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Earnings Rule

Volume 957: debated on Tuesday 7 November 1978

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asked the Secretary of State for Social Services whether he will bring forward legislation to abolish the earnings rule.

Whilst it remains the policy of this Government to phase out the earnings rule for retirement pensioners, this cannot be done until the necessary resources can be spared. This is the conclusion reached following our review of the earnings rule, a report of which was laid before the House on 24th October.

Is it not now clear that the Government's earlier estimates of the cost of abolition were far too high and that the House was seriously misled? Will the Government now get on with it and abolish this unfair and very cruel rule?

The figure will be lifted next week from £40 to £45, and a person will have to earn more than £66 before the pension is completely phased out. If we were to abolish the rule completely in one stroke, it would cost £124 million a year in public expenditure terms. If the rule were abolished, women between the ages of 60 and 65 and men between 65 and 70 who were in full employment on full pay would get the pension.

Will the Minister reaffirm the commitment of the Government to proceed in this matter? Does he accept that, following the representations which he sought on "A Happier Old Age", many of the people who put forward views were reflecting the inadequate level of pension, as opposed to pension increases, and that this is one way of getting round the problem?

When my right hon. Friend laid the report before the House, he reaffirmed the Government's decision that we are in favour of ending the earnings rule at the appropriate time, and I endorse that this afternoon. We want to see it ended. Now that we have indexed the earnings rule, and as it increases in line with earnings each year, that, in a way, is also phasing out.