I beg to move,
That this House
deplores the fact that, even on the Government's own figures, there are nearly two million pensioners living in poverty in the UK, that the poorest pensioners are seeing their incomes decline in real terms and that according to EU figures only pensioners in Latvia, Cyprus and Spain are more likely to fall into poverty;
is concerned at the damage caused to many pensioners' finances by the alarming rise in food, energy and fuel prices and in council tax;
regrets the fact that some 2.25 million older households are suffering from fuel poverty;
disagrees with the Government's refusal to state when it intends to restore the link between average earnings and the basic state pension;
notes with regret the Government's decision to abandon its target for maximising the take-up of pension credit when some 1.7 million pensioners eligible are not claiming it;
further deplores the sharp decline in private pensions savings since 1997;
and calls on the Government to finally redeem its pledge, made in 1997, to ensure that 'all pensioners should share fairly in the increasing prosperity of the nation'.
This is a timely debate, not least because the pensioners' parliament is currently meeting in Blackpool. Perhaps the best starting point for this debate is the amendment tabled by the Government, which reeks of self-satisfaction, self-delusion and a dismal level of complacency. Indeed, why should any of us support the amendment when the Secretary of State could not even bring himself to add his name to it?
The perfect illustration of how out of touch with pensioners this Government have become was the 10p tax rate fiasco. Even their belated efforts to right that wrong will not help all the pensioners affected, will not take effect straight away and will be for one year only. This debate is, to a large extent, Hamlet without the prince. The publication of the crucial statistics on both pensioner and child poverty has been held up. They were originally due out in March, and now we are promised them next week. Only this Monday, the Secretary of State was clearly rattled by the suggestion that they might have been suppressed for political reasons. We will have to wait and see. If the figures show that the Government are still failing to hit their poverty targets, any suspicions about the timing of the release could be strengthened. Presumably, they might have been suppressed to help Labour in the local and London mayoral elections and in the Crewe and Nantwich by-election—I am pleased to see in his place my hon. Friend Mr. Timpson.
Before the hon. Gentleman makes any more points about things being suppressed, he should know that the statistics were the subject of a review by the DWP statistics head of profession, which decided to delay publication because of an inaccuracy. That was independently verified by the Institute for Fiscal Studies and by Karen Dunnell, the national statistician. Unless the hon. Gentleman is suggesting that they are all engaged in a political conspiracy, he needs to apologise and withdraw the remarks he has just made.
As I have said, let us wait and see what the figures tell us. If there was any political reason to hold them up—I accept, for the moment, the Minister's personal assurance—it has not done the Government much good in any event.
The bad news is that as Labour sinks to new historic lows in the polls, the likely date of a general election moves further into the distance. That is really bad news for the country as a whole, but it is especially bad news for pensioners. Ministers like to boast—the amendment is a good example—about their alleged successes in this field. All too often, however, they quote figures based on redefining a problem rather than solving it. For example, they boast about lower youth unemployment, while recycling many young people through the new deal. They boast about child poverty while moving the goalposts. As Disraeli said, there are
"lies, damned lies and statistics"—
As a fellow alumnus, I always bow to the right hon. Gentleman. He might well have been there when Disraeli said it.
Ministers boast of removing 2 million pensioners from poverty. But if the same criteria are applied to pensioner poverty as to child poverty, it is a very different story. If pensioner poverty is measured as 60 per cent. of contemporary median income before housing costs—the measure that Ministers use to test the success of their child poverty targets—just 200,000 pensioners have been lifted out of poverty since 1997, a tenth of the figure claimed in the amendment.
The hon. Gentleman has not mentioned—perhaps he will do so—the winter fuel payment. In 1996, the last Christmas before Labour came to power—it was a bitterly cold winter—some of my hon. Friends and I went to No. 10 Downing street to plead for help for pensioners in the winter months, as there was no such allowance. The then Prime Minister, John Major, was not there, but I noticed that No.10 was very warm.
I am going to make some progress.
Let us look at the figures that we do have. Even according to the Government's statistics, some 2 million pensioners are living in poverty—in the fifth richest economy on the planet during the 21st century and on the 100th anniversary of the first state pension. About two thirds of those pensioners living in poverty are women. Between 1997 and 2006, the number of people living in severe poverty—defined as living on less than 40 per cent. of median income—increased by 600,000. The poorest quarter of pensioner households saw their incomes rise by less than 1 per cent. last year, which is well below inflation. That means that their incomes are dropping in real terms. The worst off single pensioners saw their real incomes drop by about 4 per cent.
Only a week ago, I was canvassing with my hon. Friend Mr. Timpson in Crewe, and we met two pensioner ladies. I was struck by the fact that they had worked hard all their lives and worked in the armaments factory in Crewe during the war, but one told us how, at 74, she had to go out and do a cleaning job just to keep her head above water for the basic requirements. When we talk about poverty, it is about money, but it is also about quality of life, which is quite intolerable for people of that age who have to work.
I am grateful to my hon. Friend. We can all tell similar stories of canvassing in Crewe and Nantwich where such issues were raised on the doorstep. Ordinary working people, and retired people even more so, felt that Labour had lost touch with them and their priorities.
I was going to say that according to recent EU statistics only pensioners in Latvia, Spain and Cyprus are more likely to fall into poverty than those in the UK. The surge in food, energy and fuel prices and council tax bills, which have on average doubled under this Government, has hit pensioners hard. Some experts reckon that the true rate of inflation for pensioners is more like 9 per cent.
Has my hon. Friend noticed how the Government are very much at fault? They impose taxes, especially on motor fuels that are needed to deliver products and services to the elderly, and they increase the tax at the very time when the market price is going up, too. They are pocketing more money than they were budgeting for, and they are too mean to give it back.
My right hon. Friend is absolutely right. The Treasury is quietly doing rather well out of the rises in fuel prices.
For many pensioners, the true rate of inflation is way above the official rate of inflation, because such a disproportionate amount of their income is spent on utility bills, council tax, food and fuel.
Angela Browning was talking about quality of life issues. The Welsh Assembly Government, which has been Labour-led for many years, introduced the free bus transport concession for pensioners, which has now been implemented across the UK. Does the Conservative party support that, and, if so, why did the Conservative group in the Assembly not support it early on?
I do not want to get too diverted, but in Eastbourne the Chancellor's largesse has landed council tax payers with an extra burden because the policy of free bus travel that was announced by the Government did not include the full price of the ticket.
Is it not also true that in rural areas the Government have taken away the money that used to come to local authorities in order to give it to Labour authorities elsewhere, which means that the poor in rural areas now have to pay council taxes way beyond those paid by the poor in other areas and that the services that they get as a result are far worse?
My right hon. Friend is absolutely right. There is growing evidence of a huge transfer of resources from Conservative areas, and rural areas in particular, to Labour-controlled areas. That situation needs to be addressed rapidly by the next Conservative Government.
It is no wonder that there has been a dramatic rise in the number of pensioners going bankrupt—from only 900 in 2002 to nearly 8,000 in 2007. That shows how, at a time of their lives when they are entitled to some peace of mind, money worries are preying on our elderly citizens. Even the new figures—when they emerge—will not take any account of the surge in energy and fuel prices that has occurred since the Prime Minister took over.
What of the longer term? A recent report by the Institute for Fiscal Studies does not make comfortable reading. It concludes that the proportion of pensioners below the poverty threshold will remain at its current level, despite the Government's reforms, for at least the next decade. Are Ministers embarrassed or ashamed? Not a bit of it. They persist in making extravagant claims about their alleged successes while many pensioners sink deeper into poverty, debt and despair.
The Government's main response to pensioner poverty has been to increase means-testing massively. Nearly half of all pensioners now retire subject to means-tested benefits. Surely even Ministers realise by now that they have tested to destruction the ability of means-testing to deliver help reliably to those who need it most.
Is my hon. Friend aware that many elderly people find the problem with means-testing is that the forms that they must fill in are incredibly complicated and even frightening? That has the result that many pensioners do not claim what they are perfectly entitled to.
My hon. Friend makes a good point. Despite the sterling efforts of the Pension Service—I have visited my local branch in Eastbourne—which goes to extraordinary lengths to be helpful, many older people are put off by the complexity of the process, the form-filling and the long telephone call that is usually involved. There are other reasons, such as pride and not wanting to go cap in hand to the state. Many people assume that they are not entitled, and it is clear from the statistics that that is especially true for council tax benefit, because some elderly people who own their homes cannot believe for a moment that they would be qualified to claim.
I am not saying that at all— [ Interruption. ] If the hon. Lady will allow me, I am saying that that is fine for those who make a claim. It is the duty of every Member to encourage people to claim—and, in some cases, to help them to claim, as we have probably all done—when they are entitled to do so. However, some 1.7 million people who are entitled to claim pension credit do not do so. There will always be some means-testing in the system—that is unavoidable—but we have mass means-testing for half of pensioners.
Thank you, Mr. Deputy Speaker.
"I want the next Labour Government to achieve what in 50 years of the welfare state has never been achieved—the end of the means test for our elderly people"— another broken promise.
As I have said, up to 1.7 million people who are entitled to pension credit do not claim it, despite any number of advertising campaigns and other attempts to boost take-up. The Secretary of State for Work and Pensions confirmed on Monday that the Government have dropped their original target for maximising take-up of pension credit.
The complexity of the forms often leads elderly people to seek the help of family or friends in completing them. If it is not done absolutely accurately—if an error on the form leads to the claim being refused—it is extremely difficult to put things right after they have gone wrong, so there is a serious case for making the process of claiming much simpler and easier to understand.
I am grateful for that. In fairness, Ministers have attempted to make the process easier, and to bring in other benefits if people are claiming pension credit. We may hear a bit about that in the speech of the Minister for Pensions Reform. As my hon. Friend Angela Watkinson says, there is still some way to go in that regard.
The result of all the problems that I outlined is that nearly £5 billion a year in benefits goes unclaimed by older people and remains in the Treasury. The Institute for Fiscal Studies estimates that if all those benefits were claimed, it would lift 500,000 pensioners out of poverty at a stroke. The report's authors pointed out the effect that higher pension income among new retirees has had on relative poverty levels—that is, if it was not for the massive success, under previous Conservative Governments, of encouraging private and occupational pension saving, the poverty figures would be even worse. [Interruption.] The IFS concluded:
"If the government wishes to see pensioner poverty continue to fall, it will have to find more money for pensioners in what will already be a tight spending review".
Did Sir Gerald Kaufman wish to intervene?
No, I was just interested. [Hon. Members: "Go on!"] The hon. Gentleman's speech is extremely interesting, as I would expect a speech of his to be. On the other hand, it is perforated, as I shall show in my speech, if I catch Mr. Deputy Speaker's eye.
I am not sure what the right hon. Gentleman means by "perforated". No doubt we will find out. As he and I were taught by the same English teacher, albeit many years apart, I have no doubt that he will expand on that point with some eloquence later.
I would not like my hon. Friend's speech to be perforated as a result of his failing to say that poor pensioners are paying council tax to put back the money that the former Chancellor of the Exchequer, now the Prime Minister, stole from everybody's pensions. Public servants, particularly local authority servants, are being paid for by my poor pensioners.
My right hon. Friend is absolutely right. There are other examples of massive unfairness, too. Approximately a third of state pension increases made since the Government came to power have been taken up by council tax bill increases, which is incredibly unfair.
Will the hon. Gentleman accept that council tax is one of the biggest contributory factors to pensioner poverty? In Scotland, 110,000 pensioners spend more than 10 per cent. of their disposable income on council tax. The Conservatives introduced the council tax, following the even more disastrous poll tax. Even after that experience, surely we should address the issue in order to tackle pensioner poverty, and base the tax on ability to pay, for goodness' sake.
That is another debate, and one that I would find fascinating. I assume that the hon. Gentleman is not advocating a return to the poll tax. I do not know whether he has the same experience in his constituency, but I have come across constituents who use their winter fuel allowance to pay their council tax. That is completely bonkers. When Ministers go on about the winter fuel allowance, they have to realise that, for some pensioners, it is a way of paying their council tax bill.
The hon. Gentleman says that he wants a fair share for pensioners, and he rightly decries pensioner poverty. He also decries means-testing. Will he tell the House by how much his party would raise non-means-tested benefits, and what percentage of gross domestic product he thinks a Government ought to spend on pensioners? He ought to tell the House how much more his party would offer pensioners; otherwise, it is a rather empty debate.
Yes, I will tell the hon. Gentleman, but not today. There are about two years for the Government to limp on, and I think they will do so. We need to see just how bad things have got and how dreadful the public finances are. I am always grateful for the hon. Gentleman's interventions. I do not know whether he is still a member of the Government. I shall set out the principles that we will use to approach the matters of policy in due course.
One of the serious issues is that the poorest pensioners are not claiming council tax benefit, and one of the reasons is that local authorities do not encourage it. Does the hon. Gentleman agree that local authorities should send out, with council tax bills, a form so that the poorest pensioners and others entitled to it can claim council tax benefit?
That is a fair point. My understanding is that there are moves afoot to tackle the issue. I think I am right in saying that council tax benefit has the worst take-up rate of any means-tested benefit, and I have tried to explain why. Anything that we can do to improve that, especially as council tax levels rise so much, would be welcomed in all parts of the House. The hon. Gentleman makes a good point.
