I am pleased to have secured this debate on pensioner poverty, although it is depressing that such a debate should be necessary. It is surely a scandal that, in one of the world's most developed and prosperous nations, one in five elderly people still live below the breadline. That is a total of more than 2 million individuals.
I wish to discuss some of the causes of pensioner poverty and say what more can be done to help one of the most vulnerable and deserving groups. Today, 1.3 million pensioners rely on the state pension as their sole source of income, but at £97 a week it clearly is not enough to achieve a standard of living that most people would find acceptable. Our state pension is among the lowest in the developed world. Among the 27 OECD countries, only Japan, Ireland and Mexico have a lower state pension measured as a proportion of the national average wage.
Had the link with earnings not been broken in the 1980s, the basic pension would now be £40 a week higher. It is only fair that pensioners should share equally in the growing prosperity of the society that they helped to build. The Government recognise that pensions must be re-linked to earnings but they are not committed to doing so until 2016. Even then, we will be left with a state pension system that Ros Altmann, the pensions expert and former adviser to Tony Blair, described as one of the lowest and most complicated in the developed world.
Women are hugely over-represented among the poorest pensioners. Not only are they far less likely to have savings, but thousands do not receive the full basic state pension. Even after the lowering of the threshold for national insurance contributions later this year, a quarter of women will still not qualify for a full basic state pension, mostly because of gaps in their NI contributions as a result of bringing up their children. To make matters worse, with life expectancy for women exceeding men by more than five years, increasing numbers of women are left living alone. I hope that the Minister agrees that we should be working towards a fairer system-one in which individuals who have lived in this country for their entire lives should be guaranteed at least the full basic state pension.
I draw the Minister's attention to the outrageous sums that are left unclaimed by some of the UK's most vulnerable pensioners. One of the main reasons for the unacceptable level of pensioner poverty is the under-claiming of pension credit and housing and council tax benefits; as much as £5 billion is unclaimed every year. That is £13.9 million every day.
I am grateful to my hon. Friend for giving way so early in her speech. Is it not the case that much of the problem is caused by a sense of pride? Many pensioners do not want to make a claim for means-tested benefits. They see it as some sort of personal failure. Pensioners should automatically receive a citizen's pension that takes account of all the benefits to which they should be entitled, including pension credit, without having to go cap in hand to the state.
My hon. Friend makes a valid point about one reason why many pensioners do not apply for or claim pension credit and therefore do not receive it. That is why I would like to see the basic state pension ultimately raised to such a level that the current system was not needed. For as long as the pension credit system exists, the Government should at least ensure that pensioners receive all the money to which they are entitled. However, Government figures show that that is not happening; the number of eligible pensioners not receiving their full benefits is rising.
I am following the hon. Lady's remarks closely. May I ask her to clarify precisely her party's policy on the citizen's pension? What level would it be fixed at, and how much would it cost over and above what is spent at the moment?
It was Liberal Democrat policy at previous elections to have a full citizen's pension at the level of the minimum income guarantee. That is still an aspiration, and we will work towards it, but everybody knows that in these straitened times that may not be immediately achievable. It is important that we should continue to have that aim, but the Government have not yet accepted the principle that a citizen's pension is the way forward. Frankly, that is something that the Minister ought to be able to do today.
The latest report from the Department for Work and Pensions on the take-up of income related benefits shows that 35 per cent. of people aged over 80 do not claim pension credit despite being eligible. Indeed, the Government's latest report shows that the amount of unclaimed pension credit rose by 3 per cent. between 2006-07 and 2007-08. The fact that such enormous sums are not being claimed each year indicates that the system is too convoluted for many people to understand.
The hon. Lady is right to bring such an important matter to the House before the election. It is something that people will be considering most carefully, and I congratulate her on bringing it to the attention of the House.
Will the hon. Lady put some meat on the bones? One in three pensioners fail to claim pension credit. They lose an average of £1,477 each year. It is often the poorest people who are disadvantaged, which is why the matter is so important.
I thank the hon. Gentleman for that intervention. He is quite right. Of course, by not claiming pension credit, those people become ineligible for other benefits, thus compounding the problem.
Age Concern Scotland describes as complex the system of calculations that a pensioner has to go through in order to work out their pension credit entitlement. The form to claim pension credit is 18 pages long. Once applicants have secured the guaranteed part of the pension credit, they become eligible for full help with housing and council tax-but to get it, they have to complete another form that is 40 pages long and takes three weeks to process. The Government's proposals to pilot the automatic payment of pension credit, set out in the Welfare Reform Act 2009, could begin to address the problem. Those proposals are important, and I hope that the Minister will say when secondary legislation will be introduced to allow the pilots to go ahead.
According to Age Concern and Help the Aged in Scotland, the DWP and Her Majesty's Revenue and Customs already hold the information necessary for such a scheme to be implemented nationally. We should aim to provide those elderly people in most need with simple and accessible methods of claiming. The evidence that I have outlined shows that the Government are failing some of the most vulnerable and disadvantaged pensioners. The Government know that the state pension is too low, and they rely on benefits to provide pensioners with what the Government consider to be a minimum living income. It would be fairer to move away from this flawed system of benefits, and increase the pension to a decent level that would at least meet that minimum level of income.
The hon. Lady puts her case most clearly. Does she agree that it is not just a question of complexity, although that is a real problem, but the fact that the incredibly long and complicated forms that she eloquently described are perceived by many pensioners, including those in my constituency, as being demeaning? They feel that they are unnecessarily and unfairly being obliged to parade their poverty, particularly given that they have paid contributions throughout their working lives. They believe that they should not be put through that. They would far rather go for a restoration of the earnings link at an earlier date. Does the hon. Lady agree that one of the worst outcomes of the current financial crisis is that the Government's projected date of 2013 is drifting backwards in time, because the Government's finances are so tight?
The hon. Gentleman makes his point well. It is similar to that raised by my hon. Friend Lorely Burt. Many elderly people feel demeaned by having to go cap in hand to the Government. Having a universal system would be much better. I agree that the earnings link should be restored as a matter of priority.
My hon. Friend made an important point in saying that if people do not claim some benefits they will not qualify for others. We are experiencing the coldest winter for many years, and many pensioners are cutting their heating. In areas such as my constituency, which are particularly cold, many do not get the cold weather payments because they have not applied for benefits to which they would otherwise automatically be entitled. Is it not time that we gave the benefits to those who need them without making them claim?
My right hon. Friend anticipates me and moves me seamlessly on to the issue of fuel poverty. The plight of the poorest pensioners has been worsened recently by rising fuel prices. Pensioners are more likely to be fuel poor than any other group, and, tragically, are also the most vulnerable to the effects of the cold.
Recent research commissioned by Age Concern and Help the Aged in Scotland showed that in the winter of 2009 a third of people aged over 55 turned down their heating because of fears about their finances. Given that we have just experienced one of the coldest winters for many years, surely such a statistic should give us great cause for concern. Indeed, turning down heating can have dire consequences for the health and well-being of the elderly poor. It is estimated that fuel poverty contributed to the deaths of 36,000 people last year.
