatest pressure—the people whom we have identified as being families with children, and the sick and disabled.

We have put another £220 million into income support to help us achieve some of our objectives. We put a similar extra sum into the new benefit of family credit to help working families with children. However, that is by the way, because this debate is about the elderly.

Between 1979 and 1985 pensioners' total net incomes increased, and it is only by remembering that that we can begin to address the question of the reforms. We must recognise that the base line is very much higher than it used to be and that it is fully protected in our reforms. The rate for a single pensioner between the ages of 60 and 79 is £10·65 more than the support for an unemployed man of 55. That is within the new income support system and reflects the priority that we give to the elderly in that system. That new premium covers the old standard heating addition in supplementary benefit, the long-term rate under supplementary benefit, average water charges and 20 per cent. of average rates.