In opposition, the present Prime Minister spent much of his time telling the Labour party that it could not promise to restore the link between the basic state pension and average earnings. The Government are the Johnny-come-latelys to the issue. We were the ones who promised to restore the link in our last manifesto. There is a great deal of mythology about the link and the scrapping of it, which we have gone into before and no doubt can again.
As I understand it, the Government's current position is that they intend to restore the link in 2012 or 2015, or possibly not even then if it is unaffordable. We have already legislated in the Pensions Act 2007 to do that. What we need is the trigger to be pulled by the Government. [Hon. Members: "You abolished it."] I personally did not, but I know what hon. Members mean.
A couple of weeks ago, the Government had the opportunity to tell the House and the wider public precisely when they intend to redeem that promise. They ducked that opportunity and whipped their Members to vote the amendment down—another example of dithering by the Government. No wonder Age Concern concluded that
"no joined up, targeted initiative exists to reach pensioners who live in poverty."
What an indictment.
There is another problem, linked directly to means-testing. It is the corrosive effect that that has on saving for retirement. Why should people put money aside now when they cannot be sure that they will be better off in retirement? No wonder the savings ratio has dropped to an historic low. The Government are storing up more potential poverty for the future because of the decline in pension saving. The current poverty statistics, as I explained, are significantly flattered by the success of previous Conservative Governments in encouraging private and occupational pensions.
As part of their attempt to repair the ravages of private pension saving since they came to power, the Government are setting up personal accounts. As the official Opposition, we have broadly supported the Turner package of reforms, but we want to ensure that personal accounts are indeed targeted on low and middle earners who have no pension savings. We have argued long and hard that personal accounts could well fail if the level of means-testing is not much reduced from present levels. The Pensions Policy Institute in particular has done a great deal of work to identify the at-risk groups who may be no better off or even worse off by being auto-enrolled into personal accounts. I am delighted that Ministers are now taking the matter seriously and have embarked on a programme of work with us, among others, to tackle the issue.
When it comes to pensions, confidence is a vital ingredient in getting people into the pension saving habit. Nothing has done more to undermine confidence than the Government's shameful dithering for more than four years about giving proper compensation to the 160,000 pension victims who lost their pensions through no fault of their own. The Government got there in the end, and should be commended for that, but they should not have taken so long or fought so hard against the move.
The issue of fuel poverty was raised earlier, and it is at the top of everyone's list of concerns at the moment. On the most recent figures, some 2.25 million older households are in the fuel poverty trap, and no doubt that figure is spiralling upwards almost daily. Indeed, the Government's own energy White Paper makes it clear that there is no prospect of their hitting their target of removing all vulnerable households from fuel poverty by 2010. The issue matters a lot, not just because it causes anxiety and stress for older people, but because last year there were 22,300 unnecessary winter deaths among older people in this country.
In the face of those unprecedented challenges, what do the Government do? They have cut spending on the Warm Front scheme over the next three years by 25 per cent. in real terms, and have done so in the teeth of advice from the Fuel Poverty Advisory Group that the bare minimum required was to maintain spending at current levels. It is no wonder the Government are now being taken to court over their fuel poverty strategy by Help the Aged and Friends of the Earth. What do we hear from Ministers? We hear a lot of rhetoric, empty gestures and announcements, designed to get them out of a problem today rather than to afford a long-term solution.
The hon. Gentleman is making an important point about fuel poverty. The Government strategy relied so much on cheap energy coming from competition, but that energy was not going to stay cheap for ever. The permanent solution relies on producing proper housing stock with proper efficient heating systems so that people can afford to heat their homes again.
I am grateful to the hon. Gentleman, who is absolutely right. This is not a debate on energy policy, so I shall limit myself to saying that the primary duty of Government is to ensure energy supply at a reasonable price. As they have taken so long trying to develop any kind of rational energy policy, there is now a big gap—and a rising bill to go with it.
If the hon. Gentleman will allow me, I shall make a little more progress; I have given way quite a lot.
Ministers' desperate pleas to energy companies have largely fallen on deaf ears. Their idea of monitoring fuel bills smacks more of Big Brother than of a serious attempt to tackle the problem. The so-called "extra" £225 million is not new money at all—it was first announced in April. Age Concern has described it as
"just a drop in the ocean."
It goes on:
"The government is quite simply failing the most vulnerable by not taking more action on this issue."
When we look at the figures, we see that the extra money will help only 100,000—just 2 per cent.—of the 4.5 million people in fuel poverty. Just the other day, there was another panic announcement from the Minister, on the issue of emergency vouchers to benefit claimants older than 70, to help with energy bills. We of course welcome any help for hard-pressed pensioners, but what was announced looks like another one-year-only, short-term fix. It is difficult not to agree with Help the Aged, which said:
"The government cannot shirk its own responsibility to tackle this serious and growing problem. It must stop relying on 'quick wins' to resolve a long-term problem."
That sounds to me like new Labour's epitaph.
First, I shall deal with the hon. Gentleman's initial remarks, which were rather churlish if I may say so. I have given way pretty promiscuously—including to him, on at least one occasion.
I will not make any commitments two years from an election about what we are going to do; the hon. Gentleman is old enough and experienced enough to know that that is an unlikely scenario. When the election comes, we will have a detailed, thought-out and costed suite of policies designed to help pensioners, who will by then presumably be in even worse straits than they are now after a further two years of this disastrous, dithering and incompetent Government.
In debating this important subject, we should not allow ourselves to get bogged down in dry statistics. These are flesh-and-blood issues. Poverty has a cancerous effect on our older citizens. It can affect their health, mental as well as physical; it can bring isolation and loneliness. In short, it can totally blight those later years of life when we all have some right to be free from unnecessary worry and stress. In its 1997 manifesto, Labour said:
"We believe that all pensioners should share fairly in the increasing prosperity of the nation."
Surely, after 11 years in government, and with perhaps another two to go, it is high time to start living up to that promise. I commend the motion to the House.
I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
"welcomes the policies of this Government to tackle pensioner poverty, which have lifted around two million pensioners out of absolute poverty and over one million out of relative poverty, and have led to spending of around £12 billion extra on pensioners compared with 1997;
recognises that pension credit allows pensioners to live with dignity and rewards those who have saved for their own retirement;
acknowledges the introduction of and increases to the winter fuel payment and further measures to ensure pensioners can keep warm;
notes the provision of free off-peak bus travel granting freedom to pensioners and ensuring that they are not isolated in their own community;
welcomes the long-term framework for pensions through the Pensions Act 2007, including relinking the basic state pension to average earnings and ensuring equality for women and carers with men by 2025;
and further welcomes the private pension reforms in the Pensions Bill which will enable individuals to take personal responsibility for their own retirement."
I waited in vain for the enunciation of the principles that we were going to hear—I expected something. Do Conservative Members really expect us to believe that they have somehow changed—that they have been transformed from the hard-faced Thatcherites who removed the earnings link and slashed pensioners' incomes into compassionate Conservatives? They delude themselves that their record of 18 years in government can so easily be consigned to the dustbin of history. Pensioners, above all, will remember. They lived through the Thatcher and Major periods, and they know that at the next election the choice will be clear—Conservative or Labour? The party that broke the link with earnings, or the party committed to restoring it? The party that consigned millions of pensioners to poverty, or the party that has lifted more than 2 million out of absolute poverty? The party that forced pensioners to live on £68 a week, or the party spending an extra £12 billion a year so that no pensioner need live on less than £124 per week?
Let me say to Sir Peter Tapsell, who sought to remind us of history, that in the year 1988-89 cold weather payments from the Conservative Government amounted to the grand sum of £2,510, compared with the party that in 2008-09 will pay £2 billion in winter fuel payments. That is the sort of thing that pensioners remember.
The point that I was making is that this Government are making payments of £2 billion to pensioners in winter fuel payments and the Government whom the hon. Gentleman supported were making payments of £2,500.
There is a choice: the party that left thousands of pensioners to freeze in their homes because they could not pay their fuel bills, then put VAT on fuel, and then tried to double it to 17.5 per cent., or the party that has provided winter fuel payments to keep pensioners warm by helping them to pay their bills, and that after 1997 cut VAT on fuel from 8 per cent. to 5 per cent. One can imagine what fuel bills would be like today with VAT at 17.5 per cent. if John Major had got his way.
During the Tory years, were not the cold weather payments the only help with heating? Furthermore, it had to be freezing in a particular area for seven consecutive days—not five or six—and then there would be a single payment only to those on income support that amounted to about £6 or £7.
My hon. Friend is right, and pensioners remember that.
Let us not forget private pensions either, because they were mentioned—the thousands cruelly robbed of their pensions in the 1980s and early 1990s through the Maxwell scandal, pension mis-selling and employers' pension holidays.
Let me just make my point, and then I will happily give way.
We had to clean up the private pensions mess by creating the pensions regulator to oversee private pension schemes, by creating the Pension Protection Fund to insure them and by ensuring that the Pensions Commission was able to undertake the biggest reform of pensions in a century and set out the parameters of the reform. We have taken that process on in the 2007 Act and in the current Pensions Bill, with the aim of bringing 9 million more people into private occupational pension schemes. Not only that, but we ensured in December, through the financial assistance scheme, that people such as the constituents of Mike Penning began to get the sort of justified result they needed for their pension schemes following the problems that they had when some of those schemes went down.
The Minister is quite right: I am going to raise the matter of the 700 constituents who had their pensions stolen from them, and the 140,000 pensioners throughout the country—that is the minimum number—who had their pensions stolen. They had to wait five years for the Government to come up with the compensation that they deserved, after the Government had been dragged through the courts, and in front of the ombudsman, and found guilty. What would the Minister say to those of my constituents who are still waiting for compensation today? Some of them will be taxed at a rate of 40 per cent., not the 20 per cent. rate at which they should have been taxed at the time.
As it happens, this morning I signed the order that will ensure that those payments are made. They should receive their payments very quickly. We took the order through the House recently so those payments should be made very shortly.
That sounds like great news for my constituents and the other 140,000 who have been waiting for five years-plus for the compensation that they deserve. What about the taxation issue? Will they be taxed at 40 per cent. on the lump sum? Will those who would have been taxed at the 10p rate before the Government abolished it—the poorest of those pensioners—have to pay tax at the 20p rate now?
On the reasons why the situation arose, and why his constituents had some difficulties when their pension scheme went down, the hon. Gentleman should remember that the regime under which the difficulties arose was created by the previous Conservative Government. His party is not without fault in that matter, and my party did arrange to compensate his constituents. On taxation, the people involved will be taxed, but will be able to refer that tax back to the period during which they would have otherwise received their payments. They will have to make arrangements with the taxman about how those payments are reclaimed, and they will be able to do so at the end of the year. We have, as he knows, consulted various people affected, including some of his constituents, to see what the best arrangements would be to deal with the matter.
First, the Minister threw the name Maxwell at us as if that were going to be the thrust of his argument. Mr. Maxwell was a Labour Member of Parliament. Secondly, this Government have robbed £5 billion a year—£50 billion to date—from pensioners. Thirdly, we have the highest fuel tax in the whole of Europe. That is all driven by this Government.
Let me remind the hon. Gentleman that when we came to office in 1997, the amount of money spent by the state on pensioners was £62 billion a year. It is now £90 billion a year. A certain degree of humility on the part of his party is needed on the matter.
I have to correct, indirectly, the figures that my hon. and learned Friend has given. The increase is much more than that. The increase in NHS spending is £60 billion a year, and two thirds of NHS spending, quite understandably and properly, goes on pensioners. The increase in NHS spending for pensioners amounts to £60 per week, per pensioner—all of which was opposed by the Opposition.
My hon. Friend is right. I was trying to be conservative in my use of figures, but he corrects me, quite rightly, to say that the amount that we are spending is much higher.
The Conservatives scheduled the debate on
The Minister chastised us for postponing the debate. I remind him that the last time it was fixed, then pulled, it was because we thought a debate on Burma was more urgent. I think that that was the right decision.
What is significant is that the Conservative Opposition have called a debate on pensioner poverty and on the record of a Labour Government, who have failed so dismally. Does not that strike the Minister as a sign of the way in which politics has changed in recent years?
Let us look at the record of this Government. This is the Government who have sought to help the poorest pensioners by substantially increasing, especially through pension credit, the amount of money that goes to them. Half the £12 billion increase—
When judging who cares about them, pensioners will be able to compare the levels of caring, in terms of expenditure on pensioners, shown by the Conservative Governments of the past with the levels shown by the present Government.
We have shown that we are taking constant action to help the poorest pensioners. Last week, for example, we announced measures to help the most vulnerable pensioners to reduce their fuel bills.
If the hon. Gentleman will forgive me, I want to make progress.
We shall do that through data sharing with energy companies, so that the poorest pensioners can get more help with their fuel bills. Those measures come in addition to this year's payment, alongside the winter fuel payment, of an extra £100 for pensioner households with someone over 80, bringing their payment up to £400, and an extra £50 for households with someone over 60, bringing their payment up to £250. The Government have also agreed with the energy companies that, in addition, the companies will increase their funding for social assistance by £225 million, thereby reducing the bills of many vulnerable pensioners.