Last year, 2.7 million pensioner households-one in three-were living in fuel poverty. This year, with energy prices higher than ever and the prolonged cold weather forcing people to heat their homes for longer, the figures are bound to be worse. Meanwhile the Government's measures to tackle fuel poverty are condemned as "not fit for purpose" by the Institute for Public Policy Research in its report, "The Long Cold Winter: Beating Fuel Poverty". As has been mentioned, eligibility for cold weather payments depends on having applied for pension credit, so many payments go unclaimed. In my constituency of East Dunbartonshire, nearly 1,500 eligible pensioners have missed out on cold weather payments this winter.
Energy companies have, on the whole, not reduced their tariffs in line with falling wholesale energy prices, allowing them to rake in record profits. The cheapest energy tariffs are often only available online, to be paid by direct debit, which many older people are unable or unwilling to access. Many older people do not have a bank account, but use Post Office card accounts. Extending such accounts to allow direct debit payments would not only support our post offices but enable pensioners to reduce their bills. Although such a move would be a welcome first step, surely the cheapest energy should be available to pensioners with the lowest incomes in the form of social tariffs.
The most sustainable and cost-effective way to tackle fuel poverty is to invest in energy efficiency measures and better insulation and heating systems in people's homes, because that will cut fuel bills for years to come. The warm front programme in England and the energy assistance package, as it is now called in Scotland, could be very welcome interventions. However, many poor pensioners are still not reached by such schemes, and there is scope for both to be radically expanded. I am sure that other hon. Members also feel incredibly frustrated by such schemes. In Scotland, to be eligible for replacement central heating, a person's existing central heating must be broken beyond repair. At that point-a person will not be eligible if they apply before it is broken beyond repair-a company will agree to send someone out within a couple of weeks to carry out an assessment. Then it will decide whether the person is eligible, and then it can be weeks or months before new central heating is installed. If someone's central heating breaks beyond repair in November, then this scheme is not much good.
Many pensioners on low incomes rely on the interest they earn from savings to keep them out of poverty, but with interest rates currently near zero such people have seen their incomes decrease drastically over the past few years. Shockingly, the Government currently take no account of lower interest rates when calculating how much council tax benefit or pension credit a person receives. Income from savings is assumed to be 0.2 per cent. a week, which currently bears no relation to reality and means that thousands of pensioners are having their incomes overestimated.
It is hard to express the frustration that is felt by savers, so I want to share a few comments from some of my constituents. Mr. C said:
"I have just retired and planned to use the interest from my savings to live on, however with the latest cut in Bank Base Rate, I will be struggling."
Mrs. B. said:
"So many pensioners and others rely on small amounts of interest on saving to make the difference between poverty and a reasonable existence... The Government seems to be helping those groups who have failed in business and many people who have made no effort to live a responsible life, and is ignoring those who have made every effort possible."
That sums up the feelings of many savers in this country.
Furthermore, the compulsory annuitisation of pension funds at the age of 75 is forcing struggling pensioners to accept far lower rates of annuity than they might receive if they could wait for the financial situation to improve. One 74-year-old constituent told me that having saved all his life, he felt that he was now being penalised by having to purchase an annuity at the worst possible time, and that his personal and private savings plan had been "shot to pieces" as a result.
Retirees buying an annuity today are getting pension incomes of almost half that of their counterparts back in 1994. Alternatively secured pensions, the only alternative to annuitisation, are highly taxed and can be withdrawn only at 70 per cent. of an annuity, making them not a financially viable option for the poorest.
The Economic Secretary to the Treasury acknowledged in a letter to me that ASPs are "not suitable for everyone" and advised that people seek independent financial advice before taking one, which is a luxury that many cannot afford. I can see no good reason to continue to require people to annuitise their pension savings by the age of 75.
A culture of inequity in the treatment of our aged, together with discriminatory Government policy, have led to a troubled end to some elderly people's working lives. Research by the Third Age Employment Network before the recession showed that only 31 per cent. of over 50s made redundant succeed in getting a new job within three months. Only 32 per cent. of those manage to keep their former level of pay, and on average they had to take a pay cut of more than a quarter. In the past year, long-term unemployment among men over 50 has doubled. Such an exit from the job market, coupled with the default retirement age, leaves some pensioners who have worked all their lives in a desperate situation. They are being forced to retire earlier than they had planned, which many cannot afford.
Government policy that disadvantages our elderly community in the workplace plays a major role in exacerbating pensioner poverty. I refer here to the default retirement age of 65 for men and 60 for women.
Does the hon. Lady acknowledge that one of the major problems is that employers obsessively employ younger workers and do not recognise the value of older workers, particularly those with previous experience? There is anti-discrimination legislation and she should at least acknowledge that.
I welcome the hon. Gentleman's intervention. Part of the problem with the current legislation is that it does not apply to older workers. I agree that often older workers in the workplace are undervalued. A more flexible approach to retirement could benefit older workers and employers. By retaining older people in work, perhaps on a part-time basis and on a sliding scale towards retirement so that they are not facing a cliff edge, employers will ensure that skills and experience are passed on to younger workers.
In its fifth report, the Work and Pensions Committee was pretty damning of the default retirement age, describing it as "discriminatory and unnecessary" and stated that the Committee looked forward to its being abolished. It is still legal to force a worker aged 65 to retire against his or her will purely on the basis of age. It is similarly legal to refuse employment on the same grounds. It is outrageous that only a third of people retire voluntarily, while the rest face an often depressing end to a life of valuable contributions to this country. The anger felt over such a policy is reflected in the fact that almost nine out of 10 people over 50 think that the default retirement age is unfair.
I ask the Minister to consider changing the draconian and wholly unfair law on older people's right to work. The Equality Bill could be a good vehicle to do that, but given the current discussions, it looks like the Government do not plan to take that step.
Will the hon. Lady at least acknowledge that we brought forward a review of the default retirement age this year? The call for evidence on that has now closed and we are considering the evidence even now. In the interests of fairness, she should at least have acknowledged that. Clearly, there is a great deal of support in general for the idea that we should end the cliff edge of retirement, and we are even, as she speaks, examining the evidence that has come in from both employers and employees on this important matter.
The Minister clearly puts her points on the record, but they are not much consolation to those individuals in the job market who are currently facing discrimination and being told to retire before they wish to do so. We hope that, as a result of the review, people turning 65 will not be discriminated against in such a way. It is worth noting that when the Government were taken to court last October by Age Concern and Help the Aged over the compatibility of this policy with human rights legislation, they were allowed to uphold the law only because of their promises to review the system. In his judgment, Mr. Justice Blake said:
"I cannot presently see how 65 could remain as a default retirement age after the review."
I very much hope that after the review the default retirement age will change.
I know that there are many right hon. and hon. Members here who wish to speak, so I would like to conclude by saying that if we take these issues together-the pitiful state pension rights, the fact that thousands of elderly people are missing out on money that is rightfully theirs, the concerns about heating homes in the winter and the fact that savers are being hit by plummeting interest rates-it is no wonder that many pensioners feel abandoned by Government. So I will finish with the words of one of my constituents, Mrs. M, who wrote to me to say:
"Elderly people do not seem to have a voice."
I hope that this debate today goes at least some way to providing that voice.
