Health and Social Security

Part of the debate – in the House of Commons at 9:33 pm on 27 November 1989.

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Photo of Mr Tony Newton Mr Tony Newton , Braintree 9:33, 27 November 1989

The hon. Gentleman, who was also a Minister in the Labour Government, will recall that in the mid-1970s the Labour Government were confronted with a public expenditure overrun and an astonishing increase in inflation—well into double figures—that led to a change in the uprating basis and to the taking of probably over £1 billion from pensioners, at current prices, to rescue themselves from their inability to keep the promises that they had made.

I promised to return to the point about figures that was made by the hon. Member for Birmingham, Ladywood (Ms. Short) from a sedentary position. My figures go up to 1986, and I shall tell her what happened to the component parts of pensioners' incomes. They are relevant. They are weekly figures and the comparison is drawn between 1979 and 1986. During that period, pensioners' incomes from total social security benefits rose in real terms from £48·50 to £57·70—a very substantial increase. Their income from occupational pensions also rose very fast, from £12·70 to £19·80. Perhaps most striking of all in terms of the increases, their income from savings rose from £8·70 to £14·20.

It is in the last figure that the crucial clue emerges as to the difference between what has happened to pensioners under this Government and what happened under the previous Government. Whereas income from savings rose by about 64 per cent. under this Government, the weekly income that pensioners enjoyed from their savings during the period of the Labour Government fell by 16 per cent. The inflation that had been generated by the Labour Government had the effect of cutting pensioners' incomes from other sources.

Our first priority has been to protect the value of the state pension. That we have fully and faithfully done, and we shall continue to do it by means of the uprating that I announced a month or so ago—[Interruption.] I wish that the hon. Member for Ladywood would not shout from a sedentary position that facts which can be established are lies. Even the hon. Member for Oldham, West acknowledged that there had been, at the very least, full protection of the basic state retirement pension. During the last month we have enhanced its value for about 400,000 pensioners by abolishing the earnings rule, so that those who were unable previously to enjoy the full value of their state retirement pension can now do so.

Beyond the priority that we have given to protecting the value of the state retirement pension, we have set out to achieve two major aims. The first, as is clear from the statistics that I have just given, is to protect the value of pensioners' increasingly important other income—from occupational pensions and, above all, from savings, which were reduced by the inflation that was generated by the previous Labour Government. Our success on that front has contributed to a considerable degree to the general improvement for many pensioners.