The energy companies want to know where the poorest pensioners are, so that they can get them on the cheapest tariffs. We are prepared to share data with the energy companies through a trusted intermediary to enable the most vulnerable to have access to free home insulation, a beneficial fuel tariff, or even a cash rebate on their fuel bills. Allowing data sharing with energy companies is controversial, but as Age Concern, Help the Aged and others have said, the pressure of rising energy prices justifies that action.
In the Pensions Bill, which is now in the other place, we intend to take a power to tell the energy companies which of their customers is on pension credit. The Bill will not be passed until November, so in the meantime I have offered the energy companies the facility this winter to send a mailshot or voucher to those in receipt of pension credit. Whether it will go to people aged over 70 is still being discussed. It is now up to the energy companies to take that up as part of their £225 million contribution. At a time of rising fuel bills, we are providing practical help for pensioners.
Is not the Minister ashamed that, under a new Labour Government, 47 per cent. of single pensioners and 324,000 pensioner households in Scotland are in fuel poverty? Is it not odd—even perverse—that that is the case in oil-rich Scotland, a net exporter of energy?
The hon. Gentleman's statistics are not accurate because they exclude, for example, council tax benefit and several other payments such as the winter fuel payment. His statistics, which I have seen cited elsewhere, are partial and inaccurate. Indeed, they suggest that those on low incomes are on much lower incomes than they are. Half of single pensioners have incomes of less than £7,600 after deducting tax, council tax and housing costs. The £6,000 figure excludes, for example, housing benefit and various earnings and investment income. The hon. Gentleman's statistics are simply wrong.
I represent a rural area. It concerns me that many people who are in the most difficulty with their fuel bills cannot have gas and rely not on electricity but on fuel oil, the cost of which has gone up massively and will not be affected by the measures that the Government are introducing. They often live in old houses, which are the least amenable to sensible measures for reducing energy loss. Has the Minister any plans to help some of the least well off pensioners, who also live in the least helpful accommodation?
The supply of heating oil is a difficult issue. The Government still believe that open competition between the companies is the best way in which to try to keep prices down. The Office of Fair Trading monitors the market for the supply of heating oil to consumers. For many years, the Department for Business, Enterprise and Regulatory Reform has tried to promote connections to the gas network for deprived communities, thereby reducing their reliance on domestic heating oil. That Department's design and demonstration unit has developed and tested a model for such connections where existing funding is available. Furthermore, the energy efficiency measures that are in place can help to reduce some fuel bills. Ofgem and Energywatch have organised a joint initiative, energy smart, which explores measures that can be taken to improve energy efficiency. I hope that those points help the hon. Gentleman, but I appreciate that there is a big problem.
If the hon. Gentleman will forgive me, I need to make progress. I have been generous in giving way.
I hoped that Conservative Members would welcome our initiative to get fuel companies to provide extra help to the most vulnerable pensioners. After all, last year, they called for more help with rising fuel bills. Indeed, Mr. Hunt said:
Yet last week, Alan Duncan attacked our proposals for data sharing as "alarming" and accused us of trying to "spy" on people. We get attacks both when we are not data sharing and when we are data sharing. They are simply opportunist attacks. There is no consistency, policy or substance in the Conservatives' actions. They do not have a strategy on pensioner policy, simply a way of opportunist point scoring. My old teacher used to say that empty vessels make the most noise. The Conservative vessel is certainly noisy, but it is empty of policy and has a captain who is always chasing the latest breeze.
Let me now deal with some of Conservative Members' more detailed claims because I welcome every opportunity to set our record against theirs. They say that pensioners are poorer. I will take no lessons on poverty from the Tories. In 1997, hundreds of thousands scraped a living on £68 a week. I remember the then Health Minister, Edwina Currie, simply telling pensioners that they had to wear long johns and woolly night caps to keep warm.
Average pensioner incomes under Labour have risen by 29 per cent. in real terms since 1997, which, importantly, compares with an increase in average earnings of 16 per cent. Pensioners' incomes have therefore risen above average earnings. Pensioner households are £1,500 better off this year than under the 1997 system. We have focused help on the poorest, so that the poorest third are £2,100 better off. That means that pensioners are today less likely to be poor than many other groups of the population. This is the first time that that has been the case. It is not that there are no poor pensioners—there are—but, because of pension credit, winter fuel payments, free bus travel and the other measures that we have introduced, pensioners are less likely to be in the lowest group.
This is an important point and I glad that the Minister has raised it, because he raised it in questions on Monday. Until relatively recently—I am talking weeks or a couple of months—the mantra from Ministers was that pensioners were now no more likely to be in poverty than the rest of the population. There was a sudden shift in the rhetoric on Monday, when the Minister said—I understand that he has said it again today—that pensioners are now less likely to be in poverty than the rest of the population. Can he explain at what moment that change took place and what the basis for it is?
We have been looking into the statistics, and that is the current position. As we have put in place measures such as pension credit, the income of pensioners has risen, up to £124 in the case of a single pensioner. That is a significant help that other parts of the population cannot access. We heard some other strange uses of statistics from the hon. Gentleman. His view seemed to be that our pensioners were poorer than people in eastern Europe.
I appreciate that the Minister's short-term memory may be failing, but I was quoting the EUROSTAT figures from the other day, which said that, among European Union countries, only pensioners in Latvia, Cyprus and Spain were more likely to fall into poverty than UK pensioners. I do not imagine that the Minister wants to contest that statistic.
I certainly do want to contest that statistic, because it distorts the poverty data and the EUROSTAT statistics. Because we are a wealthier country, our poverty level in the EUROSTAT statistics is set higher than that for most European countries. That is the way the EUROSTAT statistics are set. For example, the UK poverty line is 13 times higher than Bulgaria's and seven times higher than Poland's. Our pensioners are therefore much better off than those in most other countries. When we take into account the basic state pension, pension credit, free TV licences, winter fuel payments and private pensions, our pensioners are better off than those in, say, France, Sweden, Denmark and similar countries. Our pensioners are much better off than those in most other European countries. Indeed, we are about fifth in the league and have moved way up since the Government came to power. The hon. Gentleman needs to be aware of that.
Another issue that the hon. Gentleman raised was council tax, so let me say something about that. I know that pensioners are concerned about council tax increases—often, increases come from Conservative councils. We recognise that we need to help the most vulnerable, so this year is the 11th year in which we have increased local authority grants by more than the rate of inflation. By 2010-11, the increase in Government grant for local services since 1997 will be 45 per cent. higher than inflation. Council tax benefit is also important, because it goes to 2.5 million pensioner households.
I heard hon. Members' comments on the difference between rural and urban areas. However, I represent a rural area in Warwickshire where, during the mid-90s, when John Major was Prime Minister, we had to join marches against school cuts. Teachers in Warwickshire were losing their jobs hand over fist as a result of cuts in local authority grant to that rural shire county. Under John Major, there was an 11 per cent. cut in policing. Today, police numbers are well up. There are no such marches or demonstrations at the moment, because we are funding local authorities better than the previous Conservative Government did, and if we had policies of the sort that they had, council tax would be even higher.
We seek to improve how we help pensioners who are paying council tax. Many of them are finding it difficult, which is why it is a priority for us to achieve take-up of council tax benefit. It is encouraging to note that pensioner take-up of council tax benefit increased by 2 per cent. in 2005-06—the first increase in a long time—but we need to get more take-up.
We think that about four out of 10 pensioners still fail to take up council tax benefit. That represents a massive £1.9 billion in unclaimed council tax benefit. The money is there and we are ready to provide it, but we cannot force people to take it. We want to encourage them to do so, and I note the suggestion that local authorities could write much more effectively to local people to achieve greater take-up.
I hope that the automaticity of payments that we plan for this October will boost take-up next year. It will mean that pensioners who claim pension credit by telephone can also claim council tax benefit and housing benefit automatically, with minimum form filling and fuss.
Let me say a quick word on the link. It always strikes me as odd when the Conservatives talk about the restoration of the earnings link. After all, they abolished it in 1983. This Government have enshrined in law their commitment to restoring the link. To make our position clear, we understand the desire for a specific date, but we have indicated that we would wish to restore it in 2012, or during the next Parliament, as the public finances and economy allow.
I have to say that this is not just something that we regard as desirable; it is fundamental to the package of reforms that we are taking forward. It is the foundation stone—the building block—for many other reforms, not only in the state sector under the Pensions Act 2007, but in the Bill that we are taking through Parliament. Restoring the link will mean lifting many more people out of pensioner poverty, and we will ensure that people are better off when they are saving on a private pension. That is a fundamental building block of our reform and it will be done—it is the key to our policies—but we need to take account of the wider fiscal and economic conditions.
The Conservatives also talked about other changes. I want to look at some of those. In the 1980s and 1990s, being old was the single biggest indicator of poverty, but under this Government pensioner poverty is down. Our record shows that, today, age is no longer a proxy for poverty.
In relation to pensioner poverty, there is a bigger issue that I want to touch on. We are committed to dealing with pensioner poverty—from Keir Hardie and Frederick Rogers, who led the campaign for the first state pension, to Clement Attlee, who extended the right of a pension to all, and Barbara Castle, who fought for better second pensions for older people—and we will continue to build on their legacy, targeting support on those most in need.
Today, the challenges of ageing stretch beyond financial poverty. I want to talk about how our ageing society presents us with new challenges. While it is still important that we address poverty—that must be the first priority—the challenges stretch wider than material well-being. The poverty of experience in old age and people's lack of control over their own lives need to be addressed. We are developing a comprehensive strategy to ensure that old age is a time of opportunity and enjoyment, rather than merely struggle and endurance.
Through our public service agreement, we want all Departments and local authorities to ensure that their policies and services better meet the needs of older people. Just as Beveridge identified the five giants he wanted to slay, I shall identify the five giants of old age with which we as a society—not just the Government—must get to grips in the decades ahead.
The first is, of course, poverty. Our second challenge is to tackle the problems of frailty, both physical and mental, so that the onset of dementia or the loss of mobility does not mean that an older person becomes detached from society; rather, their life should be lived with some dignity and some respect. Thirdly, we must tackle discrimination, so that the 70-year-old who is still bursting with energy can continue to work and perhaps re-train in order to volunteer or contribute in some other way as an active member of the community. I echo what was said by the Prime Minister during Prime Minister's Question Time: I, too, look forward to the new equalities Bill.
The fourth challenge is to tackle fear, so that older people feel confident in their homes and free to walk in their local streets, taking advantage of the public space that encourages interaction with others of all ages. The recent report by the World Health Organisation on age-friendly cities made particularly good points about that. The fifth challenge is perhaps the most difficult, and relates directly to pensioner poverty. We must tackle loneliness, so that the pensioner who lives alone, often isolated in a flat—talking to no one for a week, watching television—can find out where to go to make some friends, and can be encouraged to socialise or help in the local community.
We need progress on those new challenges to our ageing society, and we will build on our record of tackling poverty to ensure that we deal with them as well. Our Government are committed to tackling poverty and improving the lives of older people. Our achievements since 1997 are in sharp contrast to the empty rhetoric and cheap soundbites of Opposition Members, and my commitment today is that we will not rest here. In 1997 we spent £62 billion on pensioners; in 2008 the figure has risen to £90 billion, and is projected to rise to £264 billion as a result of our reforms. We are the party with the belief, the energy and the passion to do more for our pensioners. We will continue to champion social justice, so that we can continue to build a society based on fairness and opportunity for both the young and the old.
A Labour Back-Bencher told me yesterday that pensioners had never had it so good. While that may well be the case for some middle-class pensioners who bought their houses in the 1950s, 1960s, 1970s or 1980s—although they may be starting to get a little worried now—many pensioners are living close to, if not on, the poverty line. Many others are not below the poverty line only because they have undergone a complicated and intrusive process in order to claim means-tested benefits.
I agree with all the points made in the motion, although there is an important omission. It is the one thing on which the Conservatives are holding back: an immediate restoration of the link between pensions and earnings. I shall say more about that later.
When Labour came to power 11 years ago, they promised so much for pensioners. For some pensioners, life has improved. A huge 4 per cent. fewer of them live in poverty than in 1997, which represents progress, albeit a small amount. On the whole, however, pensioner poverty has remained fairly stagnant under Labour. According to the Government's own figures, 2.2 million pensioners are living in poverty after housing costs, compared with 2.4 million in 1997. The Minister looks confused, but those are the Government's figures. That equates to 21 per cent. of pensioners compared with 25 per cent. in 1997. However, given that in 1908, when the state pension was first introduced, 1.3 million people were considered to be paupers, the fact that 2.2 million pensioners in the same age category are now living in poverty strikes me as a slightly worrying trend.
There has been some improvement in one area. Because the minimum income guarantee and pension credit are uprated in line with earnings, unlike the basic state pension, fewer pensioners have slipped into poverty. However, the absence of a larger problem is not necessarily much cause for celebration.
A big problem with Labour's approach to pensioner poverty is its reliance on means-testing, which has been mentioned by several hon. Members today. The 2005-06 figures for the take-up of pension credit showed a rate of 65 per cent., or 2.6 million households. The Government estimate that 1.7 million people are missing out, and they are giving up on them by not pushing any further to increase take-up. The Government accept that they are not achieving that public service agreement target.
The Department's annual report, which I am sure all hon. Members would agree makes gripping reading, said that in November 2007, 2.73 million households were receiving pension credit. That is positive, because it was a slight increase on the figure for 2005-06, but it prompts a question about information. Clearly, more data are available to the Department than have been published, and it is disappointing that that information was not made available for scrutiny as soon as possible. It would be interesting to know what other data the Department holds that have not been published.