It is a great pleasure, Mr. Gale, to serve under your chairmanship.
I would very much like to congratulate Jo Swinson, who has secured a number of important debates on social issues in Westminster Hall and the main Chamber. I would also like to place on record my thanks to Michael Knight of Croydon Retired Peoples Campaign-a group that I will address next week at Ruskin house-and Malcolm Felberg, who chairs the Croydon local involvement network. Both of them have made a significant input regarding our concerns in Croydon about the situation for the elderly, particularly those in pensioner poverty, and the approach that we must take to address those concerns.
We should place on record, however, the very good work that the Government have done in taking more than a million pensioners out of poverty, albeit against a background of significant deterioration in income and equality generally within society since 1997. As the hon. Member for East Dunbartonshire said, the basic state pension of £95 a week is still-horrendously-below the official poverty measure of £165 a week. That particularly affects female pensioners, who tend to live longer than their spouses. They are especially affected if they have operated as single parents for a good deal of their working lives.
I am also interested in the experience that pensioners have when they encounter the NHS. The way in which ill health is treated can often have a very real effect on pensioners' income and wealth status. I am particularly exercised by the effect on people's standard of living when they have a fall on icy or uncleared pavements, and was pleased by the response from Lord Adonis, the Secretary of State for Transport, to the problem. In my local Mayday hospital, the number of fractures went up by a factor of five when pavements remained uncleared. There may well be a very good argument for moneys in the NHS being spent on clearing pavements, as they have been-I know that this is controversial-in Durham, because doing so has a substantial effect.
I had the impression that, when the pavements were bad, people were almost imprisoned in their houses, which meant that they either had to spend more on fuel or sit in the cold. Does the hon. Gentleman agree that that was the case?
The hon. Gentleman makes a very good point, because if people are imprisoned in that way, it has a very significant impact on their mental health. The general issue is one of quality of life for the elderly. Perhaps it is the result of poor public transport-we are probably blessed with better public transport in Croydon than people are in the hon. Gentleman's constituency, although I know that Scotland invests a great deal in public transport-but it is an important concern.
The most significant illness affecting pensioners is dementia, yet the research funding for dementia is less than 2 per cent. of research funding for cancer. Obviously, I am not quarrelling with the amount that is spent on research funding for cancer, but with an ever ageing population and with more and more NHS funds being used to care for dementia sufferers, research funding for dementia is an issue worthy of consideration.
The hon. Member for East Dunbartonshire and her right hon. and hon. Friends rightly emphasised the importance of the experience of the hardest winter for 30 years. It is estimated that the proportion of pensioners who have found themselves in fuel poverty has gone up from what might be described-rather sadly, perhaps-as the normal 25 per cent. to 40 per cent. this year. It is bad enough that many pensioners have to choose between heating and feeding themselves, while also giving consideration to the fact that they might have to use any spending money they have on care services. It is fair to say that in my local authority-and I am sure that this is true elsewhere- increases in care service prices, if pensioners are not otherwise supported by the public sector, are a matter of great concern.
While we are discussing caring and care services, single women, instead of working, are often carers and they do a superb job-and a very worthwhile job for society at large-for those for whom they are caring. However, does the hon. Gentleman accept that, when they eventually become pensioners, they suffer particularly badly, so the Government must find better ways to reward carers and to recognise the contribution that they make to society before they become pensioners?
I am very grateful for my hon. Friend's comments-I know that he has raised that issue in the House. To some extent, the Government are listening on this issue, but it is a very important concern.
I hope that all right hon. and hon. Members here today will recognise the changes to carer credits for national insurance contributions, which are due to be introduced in April. Weekly national insurance credits will be granted to those who care for other individuals for more than 20 hours a week. As for those who care for others for 20 to 34 hours a week, but who are not known to the benefits system, we are very anxious that they should apply for their credits, because doing so will ensure that they can make up their own basic state pension when they retire. We need help to identify those carers, and I hope that all right hon. and hon. Members who are here today will note that and go back and work in their own constituencies to help us to find them.
I am very grateful to the Minister for that intervention, and I think that that is a very good example of joined-up government. That approach, as long as we are in the happy situation of having that capacity and making it known to potential recipients, is a very cost-effective, caring and compassionate way of operating Government activity.
Nevertheless, I sometimes feel a sense of frustration-perhaps on behalf of the Minister-at the way in which British politics has progressed. In many ways, the Pensions Minister is not responsible for many pension issues, because of the arms-length approach that has been adopted. I went to see one of the Minister's predecessors to discuss my concern about how particular private sector pensioners have suffered as a result of the demise of Allders, the company for which they worked. The response that I received then was very much, "Well, these are not responsibilities for the Minister any longer-they are at arm's length and they are with the regulator". Going through that process can be very frustrating.
I wish to declare an interest, as my father recently turned 75, and faced the very difficult situation of having to deal with an annuity, particularly at a time when the financial markets were in serious difficulties. The hon. Member for East Dunbartonshire emphasised the interaction of benefits and the fact that that many pensioners just turn their minds against claiming benefits, because they feel that there is a stigma involved in doing so. I am concerned about constituents who have had to deal with the fact that the interaction of bereavement benefits-obviously that is something that very much affects pensioners-sometimes has an adverse impact on other benefits to which they are entitled.
Several Select Committees have emphasised the good practice demonstrated by Service Canada, which provides a single point for Canadian people to gain advice, and operates in a non-stigmatising way. We can take encouragement from that example. It is extremely difficult to provide such a service, but it is something to which we should aspire.
I mentioned at the outset Croydon's performance in this area. I am very concerned that a lot of provision for the elderly has been cut back. For example, the Foyer, which is in north Croydon, did a lot of work with senior citizens, but funding for that centre has unfortunately been cut. I suppose that that is a prospect that we will face generally, as public expenditure is reduced. Nevertheless, I congratulate Croydon council particularly for providing disabled pensioners with the AskSARA system, which does a great deal of good internet-based work-admittedly, it is only available in that medium, and I will make a point about that in a moment-that tries to offer a good understanding of their problems. The system is easy to use, and helps pensioners to identify the appropriate services and equipment that Croydon council provides for the frail and disabled. Of course, the internet is not available to all pensioners, so take-up is lower than it is in other groups. I was disquieted by the approach of Southern Railway, whose consultation on rail services is now built wholly around the internet. That is unfair to many pensioners, who are thus excluded.
I am mindful that other Members want to speak. I appreciate that the country faces significant financial difficulties in the coming months. However, in considering macro-economic policy, we must remember that pensioners are likely to spend 100 per cent. of their resources-or perhaps more, making it a dissaving. Money pumped into the economy through pension increases is likely to have a stimulating effect. We need seriously to consider increasing the basic state pension, so that it at least approaches the official poverty level, to £150 a week.
I congratulate Jo Swinson on securing this debate. I thank her for the information that she shared and the Minister for her interventions. It shows the value of having intelligent debates in Westminster Hall about issues such as pensioner poverty.
