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Social Security

We have had a short but detailed and interesting debate, comprising only Front-Bench spokespeople. I will endeavour to reply to the points that the hon. Members for Bury St. Edmunds (Mr. Ruffley) and for Yeovil (Mr. Laws) made, some of which overlap. I am pleased that the order has already commanded the full support of the House. They made comprehensive and thoughtful speeches, and most of their points were perfectly legitimate and proper. On the different measures of inflation, the hon. Gentlemen rightly referred to the recent steep increases in utility bills and energy prices. Of course, there have been considerable energy price spikes before in past 40 years or so and, in all those previous cases, there was no winter fuel payment, which offers a measure of relief from such spikes. It is still fair to say that, despite the recent sharp increase in gas and electricity prices, the winter fuel payment will still cover the winter fuel bill of most pensioner households. The hon. Member for Bury St. Edmunds is right to point out that there are different rates of inflation for the various goods that make up the basket that constitutes the purchases that pensioner households make. He fairly pointed out that there has been little inflation in clothing prices, which constitute a considerable element of pensioner purchases. The dominant item for most pensioner households is food, for which inflation rates have been very flat if not negative. That goes some way to offset the steep increases in utility bills that pensioners, like everyone else, have experienced. On average, over the past 18 years, pensioners have faced lower inflation than those who are of working age and pensioner average income has grown faster than earnings over the past 10 years. To help to meet the costs of fuel, particularly in the winter when it is the most sensitive issue, we introduced the winter fuel allowance, which began at £20. It has now increased to £200—a tenfold increase—and £300 where the pensioner household contains a pensioner over the age of 80. Over the whole time frame, the increase in the winter fuel payment has well exceeded the rate of inflation. That needs to be borne in mind when looking at the current situation. Following the fall in wholesale prices, energy retail suppliers are beginning to forecast lower prices. They have already announced some reductions, with some more to come. Both hon. Gentlemen would acknowledge that there is a certain volatility in utility prices. We need to see that the inflation measure that we use reflects the entire basket of goods that pensioner households purchase and is not overly dependent on one element that is notoriously more volatile than any of the other major components.