Does my hon. Friend agree that on the several occasions when the Minister has said that those who are most in need are receiving pension credit, he has omitted to say that those who are most in need are those who are entitled to pension credit but are not getting it?
Absolutely; that is a valid point, and I thank my hon. Friend for making it.
It is not just the take-up of pension credit that we should be concerned about. Several hon. Members have mentioned the take-up of housing benefit and council tax benefit, although I think we all accept that housing benefit is less of an issue than council tax benefit. According to the 2005-06 figures, the take-up of housing benefit was about 85 per cent., which still left more than 300,000 people who were eligible to claim it but did not. Indeed, the figures were worse in 2005-06 than under the last Conservative Government. The worst of the lot was council tax benefit, for which the take-up among pensioners was about 57 per cent. Therefore, about 2.1 million people in pensioner households were eligible for that benefit but did not claim it. Again, the figure was worse than that under the last Conservative Government.
How do the Liberal Democrats aim to end pensioner poverty if they are setting their face against targeting help at the poorest pensioners? I might be wrong, of course; perhaps they are not setting their face against it. The only way to target help at the poorest pensioners is through means-testing.
I shall come to that point later, and I shall explain exactly what the Liberal Democrats would do that would make a difference.
Given that Labour's reliance on means-testing is a fundamental part of its targeting, as my hon. Friend John Barrett has said, it must be disappointed by the number of people who, by its own definition, should be claiming the benefit but are not, and who therefore are not getting the money that they need.
In July 2006, the National Audit Office published a report on Labour's progress on improving the take-up rate of benefits among pensioners in which it said that the PSA target on pension credit would not be met. Why has it taken the Government two years to reach the same conclusion? The same report suggested that the Government should improve the range of data that they collect on who is not claiming the benefit, and should share those data with the Pension Service and local services so that people in need can be better targeted. The report also said that the Government should allow more local autonomy so that local service providers could better target pockets of low take-up.
May I begin by welcoming the hon. Lady to her new position? I hope that we will work closely on pension issues in the coming months.
On the report from which the hon. Lady quoted and her suggestion that information on the PSA target has not been in the public realm for two years, she should be aware that the then Secretary of State, my right hon. Friend who is now the Secretary of State for Business, Enterprise and Regulatory Reform, told the Select Committee on Work and Pensions in July 2006 that the target was not expected to be met.
If the Minister will allow me to say so, I think that he has confused two different issues that I have raised. One related to the information that the Department holds that is not in the public domain. I also referred specifically to the statistics in the annual report relating to November 2007. On the question whether the target was going to be met or dropped, there is a world of difference between a Minister telling a Select Committee that the target is likely to be missed and the Department actually acknowledging that and dropping the target. Those are two separate things.
If the hon. Lady checks the record—I say this gently to her—she will find that there was a ministerial statement at the time.
I join the Minister in welcoming the hon. Lady to her new position. Does she agree that none of this is terribly important when compared with the reality that this is indeed a target that the Government have abandoned? There are still 1.7 million people who are not getting the pension credit to which they are entitled. Indeed, when the Government introduced the pension credit, the Treasury calculated that 1.4 million people would never claim it. The Government have therefore always cynically assumed that large numbers of people would never get round to claiming it.
Indeed; that is a valid point. Perhaps it is because the initial estimate was that 1.4 million people would not claim pension credit that the Government have assumed that 1.7 million is close enough to that figure for them to let the target quietly drop.
Will the Minister tell us, when he winds up the debate later, whether the suggestions made by the National Audit Office in 2006 were looked at and attempted before it was decided to drop the PSA target? The Government appear instead to have focused on gimmicks such as the pensioner Christmas bonus—a generous £10, I believe—which will not do very much to help, with food inflation at its present rate.
One of the major reasons pensioners are falling behind the rest of the population is that, since the Conservative Government broke the link with earnings in the 1980s, the basic state pension is uprated only in relation to prices. I concur with the Minister that that is a fundamental cause of many of the problems that pensioners now have with poverty. If they do not qualify for pension credit, they can get poorer in relation to the rest of the population as they get older, as the value of their pension diminishes. The Tories did a huge amount of damage between 1979 and 1997, reducing the basic state pension from 26 per cent. of average earnings to 17 per cent. That represents a huge drop over 18 years. Unfortunately, it has dropped even further under Labour, and it is now just 15 per cent. of average earnings.
Different European countries have already been mentioned, and I shall now throw another one into the mix. The value of our basic state pension, at 15 per cent. of average earnings, is worse than in the overwhelming majority of European countries—and not just the ones that we might expect, such as Sweden and Norway. That proportion is also worse than in the Czech Republic, Hungary, Italy and Portugal. Our basic state pension is worth less in relation to wages now than it was in 1978, 1958 or even 1908.
It was remiss of me not to congratulate the hon. Lady, my ex-Select Committee colleague, on her promotion when I last intervened on her. Perhaps she is being disingenuous in making these comparisons. She says that the basic state pension in Britain is worse than that of Italy, but I am sure that she knows—as I do, having met some Italian politicians—that there is very little second pension provision in Italy. Almost all pensioners there depend almost wholly on the state pension. The relative wealth of pensioners in the two countries is therefore quite different, and in Britain our pensioners are much better off.
I was making a specific point about the basic state pension because, as the hon. Lady points out, there are different systems in the different European countries. In the UK, we rely significantly more on private provision than is the case in some other European countries. I was commenting not on the overall income that pensioners receive, but specifically on the basic state pension.
The hon. Lady raises an important point. Traditionally, we have relied on private provision, but she will know from her own figures that that is now in massive decline, and that that has a lot to do with people's fear of having their pension robbed by the Government.
To put the record straight, the lack of confidence in private pensions came about solely because of the tremendous scandal of the mis-selling of private pensions in this country, orchestrated by the Conservative party when it was in government. [Hon. Members: "Orchestrated?"] Orchestrated, yes.
I would rather not get into the politics of who did what to whom on private pensions, but there are a number of reasons why people are very concerned about saving in private pensions; mis-selling is one, but there are also examples such as Allied Steel and Wire and other cases mentioned earlier where people lost their pensions. People are also concerned that through means-testing, they will lose out on more than they have saved; the disincentive of means-testing puts people off saving through private schemes.
Women's pensions concern me. Currently, around 30 per cent. of women retire on a full state pension, in comparison with about 80 per cent. of men—a huge disparity. I know that Members on both sides are concerned about this and everybody wants to see progress made. But 2025 is a long time to wait for equality for women pensioners and millions of women are written off in the meantime. Even with the current pension reforms, nearly 40 per cent. of women will not get a full basic state pension in 2018. That seems to me far too far down the line for us to be making progress. We have a sexist system—designed by men for men—that has, over the decades, been to the detriment of women pensioners.
The way in which the hon. Lady is using these statistics is questionable. She knows very well that, following the 2007 Act, as from 2010—not so long to wait—75 per cent. of women will become eligible for a full basic state pension. She is right to say that it will rise over the following decade and a half to 90 per cent., or full equality. But the big jump will take place in 2010 for carers and for women who will be able to get a full basic state pension.
On a point of order, Madam Deputy Speaker. If the Minister keeps making interventions after making a long speech at the start, there will be no time for Back Benchers to contribute to this very important debate. Is there any way you can stop the Minister getting up?
Thank you, Madam Deputy Speaker, and on that note I shall refuse all interventions from both sides of the House until the end of my speech.
I thank my hon. Friend for being very generous. On women's pensions, would it not be a good thing for the Government to allow women to increase their national insurance contributions by buying back previous years' contributions?
Absolutely. The reason I allowed my hon. Friend to intervene was that he had been trying to get in before the point of order. He made a valid point. The Government had a chance to solve the issue once and for all with the Pensions Act 2007, but like Opposition Members here and in another place, we are concerned that they have not done so and have blown the chance they had.
Let me move on to the Conservative party. As the Minister said, this seems to be a strange topic for the Conservatives to have chosen. It is clearly a hugely important issue but, as we have seen, the Conservatives have had nothing new to say at all. They also have nothing to be proud of when it comes to their record on pensioner poverty. The only concrete commitment they have made in the past few years to tackle pensioner poverty was the commitment in their 2005 election manifesto to restore the pensions link to earnings immediately, but that was dropped under the leadership of David Cameron. They have not made any new proposals—
I apologise, Madam Deputy Speaker. As a relatively new Member of the House, I find it difficult trying to remember 646 constituency names. As I said before the points of order, I will allow interventions later, should hon. Members wish to make them then, but I want to make some progress now because I know that a number of Back Benchers wish to speak.
In the final three years of the previous Conservative Government, pensioner poverty levels remained roughly constant, at about 2.4 million before housing costs are taken into account and about 2.9 million after housing costs are taken into account. Those figures are higher than the levels under this Labour Government. Income support for pensioners under the Conservatives was worth 18 per cent. of average earnings, whereas pension credit is now worth about 21 per cent. The take-up of income support by pensioners in 1997 was about 65 per cent., which is almost the same as the current figure. The Conservatives did not crack the problem either. Admittedly, they did have slightly better take-up rates of council tax benefit and housing benefit than the Labour Government have achieved, but hundreds of thousands of pensioners still missed out on what they were due.
The biggest error that the Conservatives made was when the former Prime Minister, Lady Thatcher, broke the pensions and earnings link in the 1980s. For all the soft words that the Conservatives have spoken on pensioner poverty, they have not made a concrete commitment to reinstate the earnings link at a particular point in time, unlike the Liberal Democrats. Despite the Conservatives' making a clear commitment before the previous election—it was made both by the then shadow spokesman, Mr. Willetts, and in the election manifesto—and despite the fact that they have been pressing the Government on this point repeatedly, they still have not said when they would reinstate the earnings link.
As befits the party that first introduced the state pension 100 years ago—the then Liberal party introduced it—the Lib Dems have the most radical solutions on reducing pensioner poverty. We are not tinkering around the edges. First, we would restore the earnings link immediately. I shall answer the point made by Miss Begg—
Not for the moment. The Liberal Democrats would restore the earnings link immediately, so that pensioners stop falling further and further behind the rest of the population, and then we would introduce a radical overhaul of the basic state pension. We would increase it by up to £130 a month for single pensioners, and by up to £220 a month for couples. We would base entitlement on residency, not on national insurance contributions, and that would particularly help carers and women who have taken time out to bring up children. Such an approach would also reduce significantly the means-testing requirements. As well as improving income levels, it would encourage and support private saving, because it would remove the disincentive that has been introduced by significant levels of means-testing. Mr. Waterson referred to that. Those proposals would eventually remove 3.5 million pensioners from means-testing, and would reduce the projected levels of means-testing from the current estimate of 40 to 50 per cent., to about 10 per cent. The problems that having such high levels of means-testing will generate have been flagged up.
We need to tackle the cost of living for pensioners, rather than just their income levels. As has been mentioned by a number of hon. Members, one of the biggest problems is council tax. Scrapping that and replacing it with a fairer system based on people's income—Pete Wishart discussed that—would make a huge difference to pensioners' disposable income. There are also real concerns about fuel poverty and the cost of other items of household expenditure.
The cost of food and fuel has risen significantly, especially recently. Since pensioners spend on average a third of their income on food and fuel, their inflation rate this year is much higher than the national indices produced by the Government. Estimates were produced in January that showed that inflation for pensioners will reach 7 per cent. in 2008. As the hon. Member for Eastbourne said earlier, it may be as high as 9 per cent., or more than double the national inflation estimate. At the same time as pensioners' income is falling behind that of the rest of the population, the pensioners' price index is significantly outstripping RPI, and that is a disturbing trend.
Fuel poverty is an issue that I have been concerned about for some time, even before I took on my present role. I represent a Welsh constituency and Wales has much higher levels of fuel poverty than other parts of the UK. It is good to see others taking up the issue and I welcome some of the moves that the Government have made recently to try to tackle the problem by working more closely with energy companies. We have already reached a crisis point on the issue. The number of households in fuel poverty has more than doubled since 2004 and the average energy bill is more than £1,000 this year, which is a huge amount for poor families and pensioners to pay.
In 2005, there were 1,500 excess winter deaths among pensioners in Wales alone, so the figures for the UK as a whole are very worrying. People are dying partly because they cannot afford adequate heating, and that should not be allowed to happen in a civilised country such as ours. We need a much more concerted effort to tackle that issue, and I am glad to see the Government taking the first steps.
The Government have made some progress, but they are grinding to a halt with their abandonment of the PSA target—at the worst possible time, given rising prices, increasing fuel poverty and the basic state pension reducing in value year on year. While I agree with the motion, the important missing element is a commitment to a date for the restoration of the earnings link. The Conservatives are pussyfooting around on the issue and making no firm commitments. Given that the last time that they were in power the situation of pensioners worsened, we have to ask why it would be any different next time.
The state pension was introduced by a Liberal Government 100 years ago this year, and we are still the only party making radical proposals.
I listened with great interest to Jenny Willott. Although she is new to her role, she has fallen immediately into the trap for Liberal Democrat spokespeople on any subject—making unrealisable promises, made because Liberal Democrats know that they will never be in a position to fulfil any of the commitments that they make. It is easy for them, because it is only words.