It is worth recording that the state pension came about just over 100 years ago after enormous campaigning and pressure by Radical organisations, trade unions and Churches and was finally forced into being through Lloyd George's Budget. The pension had a mixed history for a long time. Although it was designed to alleviate the most appalling poverty, it never succeeded totally in doing so, as it tended to rise and fall depending on how successful or otherwise the economy was. During the deep recession of the 1930s, the pension did not go anywhere near meeting the needs of the poorest. It has always been a sticking plaster rather than a solution to the issue of pensioner poverty, as I am sure my professor colleague Steve Webb would agree.
The great step forward in pensions came in 1975, with the late Barbara Castle's heroic legislation. In the teeth of an economic problem, massive inflation rates and huge demands on public spending, she managed through force of personality to persuade the Cabinet to pass groundbreaking pensions legislation that recognised pensioner poverty as well as discrimination against women and those not in any of the then big occupational industrial pension schemes. It introduced the state earnings-related pension scheme to accommodate those who were not in any other supplementary scheme and ensured that the state pension rose year on year in line with inflation or earnings, whichever was larger.
The state pension as a proportion of average earnings rose considerably during the next five years while that link was maintained, despite all the economic problems that this country faced during that period. We should pause for a moment to recognise Barbara Castle's great work and the heroism surrounding it. It must have been extremely difficult to get such legislation through the Cabinet at the time.
Does the hon. Gentleman share my dismay that this year's pensions uprating adds 2.5 per cent. to the basic pension but freezes state earnings-related pensions? Will he consider-I will not ask him for a commitment now-joining us in the Division Lobby next Monday when we vote against the decision to freeze the SERPS uprating? We believe that pensioners should not bear the brunt of the cuts.
After due consultation.
I accept the point made by the hon. Member for Northavon about the current uprating. To return to the link with earnings, we must place responsibility where it is due. The 1980 Conservative Government broke that link, which was a monstrous thing to do. They then moved on to the Social Security Act 1986, on whose Standing Committee I had the misfortune to sit. The Act put into law a continual reduction in the value of the state pension, abolished the state earnings-related pension scheme and set up the principle of a market for private pensions in this country, which is rather at variance with the European tradition and is still playing out today in the level of the state pension. Many people suffered grievously from the mis-selling of pensions and corrupt private pension schemes.
We are still in that bind and cannot seem to get the idea that in a welfare state it is the state's responsibility to ensure the elimination of poverty among everyone in retirement. That must be a primary responsibility. We accept the welfare state in terms of universal health care and education provision; we should also ensure that we accept the state's major responsibility to ensure the elimination of all poverty in retirement. However, it would be ridiculous to say that there have not been huge changes over the past 10 years. There was a big debate before the 1997 election, particularly in the Labour party, about whether we should re-link pensions to earnings and make the state pension the basic motor for the provision of income on retirement or go for what has turned out to be pension credits, pension top-ups or whatever nomenclature is put to them. Essentially, that debate was lost by those of us who wanted an immediate restoration of the link between pension and earnings and therefore a much higher basic state pension.
Of course I welcome pension credits in that they put money into the pockets and handbags of people who would not otherwise have it. I regularly attend meetings of the Islington Pensioners Forum, and I always say, "Claim every single thing you can." However, I recognise, as I am sure does everyone in this Chamber, that under a means-tested system involving a complicated application process, no matter how nice, supportive and helpful the people are on the other end of the phone line or in the local office, many people simply will not claim. Either they feel that they should not, or they are put off by the bureaucratic procedure involved. We must recognise that as one big problem.
The other-I will return to it in a moment-is that occupational pension schemes are disappearing quickly as company after company tries to close final salary schemes to new members and move to earned savings schemes, which are not as beneficial. Such schemes, of course, become less sustainable anyway. A pension system that relies heavily on stock market prices gives a pretty grim outlook for an awful lot of people in work at present. Although they would not thank me for saying so, many among the present pensioner generation are better off than those further down the line are likely to be under the current system. We must think seriously and carefully about that.
My hon. Friend will know and, I am sure, accept that that situation was made much worse by the mania for early retirement during the 1980s, when people were bought off, which put pressure on the funds later. It was also made worse by pension holidays. With the benefit of hindsight, allowing and encouraging them were one of the most disreputable acts of any Government. I am sure that he will agree.
One of the most depressing experiences that I have had in the House was serving on the Select Committee on Social Security in the mid-1990s and investigating the Maxwell pension fund. Robert Maxwell appeared to be on a permanent holiday as far as pension contributions were concerned. Like all permanent holidays, it disappeared, taking the funds with it. My hon. Friend is absolutely right that inequity in the running of pension funds is crucial. I realise that things have moved on a lot since then, but there are still reasons for concern.
To quote some statistics on the current scale of pensioner poverty in Britain, the number of people living in severe poverty-on less than 40 per cent. of the median population income-has increased by 600,000. The incomes of the poorest quarter of pensioner households rose by less than 1 per cent. last year, and the real incomes of the poorest single pensioners dropped by 4 per cent. At least 15 per cent. of pensioners, or more than 1.5 million people, live in persistent poverty, having lived on less than 60 per cent. of the median population income for three of the last four years. We have to recognise that there are significant pockets of pensioner poverty and deprivation.
As a proportion of average working pay, the state pension in Greece is the highest in Europe at 95.7 per cent. and that in the UK is among the lowest at 30.8 per cent. Those are headline figures that do not necessarily include other sources of income from state benefits, but one can see the scale of the issue and the effectiveness and efficiency of a non-means-tested, high-value state pension, compared with any other form of benefit. I think everyone now recognises that means-tested benefits tend to end up with low take-up and with a lot of people missing out.
There are two huge areas of even worse poverty. The hon. Member for East Dunbartonshire rightly drew attention to the problem of the general low level of pensioner income among women. As a union organiser in the 1970s and 1980s, most of the members I represented were women working part time in school meal or school cleaning jobs. Unfortunately-I say unfortunately because of the consequences-they were offered the right to pay a lower rate of national insurance contributions. Understandably, offered the choice between paying A or B, where B is lower than A, most people chose to pay B without much thought for the long-term consequence of smaller pensions. That was a main contributory factor to poverty.
Another major contributory factor was the lack of job security for many women workers. Most men at the time tended to be in occupational pension schemes, whereas women did not. That was what the Barbara Castle legislation tried to fix and what the Conservative Government of the 1980s tried to destroy. The median income for women on retirement is only 57 per cent. of that of men. Only 30 per cent. of women who reach state pension age are entitled to a full basic state pension, compared with 85 per cent. of men. One in five single women pensioners risk being in poverty in retirement. Almost 63 per cent. of divorced and separated older women have no private pension income.
My hon. Friend's analysis of the gender difference in access to pensions is spot on. I hope he acknowledges that in April there will be an historic change in access to the basic state pension. We are reducing the required number of national insurance contribution years from 39 for women and 44 for men to 30 for everybody. At a stroke, that will mean that 75 per cent. of women qualify by their own right. By the end of the decade, that will eliminate the gap in the access to the basic state pension between men and women.
I welcome that and the fact that the Government recognise the huge problem, in particular the problem of broken careers among women, which usually occur because they have children and stay at home to bring them up. We must recognise that there is a big improvement on the way and I welcome that.
