---

Benefits Uprating

As usual, the Liberal Democrat money tree is in evidence again, with a whole bunch of unfunded spending promises, which we will continue to tot up on his account. I reject the hon. Gentleman’s accusation that we are in any way adopting a complacent approach to welfare reform. Our approach aims to get 1 million people off IB and to reach an 80 per cent. employment rate. We are proposing probably the most radical reform of the pensions system since Beveridge and we have just published the Lisa Harker report on child poverty. Of course there is more to do. We are in no way reticent about bringing forward radical plans where they are needed to continue to reform the welfare state. We want to ensure a welfare state that is not only generous and able to lift people out of poverty, but active in encouraging people to get into work, providing the right support and the right conditionality to help them do exactly that. The hon. Gentleman raised the issue of the winter fuel allowance. As he knows, there was no winter fuel allowance before 1997. It was first introduced at the rate of £20 a year and it is now £200 a year, so it has gone up far faster than earnings and far faster than inflation. For people over 80 years old, it is £300 a year. I remind the House that before we came to power, pensioners could get £60 million a year for help with heating bills; today they can get more than £2 billion, which is quite a significant difference. The hon. Gentleman also asked about uptake of pension credit. As I said, we want to do more. The National Audit Office—not normally known for being overly generous to Departments—said that we had made very good progress. People recognise that the Pension Service has done an excellent job. It is particularly important to get money to the poorest in society who need it. Take-up of the guarantee credit is now between 70 and 80 per cent. It is important for Members not to talk down pension credit or say that somehow it is old-fashioned means-testing. It is a system for getting money to the poorest in society; it means that the poorest third in our society get an extra £2,000 a year—a massive difference compared with 1997. We want to do more, but people should acknowledge the work that has been done. The hon. Gentleman asked when we would introduce the earnings link. As recently as a few months ago, he was probably saying that we were never going to legislate for that. He may have been surprised that we have legislated for it in the Pensions Bill. I look forward to seeing him bring forward his proposals. I think that he is to propose a citizens pension, and we will be asking him exactly how it would be funded. Would it be funded by cutting back on the state second pension, taking money away from people; by cutting back on pension credit allowances that allow disabled people to get £160 a week; or by a raid on working families—taking money off them and reducing their incentive to save for their retirement? We look forward to seeing the detail of the hon. Gentleman’s policy. Like the rest of Liberal Democrat policies, it will probably come from the money tree. The hon. Gentleman asked finally why pensioners’ money should be going up in line with earnings and he also referred to children. The answer is that since we came to power we have recognised that pensioners should share in the country’s growing wealth. We accept the principle that, as the country gets richer, so should pensioners. In fact, pensioners’ incomes have gone up significantly faster than earnings over the past 10 years—of which we are quite rightly proud. The best route out of poverty for people of working age is not the benefits system. Whether they be lone parents or disabled people, the best route out of poverty is work. Our system is intended to encourage people to get out of poverty by getting into work. That is exactly what we will continue to do.