I have a great personal regard for Mr. Waterson and I always enjoy listening to him. However, I have to say how sorry I am that he has been used as the front man for a Conservative debate on pensions that is one of the most opportunistic debates in which I have ever participated or to which I have listened. Listening to Conservatives bewailing the plight of pensioners is like listening to Scrooge singing, "Have yourself a merry little Christmas". It does not come credibly from a party that had an appalling record on pensions in the 18 years for which it held office before Labour regained power in 1997. The hon. Gentleman explained to my hon. and learned Friend the Minister how keen the Opposition were to debate pensions, despite the fact that they have postponed the debate twice. The hon. Gentleman did not point out that today is one of the Tory party's days for choosing the subject, but throughout the debate on this issue, which the Conservatives claim is of such importance to their party, 93 per cent. of the Conservative Members of the House of Commons have been absent. It is their day, and it for them to produce speakers and people to listen to those speakers.
As I said, the Conservative voice on pensions is very difficult to accept as credible. For example, we had an intervention from Mr. Redwood, who has now very sensibly made himself scarce. The right hon. Gentleman inveighed against the cost of fuel, yet it was he who, as a member of the Conservative Government, voted for the Norman Lamont Budget that introduced the annual built-in fuel tax escalator. As I said during Question Time the other day, there is no point in the Conservatives' staging debates and producing commitments when we look at their record. As Aneurin Bevan said, "Why look into the crystal when you can read the book?" The book of the Conservative party's record on pensions is one of the most abysmal of those on all the subjects with which it has been involved in the House of Commons.
Someone who has been in this House as long as the right hon. Gentleman and who is as highly regarded as he is on both sides of the House should surely not seek to make his whole speech on such a serious subject into an attack on the Conservative party, as if Conservative Members have no interest in the subject of pensioner poverty. As Mr. Field has said, in 1997 the Conservative party left one of the strongest and best pension systems in Europe. It has been destroyed by the Government of whom he is a Member.
The hon. Gentleman is a very charming Member and I take his intervention seriously. He refers to my service in this House. When I was first elected, during my first Parliament, we used to have general subject debates on Fridays. I made a political speech and the predecessor of the hon. Member for Eastbourne, Sir Charles Taylor, came up to me at the end of the debate and said, "You are a new Member and therefore I think I should explain to you that we keep politics out of debates on Fridays." The fact is that the House of Commons is all about politics. Not one of us would be sitting here on either side of the House without politics. When we are elected, we deal with subjects of profound interest and concern to many millions of people in this country, but the very idea that one can debate a subject such as pensions, or the national health service or law and order, without having a political basis for what one is talking about is very odd.
The hon. Member for Cardiff, Central provided us with a huge number of statistics, which peppered her speech in the intervals between her making commitments that she will never be called on to carry out. The intervention made by Mr. Stuart makes me wonder how he got here. I think that he fought an election campaign as a Conservative candidate and that he talked politics during his campaign. I have the highest possible regard for him as an individual, but I say to him that it is about politics. Without politics, we would not have elections and we would not be able to carry things out. That is my response to him.
As always, what my hon. Friend says is accurate.
The hon. Member for Cardiff, Central and others referred to the earnings link. The earnings link was broken by a Conservative Government in 1980. If they had not done that as a deliberate act of policy, which was announced by their Chancellor of the Exchequer at the time, there would be no debate about restoring the earnings link, or when to do so, because it would never have been broken. Breaking the link forms part of the Conservatives' record. Our Government have legislated to restore the earnings link. I wish that they could restore it sooner, but at least they have legislated.
As always, I am listening closely to what the right hon. Gentleman is saying. If it was so outrageous of the wicked Tories to scrap the earnings link in 1980, why have the Labour Government done nothing about it over 11 years, and why might they do nothing about it until 2015—and perhaps not even then?
I am glad that the hon. Gentleman accurately expects a Labour Government to be in office in 2015, as they will be, with me as a Back Bencher to support them. He will remember that when we were elected in 1997, we made a commitment to abide by spending and taxation levels as an act of fiscal responsibility. Of course I would like the link to be restored sooner—I will campaign for that—but let us be clear that it is no good for him to be moaning and wailing about our not putting right as quickly as some people would like something that the Conservatives put wrong deliberately.
When the Government introduced winter fuel payments in November 1997, the Conservative party derided the payments. It said that they were a gimmick and implied that it would get rid of them. It was only when it turned out that winter fuel payments were popular and helpful for pensioners that the Conservative party backtracked. When Conservative Members talk about the value of winter fuel payments and about poverty for pensioners, they must take account of the fact that they are complaining that something initiated by a Labour Government should be improved still further. That is quite true, but let us not forget that without a Labour Government, there would not have been winter fuel payments. I can tell the hon. Gentleman that pensioners know that.
The hon. Gentleman complained about the take-up and availability of the Warm Front scheme. Constituents write to me, as no doubt they write to him, about their wish to be involved in the scheme, but who created the scheme? The Labour Government did so in 2000. The scheme never existed under a Conservative Government. For Conservative Members to say that there is not enough take-up of the scheme is for them to admit that the scheme is valuable, which makes one wonder why the Conservative party never introduced it. When constituents ask me to do so, I visit them in their homes to discuss issues if they are not well enough or mobile enough to come and see me at my constituency surgery. When the Conservatives were in government, in winter constituents would ask me to visit in the early afternoon, because as soon as it got dark they would go to bed, as they could not afford to heat their houses. They lived in misery.
The Liberal Democrat party seems to believe that the issue is simply about reeling out a succession of statistics. The issue of pensioner poverty is of course to do with money, but in the end it is a human problem. As hon. Members have said, pensioners are living longer and longer because of the creation of the welfare state and because of the way in which health services assist pensioners. That involves the possibility of pensioners living alone and having to spend time alone. If their relatives do not live near them, they have the problem of loneliness, and the problem of participation in the general life of the community. That is a very important point. There is absolutely no doubt that money is very important for pensioners, but they also need the possibility of company. They need drop-in centres and the availability of all kinds of other facilities to make them feel that they are not on their own and are part of a community.
I do not for a moment say that the Government have solved the problem of poverty among pensioners. Of course they have not, and I very much doubt whether any Government will totally solve it, because there are more and more pensioners the whole time. The hon. Member for Cardiff, Central mentioned the number of people who were helped as a result of the creation of the old-age pension by Lloyd George. There are now 11 million people of pensionable age—a huge proportion of the population. Their need for the public services created by the state grows and grows.
From time to time, I discuss with the chief executive of the Central Manchester and Manchester Children's University Hospital NHS Trust the issues that he has to deal with, and one of them is the fact that because pensioners are living longer and longer—that is a good thing, of course—they contract illnesses that they would not otherwise have lived to contract. Of course they require the services of the NHS. They require hospital space.
One of the problems that we did solve—my right hon. Friend Frank Dobson solved it when we came to office in 1997—was bed blocking, and the fact that pensioners could not be discharged from hospital because there were no carers to look after them. At the time, there were no spaces in care homes, which the Conservatives had privatised. We solved that problem, but the fact is that pensioners will draw disproportionately on the services of the NHS because it is in the nature of ageing that they will contract all kinds of ailments that they would previously never have lived to contract.
What have we done on the issue? In his impressive account of the Government's record, my hon. and learned Friend the Minister for Pensions Reform mentioned that 3 million old-age pensioner households have been lifted out of poverty since 1997, that the basic state pension has risen above inflation every year since 2000, and that 3.3 million senior citizens receive pension credit. This very April we introduced free local bus travel for every pensioner as a right throughout the United Kingdom. The ability to travel and see family members is extremely important to counteract pensioner loneliness. We did that.
On the point about pension credit, does the right hon. Gentleman encounter the same problem as I do in my surgeries, where pensioners come in and complain about the endless bureaucracy involved in claiming it successfully? Is he aware that the pension credit application form is 17 pages long, with 18 pages of explanatory notes? Does he agree that simplifying the design of both the pension credit and the form would dramatically improve take-up and therefore reduce pensioner poverty significantly?
The hon. Gentleman is probably right, and I agree that complicated forms are awkward not only for pensioners, but for all members of society who have to fill them in. I acknowledge that, and I hope that my hon. and learned Friend the Minister is working, as he indicated he was, to improve the situation. The hon. Gentleman makes a valid point, but the credit exists only because the Labour Government created it.
I accept that there are problems, which is why there is not 100 per cent. take-up, but the Government deserve congratulation for having created the pension credit, just as we created the winter fuel payment; 11.7 million pensioners in 8.6 million households are benefiting from winter fuel payments. One of the merits of that, which goes back to the intervention of John Penrose, is that pensioners do not have to fill in a single form in order to claim the benefit. It comes through the post automatically. That is very good indeed. Without the Labour Government, there would never have been a winter fuel payment.
The hon. Member for Eastbourne spoke about Warm Front. There are grants of up to £4,000 to insulate homes. With reference to the television licence, I wish—I campaigned on this in the past—the Government felt able financially to provide free television licences to all pensioners. As everybody will acknowledge, the cost is substantial, but 3.3 million pensioner households are benefiting from the free TV licences for those aged 75 and over. The Government have introduced free passports for 4.5 million senior citizens aged 75 and over. They have restored free eye tests to 6.6 million pensioners. All those are achievements by the Labour Government.
I regard as one of the Government's most dazzling achievements the fact that there are now free flu inoculations for all 11 million pensioners every year as winter approaches. I am just slightly over the age at which one qualifies for the flu inoculation. What I find interesting is that the health centre at which I am registered sends me a letter asking me to apply for a date and a time when I can go for my flu inoculation. When that is fixed, I go there and I am given the inoculation without a wait at the precise time that has been arranged. I regard that as a dazzling act of efficiency that the Government have been able to achieve. Anybody who has used the national health service—I certainly have, and I am sure that every other hon. Member has—must be impressed by the dedication of its staff. In just over a month, on
We will never be able to do enough for pensioners. Individually, as families and through pressure groups, pensioners are right to press Members of Parliament and the Government to do more for them the whole time. I will always join in on that, because our pensioners have gone through two wars and have worked hard for this country. They deserve dignity and comfort in retirement. Yes—let us go on pushing and pressing, regularly and frequently, for improvements in the situation of pensioners. But I will take no lectures from the Conservative party, whose record on the issue is appalling. The record of this Government, however, is one of which I am proud.
We all have to cope with a rising cost of living and a record burden of tax from a Government who have clearly run out of money. However, we should regard the fact that that burden falls disproportionately on pensioners—some of the most vulnerable people in our society—as a disgrace. The real cost of living is increasing steadily, and that is all the more apparent for pensioners living on low or fixed incomes. Recent research highlights the fact that inflation for the elderly is more than a third higher than the official consumer prices index rate, at 3.4 per cent. As we have heard today, the elderly spend a higher proportion of their income on the bare necessities and less on consumer goods.
However, the numbers themselves do not tell the whole story of pensioners in my semi-rural constituency; they are struggling to run a car, and struggling with rising energy bills and the rising cost of a pint of milk and a loaf of bread. I want to focus on just two themes: fuel poverty and the Government's addiction to the means-testing of pensioners.
Rising energy costs are inconvenient to almost everybody, but they are potentially deadly to pensioners. Earlier this year, I wrote to the chief executive of EDF Energy, which supplies many of my constituents in Braintree and Witham, to ask what steps the company was taking to lighten the load of fuel poverty, which is falling on vulnerable people, particularly pensioners. The response that I received drew my attention to EDF's very welcome social tariff, which offers a 15 per cent. discount on energy bills for those in receipt of income support or pension credit or who are recognised as living in fuel poverty because they spend more than 10 per cent. of their annual income on energy. Nevertheless, a percentage discount of that kind becomes less and less relevant as the underlying cost continues to spiral upwards. The scheme will need to be kept under review, particularly as some energy suppliers have raised their tariffs by more than 15 per cent. already this year and average fuel bills have risen by 60 per cent. in the past four years.
I have two further observations, applicable to both the private sector and the Government in their respective responses to pensioner poverty, the first of which is short-termism. EDF, for instance, confirmed that its scheme is guaranteed to continue until March of next year, but not beyond. Similarly, the Government have shown time and again that they also favour short-term solutions to pensioner poverty; this year's Budget offered another one-off payment for pensioners, who would rather have a sustainable income. I have previously addressed this issue at some length with the Prime Minister. When the Treasury Committee considered the 2006 Budget, I reminded the right hon. Gentleman of Help the Aged's view of the failure to repeat a £200 council tax rebate for pensioners:
"The Government issued a pre-election bribe last year but they have not renewed it for 2006. This exposes a shameful level of political expediency".
"What has changed is we said in the last Budget that this was for the year and we made no commitment for it beyond that."
Unfortunately, this culture of Government living from year to year, devoid of long-term planning, does little to help the vulnerable pensioners who are living from hand to mouth day by day.
Does my hon. Friend agree that one of the causes of today's short-termism is almost certainly the Government's tight financial circumstances? We have already seen, with the 10p tax U-turn and with Northern Rock, the pressure that has been created on the Government's three financial tests. They had no headroom to make such short-term measures become sustainable longer-term measures. The reason for their short-term thinking is the financial pressures that they have landed themselves in.