The other area of enormous pensioner poverty is among ethnic minority people. The number of ethnic minority pensioners is small, but it will rise rapidly over the next 10 or 20 years. We are all aware of that from our constituency work. The proportion of ethnic minority elderly people who are in great poverty is much higher than for any other group. They make up only 3 per cent. of people above state pension age, but they are often in considerable poverty because of discrimination in the workplace, for example in promotions and the inability to get a permanent job, particularly, in the past, one that had a pension attached to it. That is another pocket of high levels of poverty that we must recognise and do something about.
I will be brief, Mr. Gale, because I know that other hon. Members wish to speak. I just want to mention other areas of support for pensioner households that tend, unfortunately, to be patchy and sporadic. The travel permit and travel pass systems are welcome if pensioners get free travel on all public transport. London paved the way with the Greater London council bus pass, which was introduced in the early 1970s. That morphed into the freedom pass, which is now universally available across London, and I welcome that. The Government have done a great deal to extend the concept of supported or free bus and rail travel across the country. We must recognise that these are important things and that in this time of recession and pressure on Government spending, they should not even be considered for a cut, but should be fully supported because they provide freedom of movement.
I will be brief because other hon. Members wish to speak. It is important for politicians to defend the freedom pass because many local London councils that are upset about changes in funding and about money being taken away from London and put elsewhere talk rather darkly of compromising the provision of the freedom pass.
I hope that they will not compromise the provision of the freedom pass. There is no threat to the freedom pass in London as long as the local authorities ensure it is provided. Under the Conservative Government of the 1980s, we saved the pass in London only through a consortium of local authorities and last minute changes in the legislation. The freedom pass is important.
We must also look at caring and nursing costs. The provision of care arrangements is often inadequate. The use of agency staff by local authorities for the care of frail elderly people in the home means that there is often a lack of continuity in care. We must look at the quality of care that is provided because it is patchy. There is nothing better than a publicly employed person with a secure job whose responsibility is to look after an elderly person in their home. The same person should go everyday so that a good relationship is built up. That is good support for the community. If that work is done by contractors and agencies with different people going in everyday, it is distressing and disturbing for the elderly people and we end up with a less harmonious and less happy society.
I will conclude with the suggestions put forward by the National Pensioners Convention to the Work and Pensions Committee on tackling pensioner poverty in Britain. It outlined many issues concerning the level of the state pension. We should recognise the great work of the National Pensioners Convention, which is an effective campaigning body, in not only mobilising large numbers of elderly people across the country, but bringing to the attention of younger and middle-aged people in work that it is their responsibility to campaign for decent pension provision and to ensure the elimination of poverty in retirement.
I will quote two points made by the National Pensioners Convention:
"The National Insurance Fund remains the most secure way of funding decent pensions in retirement, but its status is being undermined by the government's policy of using the excessive balance held in the Fund for public expenditure other than that of pensions and benefits for which it is intended".
There is a serious debate to be had about that. The next point states:
"The basic state pension provides the most obvious and effective method of tackling pensioner poverty, both now and in the future. It should be set above the officially recognised poverty level and paid universally to all pensioners. This could be easily afforded by introducing a number of changes to the national insurance and taxation systems".
Essentially, the point is that it is the responsibility of us all, through national insurance and taxation systems, to ensure that pensioners receive enough money to live on decently and safely in retirement. It is simply not right that people go through the disfigurements of poverty, borrowing from children or just trying to scrape by. As I said, the welfare state should apply to pensioner income as much as it applies to health and education.
I was going to call the Front Benchers at 10.30, but I am afraid we are running out of time because of the length of the speeches. I urge brevity on hon. Members.
I will try to be reasonably brief and not raise points made already. I congratulate Jo Swinson on obtaining the debate and on being brief in her opening speech. As we are the only two non-Labour MPs in the Greater Glasgow area, I think we have a certain affinity.
The complexity of the benefits system and people not claiming has already been covered, so I shall not spend time on that. However, I wish to underline that it is a huge problem. I recognise-as all hon. Members who have spoken have-that if the system is too complex and uptake is significantly short of where it should be, something is wrong and we need to consider the need to have a much more universal provision, whether that is a citizen's pension or whatever.
Another area on which I would like to touch is the gap between the rich and poor in our society generally. Clearly that issue does not affect only pensioners, but it certainly includes them. When people reach pension age, how much they have, how much they owe and what their wealth is are key factors. A recent report said that the top 10 per cent. in our society have at least £853,000 of wealth and the bottom 10 per cent. have a maximum of £8,800. So the top 10 per cent. have at least 96 times as much as the bottom 10 per cent. I accept that we cannot all be exactly the same, but it seems that 96 times as much is rather too large a figure. Another comparison on the income side is that since 2000, the ratio of FTSE top 100 bosses' income compared with that of an employee has risen from 47:1 to 128:1. That has happened under the Government's regime and shows that there is something seriously wrong. Income during working life clearly has a major impact on one's income as a pensioner.
That leads me to my next point about company pension schemes, which has already been mentioned, particularly by Mr. Pelling. Almost every day, we hear about the closure of final salary schemes and, as he suggested, such a situation is surely storing up problems for the future. It might be cheaper for people not to save in the short term-that is obviously the case for employers-but, in the longer term, we will be left with more of a problem.
We read complaints in the press and from the private sector that the public sector is far too generous in its pension provision, but the reality is that many ordinary public sector workers get a very modest pension when they retire. It is very much the exception rather than the rule that there are huge pensions either in the public or private sector.
Does the hon. Gentleman agree that in relation to the public sector pension, the average payment is currently around £5,000? It is extremely peculiar to describe that as a gold-plated pension, yet that is what we hear from those who wish to attack public sector provision. Does he agree that the public sector provision needs to be defended?
I completely agree with the Minister on that point. In a constituency such as mine, where people are probably earning a bit less than average, they are possibly getting even less than that. The matter is very important to those people and such a pension is certainly not gold-plated. We should surely bring the private sector up to the public sector, rather than the other way around. I wonder whether employers are getting off too lightly and if there should be much more compulsion regarding employers contributing to employees' pension schemes. The reality is that that is often why the private sector can undercut the public sector when it comes to contracts in the local authority or elsewhere. The private sector has lower pension costs and is able to win contracts, but, in the long term, such a situation is causing a problem. I accept that it is unlikely we can return all employees to defined benefit schemes and that putting all the risk on employers is perhaps unfair, but to switch to the other extreme of putting all the risk on employees is also unfair. It should be possible to come to some kind of compromise where risk is shared.
There is also clearly an issue regarding spending priorities. When we face tight financial times, we have to choose priorities. We have to choose between nuclear submarines or going around the world fighting wars as if we were still an empire, and putting money into helping pensioners and other vulnerable groups. Surely the reason why Sweden, the Netherlands and such countries have a level of pensioner poverty that is a third of that of the UK is that they are not spending so much on defence and other priorities. Even if the UK has those priorities, can Scotland not be allowed to have a bit more freedom to set its own priorities? I believe that most people in Scotland would want to put more money into pensions and less into nuclear weapons. If we could have fiscal autonomy or accept at least some of Calman's proposals, we would be moving in the right direction.
