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John Barrett MP

John Barrett MP for Edinburgh West, 2001-2010

17 November 2004

Pensioner Poverty

The first report of the Pensions Commission made stark reading for the Government and hon. Members. It set out clearly and fairly the tough choices that lie ahead in respect of pensions, and the even tougher consequences of any failure to act. One of the true measures of a decent, fair and free society is how it treats its older citizens. Surely one of the most important social issues facing any Government is the need to ensure that older people can, after a lifetime of contributing to their country, retire with dignity, free from poverty. That challenge can be broken into two basic parts: how do the Government alleviate the pensioner poverty of today, and how do they prevent the pensioner poverty of tomorrow?

I am pleased to have secured this Adjournment debate, because it will allow me to raise some problems faced by pensioners in my constituency. The Minister for Pensions, whom I am delighted to see in his place, is well known for his considered replies and I look forward to such a response today. In that spirit, I say at the outset that the position in my constituency is far from being all doom and gloom. The fact is that pensioner incomes vary enormously. Many pensioners in my constituency enjoy a high standard of living, often because of the extra savings that they made throughout their working lives. However, too many others in Edinburgh, West do not enjoy the standard of living that they should be able to expect.

Given that 2 million pensioners still live below the poverty line in this country—the fourth richest in the world—there is no room for complacency. However, it would be wrong of me not to acknowledge the measures that the Government have taken to benefit pensioners in my constituency. I do not want to steal the Minister's thunder, but it does not take much foresight to predict that he will refer to such measures as the winter fuel payment, free television licences, the Christmas bonus, the £100 towards council tax bills and pension credit. I recognise that each of those measures has, in its own way, benefited a section of people in my constituency. However, I have to warn the Minister against simply rattling off that list as a defence, because as welcome as many of the measures are, if the Government really have done everything right and delivered a fair deal for pensioners, I must ask why I receive so many letters and telephone calls from older people in Edinburgh, West arguing to the contrary.

The Government hold up the pension credit as their flagship mechanism for tackling pensioner poverty. The latest information from the Department for Work and Pensions shows that more than 2.5 million pensioner households benefit from the pension credit. That figure is not to be sniffed at, but it stands short of the 2.8 million target set by the DWP for October 2004. The Minister will also know that the rate of increase in claims is falling off sharply. The September 2004 increase of just 15,000 new claims was the lowest monthly increase since the take-up campaign started. If the number of claimants is plateauing, as it appears to be, that raises the question of when, or indeed if, the Government will reach their target.

The latest pension credit progress report, which I obtained from the Vote Office, shows that some 2,700 pensioner households in my constituency benefit from the pension credit. However, a written parliamentary answer that I received last year from the Under-Secretary of State for Work and Pensions, the hon. Member for Liverpool, Garston (Maria Eagle), said that more than 1,400 people in Edinburgh, West were already benefiting from the minimum income guarantee. They would simply be transferred over to the guarantee element of the pension credit, so the figure for new pensioners in my constituency to benefit stands at about 1,300.

According to another parliamentary answer that I received from the DWP that uses the number of winter fuel payments as a guide, there are some 86,250 pensioner households across the six Edinburgh parliamentary constituencies. The Department admitted before introducing pension credit that it expected approximately 40 per cent. of pensioner households in Scotland to be eligible for it. For Edinburgh, that would mean about 34,500 households, but the latest progress report shows that only 18,148 pensioner households in the capital are claiming the credit—53 per cent of those eligible.

To the Government's credit, they have worked hard to promote the availability of pension credit before and since its introduction last year. Although I have taken issue with the Government over the emphasis on means-testing, I genuinely wanted to see the credit work and for eligible constituents to get the money that they deserve. As a result, I contacted each household in my constituency twice through newsletters about the credit, providing basic details and making it clear that any person who wanted further information or an application pack could contact my constituency office. I am glad to say that many pensioners did just that, and I put on record my thanks to those working in the Pension Service in Scotland who helped me with that campaign. I know that the Minister will agree that the considerable contribution made by those working in the Pension Service has been much appreciated by constituents. I have always found the team in Scotland to be helpful, friendly, accessible and professional in their work.

None the less, despite the promotions, the advertising, the work of the Department for Work and Pensions and the Pension Service, the home visits and the roadshows, many pensioners eligible for pension credit still do not claim it. That presents a new problem for the Minister. We are no longer talking about people being unaware of the existence of the credit—although I accept that some still are—but about people who know about it and are making a conscious decision not to make a claim for some reason.

During my local take-up campaign, I received a number of letters from pensioners who found the process of applying for the means-tested benefit complicated and degrading. One constituent from Drylaw in Edinburgh wrote to tell me how she felt "stripped of all dignity" by the questions asked and had decided not to proceed with her application. Another constituent from Queensferry told me that she did not want to "go through hoops for the sake of a few extra pounds a week."