My hon. Friend makes an excellent point. This is happening across the board throughout all public services. The pre-Budget report and the Budget showed that the Government are having to make cut after cut, and the people paying the price are the vulnerable—the poorest in our society, particularly pensioners.
We have seen all too recently what happens to a Government fearing annihilation in local elections and by-elections—they feel free to make costly electoral bribes with taxpayers' money. Unfortunately, we have also seen the doubling of council tax over the past decade, met with rebates that then vanish after the electoral dust has settled. Now there is an additional one-off winter fuel payment of £100 for 2008-09. There has also been an increase in personal allowances partially to compensate those who lost out from the doubling of the 10p rate, which, again, will vanish when the year is up. The common theme in all the Government's disingenuous ingenuity is the short time horizon for additional support offered to the elderly and the vulnerable. This is not a helpful approach for those who are on low and fixed incomes and whose savings have been systematically eroded by the Government's ever-increasing dependence on means-testing.
My second observation concerns the challenge of increasing uptake. A total of 55,000 people are currently on EDF Energy's reduced social tariff, although the chief executive was unable to tell me how many of them fell within my constituency. I am glad that the private sector is taking action, and I hope that more will be done to promote uptake amongst pensioners and other vulnerable people. Yet the Government's response to pensioner fuel poverty has been an expensive awareness campaign through Citizens Advice that is unlikely to reach the most vulnerable pensioners who do not take the initiative to seek such advice. On the DWP's own figures, between 1.1 million and 1.7 million pensioners are not claiming the help that they are entitled to, and the Department even admits that the numbers responding to its campaigns to increase uptake are steadily decreasing over time.
More worrying still is the proposal for even more invasive data sharing between the Government and the energy companies—a point eloquently made earlier in the week by my hon. Friend Alan Duncan. If a major energy supplier such as EDF does not hold data that can tell me how many people in my constituency—or in Braintree district, if that is easier for it—already make use of its own scheme, I have little confidence in entrusting it with the personal data of millions of vulnerable pensioners.
The elephant in the room concerning uptake remains the Government's utter failure to address their reliance on the principle of means-testing pensioners. The first question that I ever asked the former Prime Minister, in response to the concerns of the Braintree Pensioners Action Group, addressed that very point and it is something that I have since followed up with his successor. The current Prime Minister has told me:
"Our aim is to link tax and benefits for pensioners in a way that there is a seamless transition through the benefit and tax system."
But outside his own parallel universe, the interaction of the tax and benefit systems has so many burst seams that the stuffing is falling out completely. The Government are still trying to compensate for the heavier tax burden and higher costs of living facing pensioners by relying on one-off bribes and means-tested benefits that pensioners find complicated and inaccessible. As many hon. Members do, I routinely see pensioners who qualify for means-tested benefits but do not understand their entitlement, even if they happen to receive it, because they are forced to plough through page after page of abstruse computer-generated calculations. I believe that my hon. Friend John Penrose made that point.
The Prime Minister has also told me that the complexity does not matter so much because:
"What we have reduced is the amount of means-testing that is done for pensioners."
Bah, humbug! But there are still 3.74 million people over the age of 60 in receipt of means-tested benefits and many more who are entitled to claim but do not do so. Help the Aged identifies a staggering sum of up to £4.5 billion that lies unclaimed each year. Furthermore, half of those pensioners entitled to council tax benefit do not claim it. Once again, there is a disconnect between the Prime Minister's rhetoric on means-testing and the reality of stagnating uptake, a declining savings culture and an ongoing failure to reach those pensioners who are most in need of additional support.
As the Government move to the introduction of personal accounts, the reliance on means-tested benefits will pose new problems for a new generation of savers looking towards their retirement. The Government must face up to the need to grasp the means-testing nettle so that people feel confident about saving for the future. The message must be that taking personal responsibility along with a personal account is the right thing for pensioners, and we will not leave them worse off. The Opposition motion is right to call on the Government to deliver on one promise from 1997, but they must also deliver on another: the end of means-testing for the elderly.
I had not intended to speak today. I intended just to come into the Chamber to hear what the Conservatives were going to say about pensioner poverty. I thought that they would be embarrassed and shamefaced when we looked back at the appalling record of the previous Conservative Government on pensioners and pensioner poverty. In contrast, the present Government's record is very good. How well we look after the most vulnerable members of society is the mark of a civilised society. This Government have a good record of looking after those vulnerable members, including the poorest pensioners.
The pension credit has been very successful, and it has helped several thousand pensioners in my constituency. It can make a difference of up to £30 or £40 a week, which is a substantial amount for someone on a low income. I accept some of the comments about the forms being complex and the take-up rate. We need to improve that; much more needs to be done. I listened to people from the Pension Service go through telephone calls with pensioners, and I have to say that what they did was very good. They took a lot of time, and some of those people are dedicated; they take pride and pleasure in helping pensioners claim the money to which they are rightly entitled.
We come to the winter fuel allowance—another success for this Government. It is interesting that it appears that the Conservatives intend to scrap it.
I am very pleased to hear that. Perhaps we can go through a few of the other measures. Will the Conservatives keep free transport for the elderly? My constituency is in a scenic area—we have Morcambe bay and the Lake district quite close at hand. It is great that pensioners can have days out—they have so much more freedom to get out of the house now.
To revert to the winter fuel allowance, when Mr. Waterson, opening for the Opposition, was asked by me whether a Tory Government would keep the winter fuel allowance, he said that there were no commitments to be made. What has happened between his reply two hours ago and the intervention that we have just heard from the other Tory Front-Bench spokesman?
I think it is a case of flip-flopping around. It will be interesting when the Conservatives have to start stating what their policies actually are. That is when we may see a change in fortunes and in the opinion polls. It is easy to be critical of what goes wrong with a Government, but at some point they will have to say what they will do to put it right. The British people are not stupid, and nor are pensioners—they will remember the Conservatives' record.
As well as free transport for pensioners, this Government have introduced free television licences for the over-75s—another very welcome measure. We have already heard about the Warm Front scheme, under which people can claim up to £4,000. That helps to ensure that pensioners' homes have proper central heating and people can keep warm.
We have touched only briefly today on the national health service, which is used mainly by pensioners. I have seen tremendous strides forward in the NHS. I remember, when the Conservative Government were in power, an old man—a Labour party member—who had to wait several years for a cataract operation. That man was practically blind; his poverty of life was appalling. Now, such operations take place within a matter of months or weeks. There has been a huge improvement. I have seen knee replacement operations going ahead in our local hospital, again within a matter of weeks. Before, people were not having those operations—they were dying before they could have them. In winter, old people lay on trolleys—
People were dying on hospital trolleys. As I have said, the British people are not stupid. When they come to choose a Government, they will remember those things.
Another welcome measure introduced by this Government is the financial assistance scheme to support people who were cruelly robbed of their pension—quite right, too. Now, we have said that we will restore the link with earnings. The Conservatives conveniently forget that it was they who abolished it. It is incredible. There is an old northern saying, "You would stand clogging." They have absolutely no shame.
I take the hon. Lady's point about the importance of the link. Why does she think it has not been reintroduced in the 11 years of the Labour Government?
The Government have said that they will restore that link and we await an announcement. The Conservatives have not given a clear commitment on when they would restore the link with earnings. Perhaps we might have an announcement on that. Are they going to restore the link with earnings? Will that be part of their manifesto and their pledges to the British people? [ Interruption. ] Was that a no? No answer. Okay.
There are things that the Government need to do something about. Council tax has been mentioned a few times today. The Government seriously need to address that. I would go so far as to say that it should be scrapped. A new, fairer tax should be implemented because the council tax is unfair.
My right hon. Friend Sir Gerald Kaufman talked about drop-in centres for the elderly. It is important that elderly people are not left lonely in their own homes and can get out and socialise. In the Rainbow centre in my constituency, people do a fantastic job. They are often elderly people, who look after those who are more vulnerable, and ensure that there are meals on wheels services and that people can come to the centre and participate in a variety of activities. Much good is therefore happening in the community.
Of course, much more needs to be done to help pensioners—we should never get complacent. Those people remember the war, took part in it and fought for their country. They should be able to live out their lives with dignity and in comfort. We owe them a debt and we must ensure that we keep moving in the right direction and do more and more for the older people of this country.
I want to pick up on some of the comments that my hon. Friend Mr. Waterson made in his opening speech. It is worth beginning by agreeing that the Government have done an impressive job of working on long-term pensioner poverty. They have taken some important steps, supported on a cross-party basis and by many people outside this place, to try to alleviate the systematic problems in the existing pensions system. We should acknowledge and celebrate that as an important piece of institutional workmanship, which, I hope, will stand the test of time and provide a solid foundation for reducing pensioner poverty in the long term. It is important to have cross-party consensus on that, and it is worth therefore celebrating the fact that there are reforms to the state pension in the works, including a vital measure on personal accounts, which is currently being considered in Parliament.
Restoring the earnings link from 2012 or 2015 is tremendously welcome, although we can argue about the timing. Reforms to the arrangements for carers' and women's pensions have also been mentioned. All those matters are vital and will make a material difference. However, the current problem is to do not with those long-term arrangements, which are impressive, but with a point that the committee of the Weston-super-Mare Senior Citizens Forum made to me. I encourage the Under-Secretary to visit it if he needs a refresher course because it is a feisty and well educated group, whose members will be delighted to discuss some of the problems with him at length.
Those pensioners say that it is all very well trying to put things in place for tomorrow's pensioners, but ask what the Government are doing—and why they are not doing more—for today's pensioners. They feel that the progress on long-term pensioner poverty alleviation is not matched to anything like the same extent by that on current pensioner poverty. That is a crucial point.
The earnings link will not be restored until 2012 at the earliest. As my hon. Friend Mr. Newmark said, because average earnings will continue rising higher than the state pension in the next few years, the state pension will continue to decline as a percentage of average earnings relative to people in work. That makes it more affordable for the Government, if they delay reintroducing the link until 2012 or 2015, but it also means continual increases in the number of pensioners on means-tested benefits between now and the date when the link is reintroduced. Clearly, we will start from an even worse position than we are in today.
The problems of fuel poverty have already been mentioned. The Government's moves, while welcome, will not be enough to make a significant difference to sufficient pensioners, especially as the cost of fuel skyrockets. Therefore, there is a wider issue of inflation for pensioners increasing much faster than the average figure for the economy as a whole.
That is partly to do with council tax, but it is also worth while pointing out that, as several hon. Members have mentioned, the take-up of means-tested benefits is appallingly low. That is to do with the design of those benefits, as much as the complexity of the forms. I have already mentioned the pension credit form, at 17 pages, but it is worth while mentioning the housing benefit and council tax benefit form, too. That form is 29 pages long and the explanatory notes are six pages long. Although it is true that plenty of people are available to help pensioners to fill in those forms, that does not help with the fact that pensioners find them intrusive and demeaning. It must surely be better to reduce the low take-up rates by redesigning those benefits in a way that does not mean just simplifying the forms, but redesigning the complexity out of the system. That is the only way in which the Government will make progress on improving take-up rates.
The Government have, I fear, faced a significant problem in improving take-up rates and have already admitted defeat. They have been trying to persuade pensioners to parade their poverty by filling in all the forms, but have failed to improve take-up rates dramatically, as a result of those difficulties. A much more fundamental change needs to be introduced.
Why has the Government's progress on current pensioner poverty not been as impressive as the longer-term arrangements that they have put in place? My hon. Friend the Member for Braintree put his finger on it when he said, "It's all to do with money." The Government's finances are tighter than they have ever been and their three fiscal tests are under severe pressure. In fact, if we include the figures for Northern Rock, which the Government tend to forget, they have broken one of their fiscal rules. The Government faced problems over the 10p tax fiasco, which meant a one-off fix for this year, which will create additional fiscal pressures next year. As my hon. Friend said, the result is a series of short-term measures that do not allow pensioners to plan for the future or to be certain about their financial arrangements.
As the shadow Chancellor has said, the fundamental problem is that, fiscally, the Government failed to mend the roof when the sun was shining. The Under-Secretary will not be able to say this in public, but I am sure that he knows that there should be an opportunity to improve current pensioner poverty; indeed, there would be such an opportunity if there were more money in the Government's coffers, but there is not. Improving pensioner poverty would surely be at the top of this or any Conservative Government's priority list, but that opportunity will be lost, because of the financial constraints that the Government are currently under. I know that the Under-Secretary knows that that is a tremendous missed opportunity, which I am sure he would prefer not to have to face.
There are, however, two things, which I hope the Under-Secretary will point to, that will help without costing too much money. One of them, which should be fiscally neutral, is to improve the take-up of the key pension benefits that I have mentioned. I am assuming—I hope that he will reassure the House about this in his winding-up speech—that there is a contingency in the Government's budgets for an improvement in those key take-up ratios. On the assumption that there is, and that the Government therefore have the money ready, redesigning those benefits and forms, and improving the take-up rate will make a tremendous difference, particularly to those pensioners in the severest poverty, 60 per cent. of whom are not claiming the benefits to which they are entitled, according to the Government's figures. If the Government have the money in their budget, that fix, although not simple, would be tremendously effective and would not put the Government's finances under additional pressure.