I wanted to intervene on the hon. Member for East Dunbartonshire to point out that she had not talked a lot about council tax, but I did not get the chance. I believe that her party-mine certainly does-favours a move away from council tax towards something such as a local income tax, which would be based on ability to pay and, at a stroke, would help pensioners and people on a limited income. Such people would not have to apply for anything because that local tax would be based on their income. I congratulate the hon. Lady on the debate and urge the Government to take the issue more seriously. Surely, this is one subject where the Government could be seriously to the left of the Conservatives.
It is a pleasure to serve under your chairmanship, Mr. Gale. I am grateful to my hon. Friend Jo Swinson for raising the issue and am particularly grateful to John Mason for the speed at which he made his remarks.
These are critical issues. We have a higher proportion of pensioners in Wales than anywhere in the UK- 21 per cent. compared with 19 per cent. in England and Scotland. In my constituency of Ceredigion that figure rises to 24 per cent. We have heard the statistics: 22.1 million people in the UK are living in poverty and two out of three pensioners rely on benefits. I want to make three quick points. First, the key trend is that older people tend to be worse affected by inflation than the general population because they tend to spend a higher proportion of their income on things that have had particularly large price increases, such as fuel, food and council tax. The National Pensioners Convention has estimated that 40 per cent. of pensioners' income is spent on those things, which puts pensioners in an acutely vulnerable position.
That is backed up by a 2008 report by the Institute for Fiscal Studies, which talks about food and fuel inflation being at 6.7 per cent. However, for pensioner couples that figure is 7.7 per cent. and for single pensioners it is 9 per cent. Inflation might not be the most pressing problem at the moment-it stands at 3.5 per cent.-but it looks set to increase, so we need to monitor that position very carefully and look out for those food and fuel spikes.
It would be churlish not to welcome the 2.5 per cent. increase in the pension-the £2.40 and the £3.85-but when we put that in the context of the 50p a month charge on phone lines to finance broadband, we realise how minimal that increase is, not least for constituencies such a mine where there is minimal broadband and a large number of my constituents cannot access it.
I have two specific points for the Minister. The last time we had a debate on the subject in this Chamber was in December 2008. One of the clearest points made was that council tax benefit should be renamed the council tax rebate. The Government were receptive to the idea and an amendment was put forward. The amendment was removed on the basis that the Government would bring that issue forward, but the time frame for that is yet to be forthcoming.
The Royal British Legion has particular concerns. The response from the Minister to the legion stated that the Government would be consulting with local authorities and other key stakeholders in due course. We are still unclear about what "due course" means. Renaming council tax benefit would deal with some of the issues about pride and lack of take-up raised by other hon. Members. It is appalling that only up to 61 per cent. of pensioners eligible for council tax benefit claim it. We need to do something to deal with that issue, which was part of the legion's return to rationing campaign. Research for that campaign revealed that 38 per cent. of older veterans were living on an income less than that required for healthy living.
I reiterate the concerns raised about fuel poverty. Particularly in a rural constituency such as Ceredigion, many people come to me with concerns about the costs of heating their home. They are unable to do so and they are unable to switch between different suppliers because of the monopolistic situation that exists.
Finally, I wish to highlight the work of the voluntary sector in bringing awareness of pension credits and other available benefits. Age Concern Ceredigion has reported a 10 per cent. increase in poverty-related inquiries among the 32,000 over-55s with whom it works. It has helped people access up to £1 million in benefits. It is an independent charity that is combating rural isolation and promoting income maximisation. It has a £100,000 shortfall in its funding for next year-because of the recession, grants are drawing up-so it will have to cut back on some of the invaluable work it does for those people. That work is replicated by citizens advice bureaux, the Royal British Legion and volunteer consultants such as Rif and Ann Winfield in my constituency. They have an important contribution to make in the short term, before we get the full citizens pension that the Liberals Democrats would certainly support.
My final point is this: the spectacle of a retired couple in south Ceredigion who have to reconcile whether it is more provident to put £10 of petrol in the car to do their shopping or to walk cannot be right, and that is why this debate is so important.
I congratulate my hon. Friend Jo Swinson on securing the debate on this important matter. As we have heard, she has a track record of raising such matters, including Equitable Life, and I thought that her contribution was characteristically well researched and comprehensive. She has done the House a service by giving us the chance to debate these vital issues. Various facets of pensioner poverty have been discussed, particularly the position of women, to which I will return.
I also want to thank the Minister. Rather than sitting for an hour twiddling her thumbs before reading out a prepared text, she has intervened on several occasions to make her points, which was entirely welcome. Therefore, I will save her the trouble of reading out her prepared text. In such debates Ministers tell Members all the things the Government have done to improve take-up, for example, or to address all the matters that have been talked about, but the point my hon. Friend the Member for East Dunbartonshire and others have made is that, after all the things the Government have done, such as the take-up campaigns, we still have vast pensioner poverty, rising fuel poverty and very poor take-up. The question is not what the Government have done, but what will they do to address the aspects of poverty that are still very much with us, because pensioner poverty, as Jeremy Corbyn said, is a blight on our society. It should be the role of the state, not necessarily to deliver, but certainly to ensure that pensioner poverty is defeated. The fact that successive Governments have failed so lamentably on that is a shame on us all.
Mr. Pelling and my hon. Friend the Member for East Dunbartonshire referred to the position of women. One facet of the changing pensions landscape that is prejudicial to women has not had the attention it deserves. John Mason mentioned the demise of final salary pension schemes. Although they tended to reinforce the gap between men and women, because men tended to earn more, when we switched to money purchase schemes we found that they were biased against women because women tend to live longer. Under such schemes, a man and a woman could start the same job at adjacent desks, leave their work at the same age and earn precisely the same amount of money, but the man will get the bigger pension. He will not live as long, so the total pot of money would be the same, but it is not much consolation for someone living in poverty to be told, "Don't worry. You can have a long period of poverty, rather than a shorter period on a higher income." Can the Government just watch the shift to defined contribution schemes, which are biased against women, and the introduction of personal accounts, or National Employment Savings Trust pensions, which are part of a whole new system of defined contribution pensions that will also be biased against women, relative to state provision, for example, which is unisex?
The Government cannot stand idly by and watch those things happen. I fully accept that the April 2010 changes are welcome, as the Minister said, but they create a cliff edge that means that women who are born perhaps a day too early will miss out on the whole improvement. I fully accept that there has to be a day when things change, but when the change is so substantial, the onus is on the Government to avoid those cliff edges and phase things in so that those who reached pension age in 2008-09 could have some proportion of the benefit of the changes, which would be a better step.
I hope that the hon. Gentleman will forgive me, but I cannot take an intervention with so little time left.
Members have discussed a default retirement age, and the best that the Government could say on that after 13 years is that a review is being undertaken. That is pathetic. Injustice is injustice. Being discriminated against because of one's age and the idea that one's fitness for a job depends on the date on one's birth certificate is nonsense. Are we really in the 21st century? Do we need a review? Should we not get on with it? I joined Mr. Waterson, with whom I seem repeatedly to be joined at the hip on these occasions, at a pensions dinner last night, and he announced to an expectant world that the Conservatives have decided to scrap default retirement ages. I am delighted that they followed us in a case that we have been making for years. There is great joy in heaven when a sinner repenteth, so I welcome him to the fold. That is a good step, and hopefully, as in so many areas, the Liberal Democrats lead the way, the Conservatives follow and finally the Government will implement the change. Incidentally, I could not help noticing that there were more ex-Conservative Members in the Chamber this morning than current Conservative Members.
