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Pensioner Poverty

As the hon. Gentleman says, we could debate the figures and argue about them, and no doubt the National Pensioners Convention has its own figures, although I do not have those to hand. Had we not broken the pensions-earnings link, we would have solved much of the problem already, but the NPC suggests that to make sure that no pensioner lives below the poverty line we need a basic state pension of £165 a week, which is an enormous increase. Of course, I have suggestions about how we would achieve that. It would mean much greater contributions. However, for the future we must think about radical reforms. With the gradual—even rapid—demise of occupational and private schemes, we must look towards a compulsory state scheme for the long-term future, if people like my children and grandchildren are to have any kind of decent living in old age, assuming that they do not have enormous incomes from which they can save vast amounts. For an adequate state pension, the NCP talks about £165 a week, and that is a fine place to start. One way in which we could achieve that would be, first, to roll up all the payments that are made at the moment—pension credit and the winter fuel allowance—and build them all into the basic state pension, so that there are not means-tested bits and little add-ons. The winter fuel allowance, much as I welcome it—it is very useful—is said to be targeted on the poor; but actually it is a benefit that is not even taxed, so the rich get it as much as the poor. It is regressive in that sense. If the winter fuel allowance were to be built into the basic state pension, which, with total income, would be taxed, what was taken from the rich could be recycled to be built into the system at the bottom and help the less well-off. A taxed system is much better than one that is either means-tested or, indeed, not taxed or means-tested at all. I suggest a 54-week year for the payment of the basic state pension, with a double payment in January and December, which would have the same effect of extra income in the winter, when it was needed to help people. Instead of the winter fuel allowance, people would get that double payment in December and January, to overcome the problem, and pensioners would get the extra lump sum that they enjoy so much. Such an approach to the basic state pension would, however, still mean a fairly basic standard of living for many people. I defy any Member of Parliament to sustain the standard of living to which they are accustomed on £165 a week; nevertheless, a lot of poor pensioners would think it a good start. Still, many people would want to save beyond that. Voluntary saving in the end does not work for many people. The only system that would work would be a compulsory one—a compulsory universal state earnings-related pensions saving system. That is the only way forward. There would be two elements—the basic state pension and a compulsory state earnings-related pension scheme for everyone. The contributions would be substantial and people would know what they would receive in the end; it would not be subject to economic conditions, the stock market, interest rates or whatever. That is the way forward: voluntarism will not work. People live for today and there are pressures in daily living which mean that they do not save. The amounts that must be saved to provide a serious pension are enormous. People might say, "I'll put away £50 a week." That would not give very much over a lifetime; it would give something, but not enough. Many forecasts have been made about the kind of money that must be paid. Private schemes are inefficient, anyway. The great advantage of a national scheme is that it is easy to administer and very efficient, and we could have a large national savings fund, which could be used for investment purposes and would generate its own income, particularly in public infrastructure, for example. It would be a comprehensive state scheme, with a large fund that would mean that people's pensions were secure for the long term. That is the only serious way forward. I do not believe that we have yet addressed the problem at all seriously, although I welcome the marginal changes that have been made, and the worthwhile suggestions in the report. We must be much more radical if our children and grandchildren are not to suffer poverty in old age.