I have lost count of the number of times I have heard older people say something like, "I have never had to claim benefits in my life and I am not going to start now", or, "I have gone through my entire working life without asking for help, and I'm not going to ask the Government for help."

The fact is that we are talking about a proud section of society. Last Sunday, I was fortunate enough to attend two Remembrance day events in my constituency, in Corstorphine and Davidson's Mains. The immense pride that older people rightfully feel on such occasions illustrates the honour and dignity that they too should be granted. It is no wonder that so many of them do not want to go, as they describe it, "cap in hand" to the Government. They feel that the process is degrading and no amount of information will convince them otherwise. That shows one underlying problem with the Government's mass means-testing of pensioners—as a policy it is neither desirable nor effective.

My party and I believe that the only guaranteed way of getting more money to the poorest pensioners is by increasing the wholly inadequate basic state pension. The Minister will be well aware of the Liberal Democrat's pensions package, even if some members of his party have chosen deliberately to misrepresent it. He will know that pensioner poverty is particularly acute among women, because of the rules on national insurance contributions. Just a few days ago, the TUC pointed out that 70 per cent. of female pensioners are getting less than the full basic state pension, compared with just 15 per cent. of men. A system that assumes that a woman does not need a pension if she has a husband is grossly outdated.

The so-called citizen's pension, which my party proposes, is the kind of basic reform that the UK pension system needs, because it would be linked to residency and uprated in line with earnings. The citizen's pension would make an enormous contribution to alleviating pensioner poverty, especially among women. An extra £100 a month for over-75s would lift 1 million people out of means-testing overnight.

There are a few other issues that I would like to touch on and I hope that the Minister will find time to comment on them, too. Another major problem facing pensioners in my constituency is the cost of council tax. Nationally, pensioner incomes have risen, in percentage terms, by less than half the increase in council tax bills. In Edinburgh, the average council tax bill has risen by 22 per cent. in four years. The £100 offered to older pensioners in my constituency was welcome, but it ignores the underlying root of the problem. Also, because it was targeted at older pensioners, it left no help for many younger pensioners who are struggling to make ends meet because of their council tax bill. Council tax remains one of the most regressive and unfair taxes. It hits disproportionately those on fixed incomes and low incomes, including pensioners. The result has been that pensioners in my constituency are spending a huge chunk of their pension on council tax; that is money that they should be spending on heating their homes and on food for their meals. Just as with pension credit, too many pensioners—almost a third—are not claiming the council tax benefits to which they are entitled. Estimates given to me by Help the Aged suggest that some £2.5 billion worth of benefits, including council tax benefit, is going unclaimed by pensioners.
Thankfully, in Scotland, the Scottish Executive is undertaking a review into local government finance, and the Liberal Democrats will argue strongly for council tax to be abolished and for a new, fairer, local income tax introduced. The system would be based on income, not property values. Thousands of pensioners in my constituency and throughout Scotland would benefit. As fairness would be built into the system, we would also remove the need for council tax benefit and resolve the take-up problems.

Turning to poverty among disabled pensioners, the Minister will be aware of the strong and widespread feeling among Members about the discrimination in relation to disability benefits. Early-day motion 953, which concerns the Mobilise campaign to allow over-65s to claim disability living allowance, now stands out as one of the most popular EDMs this Session. Almost 250 MPs from all parties have backed it.

The main support for the Mobilise campaign has come about because of the in-built injustice that it seeks to end. Surely it cannot be right that under-65s are entitled to help with their mobility costs while the under-65s are not? The allowance of £41 a week would go a long way in helping elderly people who suffer from mobility problems and who have to use their pension to pay for help. Such a move would also have other positive effects. DLA acts as a gateway allowance; entitlement to it also means access to other benefits, such as the Motability scheme and exemption from car tax. The 20 charities that formed the Mobilise campaign have done a power of work on raising awareness of the issue, both inside and outside Parliament. I hope that, at some point, the Minister will confirm that their work has not been in vain, and that changes to the rules will be introduced as soon as possible.

I remember when the Prime Minister promised to learn from what he described as a mistake—the 75p increase in the state pension, which many pensioners found insulting. That was one of the big mistakes of Labour's first term, and one of the big mistakes of their second term has been the abolition of pension books. Although that has not added to pensioner poverty, it has added to the general anger and frustration felt by many pensioners. It comes down to the attitude of the Government—an attitude that has led to their setting a target to end child poverty by 2020, but setting no such target and making no such commitment for older people. That attitude has fostered feelings of injustice and unfairness among the pensioners whom I represent. After all their contributions to society, they are only asking for what is fair. The Government should offer no less.

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This website was established while I was a Member of Parliament. The site content is being kept online as a source of information, but all forms / email have been disabled.