Pensions

Oral Answers to Questions — Scotland – in the House of Commons at 11:30 am on 15th March 2005.

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Photo of Michael Weir Michael Weir Scottish National Party, Angus 11:30 am, 15th March 2005

What discussions he has had with the Department for Work and Pensions on the impact of the breaking of the earnings link to pensions on pensioners in Scotland.

Photo of Alistair Darling Alistair Darling The Secretary of State for Scotland, The Secretary of State for Transport

I discuss a wide range of issues with my right hon. Friend the Secretary of State for Work and Pensions.

Photo of Michael Weir Michael Weir Scottish National Party, Angus

I thank the Secretary of State for that answer. When in opposition, Labour condemned the breaking of the earnings link. When in power, it has refused to reverse that, extended means-testing and condemned one in five Scots pensioners to live in poverty. Even at this late stage, will he put pressure on the Chancellor to provide in his Budget statement tomorrow a citizen's pension that will end means-testing and lift Scots pensioners out of poverty?

Photo of Alistair Darling Alistair Darling The Secretary of State for Scotland, The Secretary of State for Transport

May I say to the hon. Gentleman, in the nicest possible way, that he clearly does not understand that restoring the earnings links would not help the poorest pensioners in this country? The reason we introduced the pension credit and the minimum income guarantee is that half the additional money—the £10 billion more that we have spent on pensions—has gone to the poorest pensioners in this country. That is why we have been able to lift pensioners in Scotland out of poverty. The fact is that restoring the earnings link would be a cheaper policy to pursue, but it would be the wrong policy, as it does not help the poorest pensioners in this country.

The hon. Gentleman might want to reflect on the fact that, because of the pension credit, 270,000 households with pensioners in Scotland are getting, on average, more than £40 a week because of the pension credit. That would go under the nationalists. He mentioned the nationalist policy, which would cost some £3 billion over five years—money that they have not got. The nationalists' claim that they would help Scots pensioners is therefore a complete and utter fraud.

Photo of Mr Ernie Ross Mr Ernie Ross Labour, Dundee West

Does my right hon. Friend agree that we should congratulate the Department for Work and Pensions on the way in which it has restored pensioners to the land of the living? A recent report by the Institute for Fiscal Studies made it clear that pensioners, as a group, are no more liable to be poor than any other group. That is because we have introduced a whole range of policies that have allowed us to reflect pensioners' contribution in the past and look after them in the future.

Photo of Alistair Darling Alistair Darling The Secretary of State for Scotland, The Secretary of State for Transport

The basic problem in this country is that, because so many people rely only on the basic state pension, and because the issue is clearly contribution-related, many people were reaching retirement without enough money to live on. That is why we introduced the minimum income guarantee and then the pension credit, which are designed to help two groups of pensioners in particular: people who have not been able to save enough for their retirement are given substantially more money than they would ever have got under an earnings link proposal; and the pension credit rewards savings rather than penalising them as the old social security system used to do. That is on top of the winter fuel payment, which the Tories wanted to abolish a few years ago, free television licences, free eye tests and other measures that we are taking to help pensioners. My hon. Friend is absolutely right that there is no doubt that, as a result of what we have done in the past eight years, pensioners are better off. Obviously, we want to do more, but pensioners are certainly better off than they would ever have been had we followed either the Conservative or nationalist policies.

Photo of Mr Peter Duncan Mr Peter Duncan Shadow Secretary of State for Scotland, Local and Devolved Government Affairs

Ten years ago, the then Leader of the Opposition, now the Prime Minister, said that the aim of his pensions policy was to remove the stigma of means-testing for ever. Would the Secretary of State like to give the House a report on progress towards that aim in Scotland?

Photo of Alistair Darling Alistair Darling The Secretary of State for Scotland, The Secretary of State for Transport

What I have said on many occasions is that if we want to deal with the problem of pensioner poverty—

Photo of Alistair Darling Alistair Darling The Secretary of State for Scotland, The Secretary of State for Transport

Well, the hon. Gentleman says that there is a stigma. The stigma is to leave pensioners poor. The stigma is pensioner poverty. In the 18 years that the Conservative party was in power, more and more pensioners fell into poverty. I will therefore make no apology whatever for introducing policies designed to help the poorest pensioners, which is what the pension credit does. He might want to reflect on the fact that the policies to which the Conservative party is now wedded—restoring the earnings link, but only for four years, after which that policy stops—would not help the poorest pensioners and would do absolutely nothing to get more pensioners out of poverty.

Photo of Mr Peter Duncan Mr Peter Duncan Shadow Secretary of State for Scotland, Local and Devolved Government Affairs

The Secretary of State's phoney bluster will do nothing to hide the fact that the Government have clearly failed on this issue. The simple fact is that 50 per cent. more pensioners are subject to means-testing in Scotland and must go cap in hand to the Chancellor for the stigma to which the Prime Minister referred 10 years ago. Is not a restoration of the earnings link and a substantial cut in council tax required, which would give a fair deal to Scotland's pensioners?

Photo of Alistair Darling Alistair Darling The Secretary of State for Scotland, The Secretary of State for Transport

The hon. Gentleman should know, although perhaps he does not, that the Tories' present policy—which, incidentally, was rubbished by their work and pensions spokesmen for years—favours restoring the earnings link for the next Parliament only. Then it will stop: in other words, the problems will start to build up again. The Tories have done that because they know that if they committed themselves to restoring the earnings link in perpetuity, they would have an even bigger spending problem than they have now.

The hon. Gentleman should reflect on this: 3,800 pensioners in his constituency benefit from pension credit, with a local average award of £41.34 per week. Under his system, they would not receive that money.