The second thing that the Government could do—it would not cost a penny—is to ensure that the scandal of age-related discrimination is finished once and for all. I was particularly pleased to hear questions about that earlier today, in Prime Minister's questions. Perhaps I was being a little over-optimistic, but I hope that I heard from both the Prime Minister and the Minister for Pensions Reform, in his opening remarks in this debate, that there is a commitment to include measures to abolish age-related discrimination in the upcoming legislation that the Government are preparing. I hope that the Under-Secretary will reassure us on that point.
Those two measures alone would not put the Government's finances under any greater pressure, but would make a material difference, promptly and practically, to the problem of pensioner poverty today, not just in the long term.
Thank you for calling me to speak towards the tail end of the debate, Madam Deputy Speaker.
I listened closely to the speech of Sir Gerald Kaufman, who made a number of telling points. The first was that the old will always be with us. Of course they will. It is incumbent on politicians—yes, we are politicians with differing views—to ensure that, more often than not, we get it right when looking after those who in the main have given a huge amount to society throughout their working lives.
We can have political differences over how that is done, but there is not a single politician in the House—on the Government, Conservative or Liberal Democrat Benches—whether in government or in opposition, who does not have at the core of their beliefs a desire to improve the outlook for pensioners. Therefore, I am not going to be partisan in this brief contribution.
Without doubt, pensioners face serious problems right now. In the main, that has to do with problems afflicting the global economy. Fuel prices are going up. A large amount of pensioners' income is spent on fuel, so that increase is hitting them in the pocket right now. Fuel prices are going up, so the cost of food production is going up. That means that food prices are going up, which is also hitting pensioners in the pocket right now. This is not something that will happen in a year's time; it is ongoing and it is causing financial hardship. We in the House need to come up with a range of ideas to alleviate the immediate pressure on pensioners.
There is also the issue with the council tax. One could be a little more political about how the council tax has risen so far in excess of inflation, but I do not want to be political. We need to consider how the council tax impacts on pensioners.
Geraldine Smith and the right hon. Member for Manchester, Gorton also referred to the fact that poverty goes beyond income. It is about a range of other, connected issues. As politicians, we need to examine them in the round.
Many elderly people are carers. In my constituency and in many others, elderly people are looking after loved ones who suffer from Alzheimer's. That puts a huge strain on them emotionally and physically. We need to ensure that that strain is recognised and, wherever possible, alleviated.
One problem at local authority level is the ring-fencing of funds. Funds delivered to local authorities have to be spent in specific project areas. I would like far more local democracy to be introduced to local government, so that local government would live or die according to how it spent its money. For example, if the elderly population in Hertfordshire, the county in which I have a seat, were growing and more money needed to be spent on the elderly, and local politicians took the view that that is what needed to happen, the money could be found within existing budgets—I am not asking for more—and the argument could be made to redirect it towards alleviating the issues created around caring for people with Alzheimer's.
There also needs to be far better co-operation between the NHS and local authorities on providing integrated support services. The NHS is often quick to push people off its books and out of its beds, back on to the local authority. Again, costing pressures are created, which need to be addressed urgently.
More generally, pensioner poverty can be linked to access to health care. Pensioners tend to have less access to cars. When a partner, husband or wife is taken into hospital, the distances that pensioners have to travel to see that person might be extremely large and expensive to cover, and pensioners may have to rely on either taxis, which, as we know, can cost a lot of money, or public transport, which may run infrequently. If they are lucky enough to have a car, often when they get to the hospital, they have to pay parking charges.
We need to consider how we deliver health care to our elderly, but also how the people who care for them when they are in hospital—for example, their children, husbands or partners—can visit them in a cost-effective and reasonable way.
The hon. Gentleman has omitted to mention one way of conveying elderly people to hospital to visit wives and other loved ones: community transport. In my area, where the general hospitals are in remote parts of Derby, Leicester and Burton, there are plenty of buses run by community transport schemes, at least part of whose purpose is to take elderly people to hospital for appointments or to visit friends or family. Perhaps Governments could do more to underpin such provision.
That is an important point. I think that it is incumbent on primary care trusts and regional health authorities to consider how hospitals as well as local government can play their part in the funding of such schemes. Our local authority, Broxbourne, provides a subsidised bus service to help people to travel to hospitals to visit friends and relatives. I should like such services to be provided in a more joined-up way, rather than just being provided by local authorities with a bit of spare cash. If the Government could give a lead, that would be a step in the right direction.
We have heard a great deal about access to benefits. I know that the Government are keen to ensure that pensioners receive the benefits to which they are entitled, and the Conservatives are as well, but the truth is that that is not happening. I do not think any of us can afford to rest on our laurels until the rate of benefit take-up by pensioners is nearly 100 per cent. Those benefits can make a real difference.
If we are to deal with many of the cost issues faced by pensioners, we must either increase their incomes or reduce their costs. There are a number of ways in which we could do either. First, we should consider the cost of energy production, in which the Government have a part to play. Oil still forms a fundamental part of the energy burned by our power stations. We must find ways of reducing the cost of energy, which would have an immediate impact on pensioners, and we must encourage energy providers to subsidise the services that they deliver to pensioners. Such subsidies need not continue indefinitely, but at a time when energy prices are high and fuel bills are rising by 20 or 30 per cent. a year, the situation requires urgent attention.
Many pensioners who could be described as middle-income earners have scrimped and saved throughout their lives to build a future for themselves. Their earnings may have been similar to those of people living opposite, but instead of buying new cars and taking holidays, they bought their homes and made provision for their old age. Too often when such people go into residential care, there is a price to pay in the form of confiscation of their assets. I do not have an immediate answer to the problem, but we need to address that element of unfairness in the system.
Pensioners are slow to anger. They are wise people who have lived long lives and have seen it all before, and they like to take a long-term view of big issues. They do not jump up and down like younger people such as me, getting frightfully agitated. However, pensioners are now becoming worried and angry. On
It is a pleasure to follow my hon. Friend Mr. Walker. We have come to expect a passionate speech from him, and we heard another one this evening.
I am pleased to see that the Minister has returned to the Chamber, because I want to address some of the points that he made in his speech. I shall also try to persuade him to deal with the question that I asked him in an intervention earlier. If he does not manage to do so on this occasion, perhaps he will write to me.
In his opening remarks, the Minister said what a wonderful situation the country is in at the moment. He said that there were no marches or demonstrations and that everything out there is rosy for our pensioners and other constituents. I am not certain what world he lives in, but that certainly is not the case in my constituency, and I draw his attention to some recent demonstrations. Pensioners have joined me to demonstrate against the school closures in my constituency that the Government are, sadly, pushing through. The Government will not listen to the local pressure groups that have asked them not to close those schools now, while we are short of numbers, because they are imposing 18,000 homes on us, whether we want them or not, and children will be coming through.
The Minister could have joined me on the picket line at my local fire station, which has recently been closed because of financial problems. It is not the first time that I have been on a picket line at a fire station, as I used to be a member of the Fire Brigades Union.
Thank you, Madam Deputy Speaker. I was addressing the comments that the Minister made in his opening remarks. If David Taylor had been in the Chamber at that time, he would have known that and would not be wasting the Chamber's time now.
If the Minister thinks that no demonstrations are taking place and that pensioners are not concerned, he should join the hundreds of thousands of people around the country who are demonstrating against hospital closures, not least the 30-odd thousand who have signed a petition in my constituency. He mentioned that there is no bed blocking, but the reason why there is not much bed blocking in my constituency is that the wards are closing. Many care homes are also closing, and that is causing even more problems for hospitals in other areas that are trying to bring patients back to my constituency, because there is nowhere for them to go.
The Minister said that things are better today than they were 11 years ago. At that time, I was in a union that is no longer affiliated to the Labour party, and we made contributions to the Labour party—I must admit that I had my donations removed—in the hope that it would address the issues that it had talked about so much when it was in opposition for so long, but that has not happened. The figures that we have heard today are frightening—not least those given by Jenny Willott—and show the many problems of so many pensioners who are still in poverty.
Let me draw the Minister's attention to one of the biggest demonstrations by pensioners in this country. The hon. Member for Cardiff, Central has joined me on many demonstrations, at which, to draw attention to the plight of the 140,000 pensioners whose pensions were stolen from them, many middle-aged men who had never demonstrated in their life took off most of their clothes just to get some publicity and to get the Government to listen to their plight.
The Minister proudly said that he has addressed that issue and that the Government have come forward with a package for those pensioners, who will get 90 per cent. of what they would have got, but I find that slightly difficult. I know the Minister well and I know that he has tried hard, but that has taken five years of promises, meetings, more meetings and demonstrations by people who had done the honourable thing. I have made this speech many times before in the House, and I know that the Minister agrees that they are honourable people who did the right thing. They worked hard and did not spend their money on holidays in lavish places, but put it into a pension scheme that Governments had said was safe.
This Government were taken to the parliamentary ombudsman on this matter, who found that they were in breach and that there had been maladministration. That is a fact that even the Minister cannot deny. He might disagree with the conclusions that were reached, but that is what the independent ombudsman found. The Government challenged the finding and said that they would not pay the compensation that the pensioners deserved and went to court, where they lost again. They went to the European Court, but they lost again, although they kept saying that they would not. They challenged the ruling in the courts.
For the Minister to stand here and say what a wonderful job the Government have done in compensating those pensioners five years later sticks in my throat slightly, because I know that although he has done his bit, his predecessors have been misleading, frankly, in many ways, regarding the promises that were made. I do not know why the Government did not listen to the parliamentary ombudsman at the time. That is exactly what previous Governments had done; they had adhered to the parliamentary ombudsman's report, come up with a compensation package and paid the compensation.
One of the great problems—I know that the Minister knows this to be a fact—is that, because this has taken five years, a lot of these pensioners will now get a lump sum, which will put them into a completely different tax bracket from the one that would have applied if they had been given their pension, to which they had a right, five years ago. It cannot be right for the Government to bring forward a compensation package that will force pensioners to pay more tax than they would have done if they had had their pension by right. Earlier on, the Minister said that this was a matter for the pensioners to take up with the taxman, but it is not; it is a matter for the Government to sort out. It is not the pensioners' fault that they did not get their pensions. It was owing to this Government's maladministration—that is the parliamentary ombudsman's word, not mine—that they failed to get their pensions.
Two groups of people are really suffering, at both ends of the spectrum, in relation to income tax. There are those who will receive a lump sum and will have to pay 40 per cent. of it, which they would not have had to pay if they had had their compensation earlier. Another group—a smaller group, I admit—comprises those who are the most needy and who would have paid only 10p in the pound before the Government abolished the 10p tax rate. Surely it cannot be right for any Government—let alone this Government, who have promised to compensate the people who have lost out—to do that. If the 10p rate had still been in place, and if those people had been given the pension that they deserved, they would not have to pay the 20p in the pound that they will now be asked to pay. I have not seen any compensation package that will protect those people.
I thank my hon. Friend for giving way. He and I share the same group of pensioners who have been affected by the Dexion pension collapse. He has put forward a cogent argument in relation to the package that has now been put in place, but that package will not compensate for the stress and worry that people went through, and the life-altering changes that they had to make during that time, when they did not know how much money they would be able to spend or what debts they might incur. On top of all that life-altering stress and change, it seems doubly unfair to tax them at a higher rate. The Government really should show a bit more compassion over this.
I thank my hon. Friend for that intervention and pay tribute to the work that she has done on behalf of her constituents on this issue.
As the Minister knows, some of those pensioners did not live to see the end of the process, and there are widows out there who are suffering as well. They will now fall into the higher tax bracket. Some of them have had to go to work because they had no income from the pension that they had paid into. They have already paid tax on the income that they earned, and now they will be asked to pay tax on top of that, which will take them into the 40 per cent. tax bracket.
However, the particular people for whom everyone in the House should feel sorry, and for whom the Government must do something, are those who would have paid only 10p in the pound before, and who are now going to have to pay 20p. They are the most vulnerable pensioners—in my constituency, they worked for Dexion—who earned the lowest amount, but they are now going to be hammered. That is not compensation; that is vindictiveness.
We have had an important debate tonight, which was comprehensively and persuasively introduced by my hon. Friend Mr. Waterson. The debate on pensioner poverty was initiated by the Conservative party because it is such an important issue. Let me begin by welcoming Jenny Willott to her new responsibilities. Among other things, she said that only 57 per cent. of people were taking up council tax benefit, and that the take-up rates for council tax benefit and housing benefit were actually lower than under the previous Conservative Government. She was wrong, however, to say that my party would not restore the earnings link; we will be doing that.
Sir Gerald Kaufman paid kind compliments to my hon. Friend the Member for Eastbourne—I gather that they shared an English teacher at some time in the past. The right hon. Gentleman also said that the issue of bed blocking had been solved, but listening to the experiences of hon. Members on both sides of the House, it seems that that is not the case.
My hon. Friend Mr. Newmark spoke movingly about the position of pensioners in his semi-rural constituency, as he described it. He made the very valid point that inflation for the elderly is higher than it is for the rest of the population and reminded the House of the Government's failure to repeat the £200 council tax reduction in 2006. As he told us, Help the Aged described that as a cynical election bribe.
Geraldine Smith talked about pensioners dying under the previous Conservative Government, but I did not detect any reference to or sorrow about the fact that there were 22,300 unnecessary winter deaths of older people last year. That needs to go on the record.