The issue is not just one of retirement age-annuities have been mentioned. My hon. Friend the Member for East Dunbartonshire made the point about compulsory annuitisation, which is something we need to end, but it is a bigger issue than that, as I am sure she would agree. When people reach pension age, roughly one third choose to stay with their current provider, and do it without thinking about it, about one third look at the alternatives but stay with their current provider and about one third switch. The evidence is that many people could simply get a bigger pension by shopping around, and the open-market option should be taken up much more highly. It is not a particularly partisan point, but I think that Governments should do much more, whether through behavioural economics or other means, to nudge people away from the latent assumption that one stays with one's current provider.
The open-market option is a clear way to go. We are working with some of the insurance companies to ensure that they release the funds more quickly, because there are issues about how fast the funds can be released so that an open-market option can be purchased practically, but I agree with the hon. Gentleman's point. We are doing things to try to make that easier. Then, of course, we have to persuade people to use it.
I do not doubt that there are small steps in the right direction, but, for example, we are now in a culture in which, when one gets a motor insurance premium, one can shop around and "compare the meerkat", or whatever it is. There is less of a culture of doing that with annuities, and one proposal is that, however many months out from the date on which someone expects to draw an annuity, they ought to be given, in a digestible format, the information that they need to shop around. If they have access to the internet-I take the point made about internet access by the hon. Member for Croydon, Central-or can go to a library, they will then have the five key pieces of information they need, and the process would be far easier than it is at present. That is an easy win for improving pensions, particularly for women, and something on which much more should be done.
My hon. Friend Mark Williams properly raised the issue of council tax benefit, as opposed to council tax rebate, and the Royal British Legion is rightly concerned about that. With the best will in the world, we can have the best take-up campaigns and can rename benefits as rebates, which would help, but ultimately a decent, secure, guaranteed pension must be the goal. I would be the first to accept that the level of pension that all of us would like to see cannot and never could be delivered overnight, but I believe that any political party must have a vision-a direction of travel. One of the problems in pensioner poverty is that we have seen flip-flops and switches in emphasis, so we need a clear goal and must make progress as rapidly is possible. That is why we think that the earnings link needs to be restored, not by the end of the next Parliament, as the Conservatives have said, or by 2012 but maybe 2015, as the Government have said, but immediately. Earnings or prices, whichever is higher, must be the way to go straight away, but that is a small first step on a long journey.
I will repeat the point I made to the hon. Member for Islington, North: at a time when we should be re-linking the pension to earnings, to have only part of the total basic pension price protected and to freeze SERPS, graduated pensions and the state second pension is an extraordinary thing to do when we all recognise-I speak at enough pension conferences to know-that every single problem in the pensions system would be made better by a decent state pension. Getting private pension incentives on top is easier with a decent state pension. Reducing reliance on non take-up and issues of means-testing is made better with a decent state pension. If we can do only one thing in the whole of pensions policy, it must be to have a decent state pension, which would make all the other problems much less severe.
Personal accounts pensions, or NEST pensions, ought to be a good way of tackling gaps in pension provision, but one of my worries about the future is that we will end up encouraging millions of people to take out relatively small pensions, much of which they will then find to have been means-tested away, and that might discredit private pension saving if we do not tackle means-testing and the adequacy of the basic state pension. I cannot do justice to the wide range of issues that my hon. Friend the Member for East Dunbartonshire and other Members have raised, but the basic state pension is a critical issue. Sorting out the basic state pension is first, second and third on the list of priorities, and it needs to be dealt with not in the distant future, but now.
As always, it is a great pleasure to follow Steve Webb. Indeed, it is becoming routine. I join him in congratulating Jo Swinson on securing this debate, which has been interesting if a bit breathless, given the number of issues that have been raised.
I was grateful for the hon. Lady's confirmation that her party has downgraded the citizen's pension, or universal pension, to an aspiration. It joins the list of other policies such as free tuition and free care which have also been downgraded recently. Those downgrades do not yet seem to have found their way into the Liberals' literature in my constituency, but I am sure that it is only a matter of time before they find their way into mine.
Pensioner poverty has been debated any number of times in recent years, sometimes in Opposition time as well. I believe that it is clear to all of us that the problem is getting worse: at least 2.5 million pensioners are officially living in poverty. On the basis of work in our own constituencies, as we have heard from several hon. Members, the problems faced by many of our older constituents are perfectly plain. I am a vice-president of my local Age Concern and see that very much at first hand.
We are asked to believe that the Government's slogan for the next election will be, "A future fair for all". What happened to the past 13 years? That was the future once, if I can misquote somebody. The fact is that all the statistics show that the problem is getting worse. The Government seem to be rightly focused on child poverty to the extent that they have introduced a Bill designed to abolish it, even though it is clear that they will fail to meet their 2020 target on child poverty. Why not a Bill on pensioner poverty? What is the distinction? Of course child poverty is important, but so is pensioner poverty.
The Government often say-I am sure that it is in the Minister's prepared speech-that pensioners are now less likely to fall into poverty than the rest of the population. Of course, that depends on how one looks at the statistics: including or not including housing costs makes a significant difference to the claim. We still face the grim truth that 2.5 million pensioners live in poverty, and 64 per cent. of pensioner households are dependent on state benefits for at least one half of their income.
One aspect among others that Mr. Pelling touched on was fuel poverty, which is particularly important at present because of the recent bad weather. The latest Government figures suggest that 3.5 million households are affected, but Energywatch says that actually 5.4 million households, or some 9 million people, live in fuel poverty. Sadly, Help the Aged has estimated that between 20,000 and 50,000 elderly people die each winter because of their freezing homes.
My party intends to continue the winter fuel allowance. We are committed to protecting that vital source of help for older people, but it is clear that this issue will not go away, whoever is in government. We intend to bring in energy efficiency improvements of £6,500 for every household and to require energy companies to provide information on energy bills that clearly shows the cheapest tariff available. We need complete transparency in the energy market if we are to give pensioners and others the opportunity to get the best possible deal to meet their energy requirements.
There has been quite a discussion about benefits and take-up. John Mason touched on this in his speech. We know that some £5.4 billion a year in benefits goes unclaimed by pensioners-a huge amount which, according to the Institute for Fiscal Studies, could take at least 500,000 pensioners out of poverty at a stroke. The hon. Gentleman was right to touch on the problem of complexity in all of this.
On the earnings link, Jeremy Corbyn took us on an interesting trip down memory lane, but I am sure that he is as frustrated as he was when the Conservatives were in government that, after 13 years, this Government have done absolutely nothing to restore it. I can confirm that my party is committed to restoring the earnings link within the next Parliament, exactly mirroring the Government's current position, which I hope the Minister will confirm.
It means that when money is available within the next Parliament, we will do it.
