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Mr. Rooker: I shall do my best to respond to the debate, which I applaud. As I mentioned at Social Security questions today, a couple of weeks ago the Government arranged for a three-hour debate in Westminster Hall on pensions reform, and one Back Bencher turned up, who happened to be a Labour MP. I notice the dearth of any attempt at a debate by Conservative MPs on this important issue.
I am in no way, in anything that I have to say, criticising the fact that new clause 36 has been tabled for debate, because that is what this place is for; the day we forget that, we might as well all pack it in. Nevertheless, I cannot accept all the arguments, even though, as I happily admit, I have made many of them myself in the past--indeed, more than most. [Laughter.] Well, I have. I suspect that I have attended more meetings of pensioners at factory gates and in pensioner groups, in trade unions and at particular companies, and more meetings of the National Pensioners Convention, than most hon. Members, simply because I have been in this place for 26 years.
I argued the toss up and down the country in 1983, 1987 and 1992, on the Labour manifesto of restoring the link, using the figures that my hon. Friend the Member for Islington, North (Mr. Corbyn) mentioned--£5 and £8. At the end of each election I went back to my constituents--I never really left them--and told them, "I am sorry; I did all the speeches but we lost. We have not even got a crumb off the table."
We lost every single election at which we made those commitments. My hon. Friends should start to think about why we lost all those elections. We made absolutely firm, positive commitments: no one was in any doubt about their clarity, because the manifesto promise even included the figures in pounds--£5 and £8. That was absolutely clear and unequivocal. No one could have doubted what we would do, but we did not get the chance to do it. I am not saying that we lost for that reason. We lost because people did not believe, by and large, that we could deliver the overall package that we were proposing: they thought, "Economically, it don't make sense".
At the last general election we made a different, more modest, commitment--more modest in the sense that we made the commitment of using the basic state pension as the building block. We said that it would not be means-tested, that it would rise at least in line with prices--which I accept is what has happened in the first three years of this Government--and that pensioners would also share, in ways that were not specified, in the wider economic gains of the country.
I must tell my hon. Friends that this debate really should not be an argument for or against the means tests; it is much narrower than that. However, if my hon. Friends want to have the argument about whether pensioners should or should not be means-tested, they cannot ignore the past. The last Labour Government introduced the link between the pension and earnings or prices--whichever was the higher. I was here, and I was proud of what that Government did. We even raised pensions twice in one year. I might add that the reason why that we did it was that there was no annual pension increase before the Labour Government of 1974. There were some years--four or five since 1948, and always under a Tory Government--in which there was no increase whatever.
We also maintained that link in a period of extremely high inflation. Both prices and earnings inflation were into the teens or the early twenties. The figures were astronomical--no doubt about it. But we introduced that pledge, and we carried it out. I know that it is a nit-picking point to say that, in the four years in which we did so, we got it wrong three times out of four because a system of forecasting was used rather than the historical system that we use now. In April, the Minister used to stand at the Dispatch Box and say, "I think that, in November, earnings will be a certain figure and prices will be a certain figure. This is the higher of the two, so we are fixing the pension"--it had to be fixed 20 weeks in advance. When we reached November, in three years out of four, the figure was not quite right; and in one year, our forecast of which would be the greater of earnings and prices was wrong. We really got it in the neck for being wrong, even though there were often substantial monetary increases--although not real-terms increases.
In 1979, when we got the boot, we had what looked like a good track record, because there had been a real increase in the pension package over those four years. And when we got to 1979, anyone would have thought that we had done so well that we had got the pensioners off the means test.
I regret the fact that there are pensioners on the means test. I wish that we had a policy that would enable us to declare, "We guarantee that, in a year's time, no pensioner will be subject to the means test." As I said at Social Security questions today, even with our current package of so many measures, we cannot say that. We can get the number of means-tested pensioners down to one in five from one in three, but one in five is still a large number of people. Even today, some 28 per cent. of new pensioners go on to the means test. Today, 40 per cent. of all pensioners are on means-tested benefits.
Dr. Lynne Jones:
Will my right hon. Friend give way?
Mr. Rooker:
No; not at the moment--not until I have made the point that I wanted to make about 1979. In 1979,
Dr. Jones:
My right hon. Friend said that his aim was to get the proportion of pensioners reliant on the means test down to one in five. Is that not the current figure?
Mr. Rooker:
As I have said, if we do nothing, one in three pensioners will end up on the means test. This overall package will get the figure down to one in five, and I regret that the number will not be less than that. However, I have described the effect of all the pension changes that we are making.
Mr. Willetts:
When will that be?
Mr. Rooker:
In the middle of this century--2047. I have never hidden that fact. I have always said that a pension is a pension. It is not something that one buys off the shelf and that is available today. One has to build it up.
The halcyon days--the link lasted for only four years--left us with 57 per cent. of pensioners on the means test in 1979. There are still many on the means test today, but an enormous gap has grown up. Nobody who seriously wants to attempt to tackle that gap can do so by lifting everyone's income up. That does not make sense in anyone's calculation; there are no good grounds for doing that, either with public money or with private funds. Therefore, it is our moral responsibility to target resources on closing that gap by lifting the incomes of the lowest 20 per cent. up while not holding down those of the top 20 per cent. We must lift the bottom 20 per cent. up at a faster rate than the highest 20 per cent. That is the only way that we can tackle the gap, and we must do that as quickly as we can. One of the measures to deal with the gap is the introduction of the minimum income guarantee.
Mr. Alan Simpson:
I am grateful that my right hon. Friend has drawn the House's attention to the graphs on page 25 of the document. We are faced with the burgeoning gap between the richest and the poorest pensioners, so will he explain how free television licences and the winter fuel payments, which are tax exempt, will help to narrow the gap? Raising the state pension would bring more people into tax bands and would enable us to recoup income. That would be a redistributive measure and would be more effective in directing resources towards those on the basic state pension.
Mr. Rooker:
My hon. Friend--like other hon. Members--has made the case better than I can for a mixture of measures. It is not possible to say that benefits should be either all universal or all means-tested. There must be a mixture of benefits for the foreseeable future.
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