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Amendment of the law

Let me begin by saying something about personal debt. Many people throughout the country are extremely worried about their personal finances during what will be—notwithstanding the Chancellor's announcement yesterday—a long and deep recession. They are worried about their jobs and their housing problems and, elderly people, in particular are worried about what will happen to the income on which they rely from investments, especially building society and bank savings accounts. We know that even before the recession started, the savings ratio had halved under the stewardship of this Labour Government. That should have sounded a loud warning bell to Ministers, but they were very tardy in attempting to do anything about it. When people lose the incentive to save—to put money aside for a rainy day, or perhaps to fix the roof while the sun is shining—it is a very serious matter, not just for them personally but because it changes the culture in the country. It affects people's feeling that they have a personal responsibility to put money aside. For many years, I have been concerned about the way in which the younger generation—by which I mean young people of working age, many of them bringing up young families—have taken account of the experience of their mums and dads, who have suffered under this Government as a result of the erosion of their pensions. The former Chancellor's hundred-billion-and-counting taxation raid on pension funds means that many people now do not have the funds that they expected to receive. All too often, their adult children think of what has happened to mum and dad and ask, "What is the point of putting money into a pension?". That should be a worry for us all, and for them in particular, but the Government do not appear to have recognised that the problem has been building up over many years. Now that we are experiencing this appalling recession, the problems of pensioners and those about to retire are particularly acute. The Government had an opportunity yesterday to remove the basic rate of taxation on people with investment income, but failed to take it. Although I welcome the Chancellor's announcement of an increase in the tax-free amounts in personal individual savings accounts, many people on fixed incomes, especially the pensioner population—a great many pensioners live in my rural Devon constituency—do not necessarily have the capital to put into an ISA. They have depended on interest on which they have drawn regularly to pay essential household bills, including bills for utilities such as fuel, and they feel extremely vulnerable now that interest rates are falling while they continue to be taxed on their income if the aggregate is above the tax threshold. Price reductions do not necessarily help them. In February this year, the Institute for Fiscal Studies estimated that the poorest pensioners—those over the age of 80—faced an inflation rate of 6.7 per cent., more than four times the rate affecting the general population, because of the types of products and services on which the very elderly rely. We have had many debates in this House about the costs of the various baskets of items that represent the retail prices index, for example, or the real rate of inflation. Members do not need me to explain all the specific individual needs of the over-80s, but their purchasing pattern is very different from that of the rest of the population. Interest rates have fallen, and those with modest savings who rely on interest rates to supplement their income have been hit particularly hard. Therefore, I regret that the Government did not take the opportunity to adopt what was a Conservative policy. They have adopted Conservative policies in the past, such as on inheritance tax. Had they done so on this occasion, I promise that I would not have stood here today and said, "You've pinched one of our policies"; instead, I would have warmly welcomed the abolition of the 20 per cent. tax rate on investment income for basic rate taxpayers.