My hon. Friend John Penrose made his customarily reasonable and measured speech, for which he is well respected on all sides of the House. He talked of the need for proper and fundamental reform of our pensions system. I was delighted to hear what he said about the need to get rid of age discrimination. Future generations will look back with incredulity at the way in which we treat people above pensionable age who want to work. The sooner we get rid of that form of discrimination, the better.
My hon. Friend Mr. Walker, a diligent attendee in the Chamber, called rightly for more freedom for local authorities to spend their money as they see fit in relation to their older residents. He also referred to the confiscation of assets of people going in for long-term care. We had an excellent policy on that at the last general election, which no doubt persuaded many pensioners in his constituency to vote for my hon. Friend.
My hon. Friend Mike Penning mentioned, quite rightly, his Dexion pensioners. I pay tribute to the tenacity that my hon. Friend has shown over years on behalf of those pensioners, some of whom are in my constituency. He reminded the Minister of the protest marches going on up and down the country at the moment against various aspects of Government policy. Marches are taking place in Hemel Hempstead and elsewhere. The Minister said he was not aware of such marches but he has been made aware of them now.
I was struck by the interventions by my right hon. Friend Mr. Gummer, who pointed out that rural pensioners—those living in market towns and villages up and down the country—are paying higher council tax and often receiving worse services. He also made the important point—one that I made in a previous intervention on the Prime Minister—that those council taxes are higher because local authorities are having to put more money into the pension schemes for their staff because of the Government's £5 billion a year tax raid on occupational pension funds. We do not hear enough about that.
I was pleased to hear mention of heating oil from Mr. Heath. I heard a recent story about shepherds in Scotland whose bill for filling their oil tank is more than their monthly wage; they have to have their oil paid for by their employers, who they then pay back on a monthly basis.
The Minister's approach seemed to be to go back and knock what happened under the last Conservative Government—a sign of a Government who are backward-looking rather than focused on preventing future pensioner poverty. Instead of attacking what took place 11 years ago, they should be more focused on ensuring that the nearly £5 billion of unclaimed benefits today actually gets to the pensioners who desperately need those benefits, 500,000 of whom would be lifted out of poverty if those benefits were paid out, according to the Institute for Fiscal Studies.
The Conservative party has supported the Turner pension reform proposals as a sound basis for a future pensions settlement and we are pleased that at last the Government are taking seriously the concerns we have raised about those people who would be better advised not to enrol in the new personal accounts scheme because of their loss of means-tested benefits. But these vital pension reforms to state pensions and personal accounts do not come in until 2010 and 2012 respectively. That is 13 to 15 years after the Government entered office, pledging that all pensioners should share fairly in the increasing prosperity of the nation. That means that a large proportion of the working-age population will be poorer than they need to be in retirement, as the Government will have taken 15 years to put a decent pension settlement in place when they would have had the support of the Conservative party to do that on day one. Rather than hearing self-satisfied complacency from the Government about what they have done, it would be good to have a general recognition across the House of the scale of the problem.
Figures produced by EUROSTAT on
The Minister shakes his head, but he should look at the note on the EUROSTAT figures. This Government have a tendency not to like any figures that they have not produced; they do not like the UN figures, the OECD figures or the EUROSTAT figures.
I do not have long left, and I am going to respond to the hon. Members who have spoken in the debate.
The figures also show that the proportion of pensioners living in poverty in the UK increased between 1997 and 2006, while the proportion of over-65s living in poverty in Greece, Portugal, France, Austria and Luxembourg fell. So, I hope that we will hear some sober reflection from the Minister on what more can be done, within the constraints of pretty battered public finances, to help today's pensioners, who are struggling with massively high gas, electricity and oil bills, as well as much higher food prices, increased council tax and the loss of the 10p tax band.
One of my pensioner constituents wrote to me last month, and the Ministers might like to listen to what he said:
"As a life long supporter of the Labour party I must say that I am perplexed that a Labour Government should penalise pensioners with a modest income. Revenue & Customs have been of little help in answering my questions...The Government's proposal to compensate those who have lost out is, to my mind, too late as it does not reflect a change in policy but is simply a political response to last week's defeat at the polls. I wish you well in your legitimate attack on the Government and, like many other citizens, await the next General Election when we can vent our displeasure."
It is good for Ministers to hear what ordinary pensioners who used to support the Labour party are saying.
I raised with the previous Prime Minister the fact that some of my constituents, and others up and down the country, were paying one third or more of their entire income in council tax. Many pensioners across the country run down their savings every year in order to stay in the home they love and to pay their council tax, which invariably rises at a far higher rate than their pension. What have the Government done with the Lyons review on the future of council tax? Again, they have dithered and kicked it into the long grass. That simply will not do; our elderly constituents deserve better, as the hon. Member for Morecambe and Lunesdale rightly mentioned. That applies not least to English pensioners, who are suffering tax and council tax increases, while the Scots have their council tax frozen this year. What happened to fairness across the United Kingdom?
We have heard criticisms of a lack of Conservative policy, but my hon. Friends were elected to this House in 2005 on a manifesto commitment to halve the council tax of everyone over the age of 65, up to a maximum of £500 a year, for the life of this Parliament. That compares with the Government's lower, £200 for one year only, offer. We were also elected on a pledge to restore the earnings link, when the Labour party was telling the country that that could not be done. So we are not going to take any lectures tonight on Conservative party failings, not least because the Government have nicked at least eight Conservative policies. I know that Labour Members are keen to know what the Conservative policy will be in more areas, but as they have already stolen so many of our policies, we will keep a few in the locker until just before the general election, so that the Government do not take those as well.
The raid on private pensions has taken place, whereby £100 billion has been taken out, and the savings ratio is only a third of what it was in the second quarter of 1997. In many societies, respect for the elderly is a given, but in our country the cult of youth often seems to dominate. Taking the right decisions now to look after current and future pensioners—the men and women who have given a lifetime of service to our country—is one of the most important responsibilities that we face in this House.
We have had an interesting debate this afternoon with contributions from Jenny Willott—I welcome her to her new post—my right hon. Friend Sir Gerald Kaufman, my hon. Friend Geraldine Smith and from the hon. Members for Braintree (Mr. Newmark), for Weston-super-Mare (John Penrose), for Broxbourne (Mr. Walker), for Hemel Hempstead (Mike Penning) and for South-West Bedfordshire (Andrew Selous). The debate has been based on the Conservative motion and I shall conclude it by focusing on that, and as I do so, I shall respond to specific points made by hon. Members.
The motion begins with a comment about 2 million pensioners still living in poverty. As we have established this afternoon, we take no lessons on poverty from the Tory party. During the 1980s, pensioner poverty fell only when there was a recession. That was the Tory method of cutting pensioner poverty—reduce median income, watch the wages of working-age people drop and unemployment rise and, hey presto, pensioner poverty falls. In fact, when this Government came to power in 1997, 3.2 million pensioners were in absolute poverty.
Unlike the Tories, we believe in giving the poorest in our society meaningful help, while keeping the economy strong. Because of the effective measures that we have taken and substantial extra investment, pensioner poverty has fallen while the economy has grown. And it has fallen not by a bit, but by more than 2 million in absolute terms. Support such as pension credit, winter fuel payments and help with council tax mean that today pensioner households are on average £29 a week better off than under the 1997 system and the poorest third are £40 a week better off. That means that today, pensioners are less likely to be in poverty than any group in society. That could never have been said under the previous Conservative Government.
The second claim in the motion is that
"the poorest pensioners are seeing their incomes decline in real terms".
That claim is simply wrong. The Conservatives' source seems to be a misreading of a parliamentary answer given by my hon. and learned Friend the Minister for Pensions Reform in July 2007. The figures in the answer were in real terms and included the effect of inflation. To get the figure used in the motion, the Conservatives have double-counted for inflation. Perhaps that is because they used to run inflation at double the level that it is under this Government.
Opposition Members appear to find it difficult to get even a basic understanding of the figures. Such figures are only accurate as trends and the trend is very firmly up for all groups of pensioners over the past decade. The trends show that the incomes of the poorest pensioner households have risen by around 30 per cent. since 1997. Average pensioner incomes have risen by 29 per cent. since 1997 in real terms, compared to earnings growth of 16 per cent.
The motion then makes a claim based on the EUROSTAT statistics about pensioners in Latvia, Cyprus and Spain, to which the hon. Member for South-West Bedfordshire returned in his speech. The hon. Member for Cardiff, Central also focused on them. The claim rests on a complete misreading of the data. The EUROSTAT survey measures the median income of each country and that of pensioners. The UK is relatively well-off so our poverty line is higher, and so our "poorest pensioners" are better off than the "poorest pensioners" in other countries. The motion's claim is therefore spurious.
The UK has the fifth highest median pensioner income in the EU—higher than in France, Denmark and Sweden. So a "poor" pensioner in the UK has an income a 10th higher than that of a poor pensioner in Germany and a fifth higher than one in France. A poor pensioner in the UK has an income nearly twice that of a poor Spanish pensioner, three times that of a poor Latvian pensioner and more than 10 times that of a Cypriot pensioner. Furthermore, the EUROSTAT figures also ignore housing costs, personal pensions, and free health care—
No, I do not have time.
So if hon. Members want to use EUROSTAT, the most reliable data are those that show that a decade ago UK pensioners had a median income which was one seventh below that of the EU15. Today, it is nearly one 10th above that median. That is the reality of the situation.
The charge of rising costs adding further to poverty was stressed by the hon. Members for Braintree, for Weston-super-Mare and for Broxbourne. In the past 10 years, pensioner incomes have increased by more than inflation and by more than the average growth in earnings. That puts pensioners in a better position when dealing with the recent increases in the cost of living.
Where we can take action to help the poorest with the rising cost of living, we are. On fuel bills, we announced last week that we are taking serious steps to enable energy companies to ensure that the most vulnerable pensioners have cheaper bills. For this winter, we have offered the energy companies the facility to send a mailshot or voucher to any of our clients on pension credit. That is coupled with the increase in the winter fuel payment announced in the Budget and the commitment of the energy suppliers to provide an extra £225 million in support over the next three years. That will provide significant extra support to the most vulnerable, enabling them to pay their fuel bills.
Of course, pensioners are concerned about council tax increases. That is why council tax benefit take-up is important. We are encouraged by the fact that since we have increased activity on take-up it has started to rise, going up by 2 per cent. in 2005-06. We need to go further and so we are introducing automaticity into the claiming of pensioner benefits. We estimate that that will lift 50,000 more pensioners out of poverty by 2010.
One of the most incredible aspects of the motion is what we have heard from the Conservatives about restoring the link between average earnings and the basic state pension. As my right hon. Friend the Member for Manchester, Gorton reminded us, the Tories broke that link and when they did so they said that it was the right thing to do. Clearly, they have no credibility whatsoever on the issue. We are committed to restoring that link, and of that there is no doubt, because we have enshrined it in law. Our aim is to re-link in 2012, subject to affordability and the fiscal position, so the latest that it could happen would be the end of the next Parliament. Restoring the link is part of a package of reforms. Unlike the Tories, we are not breaking the link or talking about restoring it for one Parliament only. We are making a commitment to do it for real and in a lasting and sustainable way. It will ensure that the poorest in our society benefit from significant increases in their income.
We then come to the claim about abandoning the target for pension credit take-up. That is old news, as we have established before. Last year, we had a stretching target to get 235,000 new claimants on to pension credit. All the indications are that we have exceeded that target, so for this year we have set an even more stretching target of 250,000. That shows our commitment to the poorest in society and to ensuring that we continue to make every effort to lift them out of poverty.
The motion moves on to make claims about the decline in private pension savings. That decline has been going on in the UK since the 1960s. In 1967, there were 8.1 million on such schemes. By the 1970s, there were 6 million, by the late 1980s there were 5.8 million and today there are 4.5 million. The reforms that we have introduced will ensure the best offer in the future for savings for pensioners.
The motion has been on the starting grid on a couple of occasions, only to be withdrawn for something else to be debated. The motion rather resembles one of the Tory party's old bangers; I suspect they got it ready to go a couple of times, took a look at it and thought, "Well, perhaps not—it doesn't really look very roadworthy." That is what we have found out today. Even with Mr. Waterson—an advanced motorist—at the wheel, it could not be kept on the road. Bit by bit, it has fallen apart—
rose in his place and claimed to move, That the Question be now put.
Question, That the Question be now put, put and agreed to.
Question put accordingly, That the original words stand part of the Question:——
The House proceeded to a Division.
Question accordingly negatived.
Question, That the proposed words be there added, put forthwith, pursuant to
The House divided: Ayes 279, Noes 209.
Question accordingly agreed to.
Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.
That this House welcomes the policies of this Government to tackle pensioner poverty, which have lifted around two million pensioners out of absolute poverty and over one million out of relative poverty, and have led to spending of around £12 billion extra on pensioners compared with 1997; recognises that pension credit allows pensioners to live with dignity and rewards those who have saved for their own retirement; acknowledges the introduction of and increases to the winter fuel payment and further measures to ensure pensioners can keep warm; notes the provision of free off-peak bus travel granting freedom to pensioners and ensuring that they are not isolated in their own community; welcomes the long-term framework for pensions through the Pensions Act 2007, including relinking the basic state pension to average earnings and ensuring equality for women and carers with men by 2025; and further welcomes the private pension reforms in the Pensions Bill which will enable individuals to take personal responsibility for their own retirement.