Savings

Oral Answers to Questions — Social Security – in the House of Commons at 12:00 am on 24th June 1991.

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Photo of Mr Peter Pike Mr Peter Pike , Burnley 12:00 am, 24th June 1991

To ask the Secretary of State for Social Security if he proposes to make any changes in the way income from savings is assessed for benefit purposes.

Photo of Ann Widdecombe Ann Widdecombe , Maidstone

The present capital rules give the greatest help to those with the lowest savings. The rules continue to be kept under review, but no further change is proposed at present. Substantial changes were made only last year to the amount of capital that a person can have and still receive income-related benefits.

Photo of Mr Peter Pike Mr Peter Pike , Burnley

Does the Minister recognise that most of the people claiming housing and poll tax benefit under the existing regulations believe that, in 1991, £3,000 is a fairly modest amount of savings? Should not the tariffed income basis, which takes 20·8 per cent. interest, be amended? When people begin to lose in that way, should not something be done to give them a better deal?

Photo of Ann Widdecombe Ann Widdecombe , Maidstone

The hon. Gentleman should do his sums again. He will find that there is a clawback of only 1·6 per cent. interest from those at the lower end of the income scale. The present system means that it is better to have a tariff than to take into account the actual income of those with low savings, because that is precisely the point at which the tariff benefits them. I know of nowhere else where interest would be assumed to be just 1·6 per cent.

Photo of Mrs Marion Roe Mrs Marion Roe , Broxbourne

Will my hon. Friend reassure the House that the Government have no plans to introduce a tax on savings, as mooted by the Labour party?

Photo of Ann Widdecombe Ann Widdecombe , Maidstone

I assure my hon. Friend that we have no such plans. Our plans will encourage savings and, more important from the pensioner's point of view, protect savings—unlike what happened to pensioners' savings under the last Labour Government.