I thought that the hon. Gentleman was uncharacteristically churlish about the role of private and occupational pensions in delivering a good standard of living for millions of our fellow citizens. Much of that is due to reforms and encouragement by successive Conservative Governments. It is a measure of this Government's failure on pensions and pensioner poverty that those pension arrangements have taken such a hit in the past 13 years. We know that the Government stripped more than £100 billion out of pension funds, and my party is committed to reversing the effects of that in time. It was important that the hon. Member for Northavon touched on the future development of personal accounts, or National Employment Savings Trust pensions-NEST, as we must get used to calling them. We also know, following the pre-Budget report, that the Government are already planning to strip out £2.4 billion from those pension savings through delays in implementation.
The default retirement age, which was touched on by several hon. Members, is important. There are already 1.4 million people working beyond normal retirement age, which shows that there is an appetite for doing so. My party supports scrapping the default retirement age in principle, but we are not oblivious to the practical difficulties that that presents-unlike, possibly, the Liberal Democrats. We will work closely with organisations such as the CBI to find solutions to the complications and problems.
Mark Williams raised a concern of the Royal British Legion. Several hon. Members mentioned the complexity of the council tax benefit system and the resulting low take-up. We know that nearly one half of all pensioners are subject to means-tested benefits under this Government and that, of all the benefits, the one with the lowest take-up by far is council tax benefit. Hence, my right hon. Friend Mr. Cameron, the Leader of the Opposition, gave his support to the campaign of the Royal British Legion, which was pleased that during passage of the Welfare Reform Act 2009 there seemed to be a firm commitment that the Government would take action quickly. However, Ministers now seem to have retreated from that position. They gave undertakings and ensured that a particular amendment was withdrawn on the back of such assurances, but they are now talking about consulting local authorities and other key stakeholders.
We know that only 55 per cent. or so of all pensioners who qualify for the benefit actually get round to making a claim. According to polling carried out by ComRes, two thirds of people believe that the benefit is not claimed because people are ashamed to claim it. Conservatives are committed to working with local authorities to have a two-year freeze on council tax levels, and I am sure that that will be welcomed by many pensioners, but it seems to us-I believe that there is cross-party support for this-that the simple change of name from "benefit" to "rebate" would take away a great deal of the shame felt by pensioners who simply do not claim. An Ipsos MORI survey conducted on behalf of the Royal British Legion found that 56 per cent. of respondents believed that eligible veterans would be more likely to make a claim if it were for a rebate rather than a benefit.
May I take the opportunity provided so kindly by the hon. Member for East Dunbartonshire to press the Minister to tell us exactly when that simple administrative change will happen. A simple change it may be, but it could put a great deal of extra money into the pockets of needy pensioners across our country who face poverty. I look forward to hearing what the Minister has to say.
First, we all need to congratulate Jo Swinson on securing the debate. It has been useful and touched, as many of these debates do, on a range of issues that have a bearing on pensioner well-being and poverty. Some are not directly my Department's area, but that is only right because older people do not live lives according to departmental boundaries. Social care, carers, access to occupational pension schemes, the implications of what happens in the financial markets, and how the financial services sector deals with insurance policies and annuities all have a bearing on the experience of those over retirement age trying to reconcile their savings with their expenses. If I did not realise before I got the job, I know now that, with pension policy, many echoes of the past arrive on the desk of the Pensions Minister. They were germinated and generated in the history books but arrive in the present and give a Minister conundrums, problems and difficulties.
My hon. Friend Jeremy Corbyn was right to give a historical review of some of what has happened because the history of pension policy has an acute effect today. Those of us who wish to see a simplified system, and perhaps long for it because some parts are so complex, can think about the history from which our pension policy descends. He was right to recall the contribution that my political heroine, Barbara Castle, made. He was also right to point out that the link between pensions and earnings was broken by the last Conservative Government, and the effect that that had on the overall value of the basic state pension. It is important to remember the history.
Steve Webb also mentioned some of those issues, particularly women's exclusion from not only occupational pensions, often due to the structure and shape of the labour market, but the basic state pension. Other hon. Members, not least the doughty feminist the hon. Member for East Dunbartonshire, mentioned in passing that there was a gender issue with pensions. I feel strongly about that as well, which is why I am proud that I will be the Minister when the April changes come in to being. They will make a huge difference to women's access to the basic state pension in their own right. The reduction in the number of years of national insurance contributions required to qualify for a full basic state pension will reverse the historic exclusion of women from the basic state pension over time until the pension is almost completely equalised by 2020.
That is right; women tend to be able to deal with their social networks away from work more effectively, perhaps, than men, particularly older men. I have spent many good times in my job, which I am privileged to have, visiting older men's groups, as well as women's groups, where some of that social exclusion can be tackled. I know that such groups greatly add to the quality of men's lives.
There are 900,000 fewer pensioners living in poverty than there were when we came into Government. I am grateful to Mr. Pelling for having the generosity to point that out. Often these debates, rightly, focus on those areas in which we still need to make progress, but it is important that we also acknowledge the progress made by the policies that the Government have pursued since we came to power. That is not being complacent, but significant work by the Government has taken nearly a million pensioners out of poverty. In 1997, the poorest pensioners received income support and had to live on £69 a week. Ministers were not introducing extra support, such as pension credit, but were advising pensioners to knit hats and woolly jumpers to stay warm.
Pension credit makes a big difference to the lives of the 3.3 million people who receive it each week. There are some not claiming the pension credit that they are entitled to, which is why we are continuing our take-up campaigns. I invite all hon. Members who have participated in the debate to continue to do all that they can to assist us.
Off the top of my head, it is several billion, which is why we are spending time on take-up campaigns, focusing particularly on those areas that we think have the lowest take-up. We have developed what is clumsily known as the automaticity pilot, which pilots data matching. That will enable us to pay pension credit, at least for a period, to people who are entitled to it and then invite them to claim once they have realised how effective it is for them.
Evidence shows that peer endorsement, in other words pensioners who have successfully claimed pension credit and endorsed it to their peers, is the most successful way of getting the pension credit claim rate up. We make 13,000 visits a week to the homes of vulnerable pensioners to assist them to claim. There is now a claim process whereby pension credit, housing benefit and council tax benefit can all be claimed with one phone call, which makes the process as simple as possible. We are pressing forward with those different methods of making benefits available and making the process of claiming easy and user-friendly for pensioners.
Mr. Waterson asked about renaming the council tax benefit a rebate. We are anxious to get on with the process as quickly as we can, but I hope that he acknowledges that there are 380 local authorities administering council tax and housing benefit-perhaps we would all rather have seen it nationalised, rather than administered at the current level. Many local authorities have different IT systems; we have been in touch with IT suppliers to see if we can ease the shift from a council tax benefit to a rebate, and are in discussions with software and IT suppliers, as well as local authority administrators, on the practical issues raised by that shift. We remain committed to doing it as quickly as possible. I hope that that reassures him.
On fuel poverty, the hon. Member for East Dunbartonshire commented, mainly I think, on the Scottish system. The English system is slightly different; if people own or rent their home, are 60 or over and claim pension credit, they can be eligible for up to £3,000 help with upgrading their heating, or £6,000 if they use heating oil. I advise her to take up the issue of irretrievable breakdown with the Scottish Executive and the authorities there, rather than bringing the issues here.