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House of Commons Hansard
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Pensioners: Poverty
01 March 2010
Volume 506
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To ask the Secretary of State for Work and Pensions (1) what recent steps her Department has taken to eradicate pensioner poverty; [319024]

(2) what representations she has received on the establishment of a formal target for the eradication of pensioner poverty.

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Our strategy since 1997 has been to target help on the poorest pensioners while providing a solid foundation of support for all.

We have a good track record of reducing pensioner poverty. In 2007-08 there were 900,000 fewer pensioners in relative poverty than in 1998-99 (measured as below 60 per cent. of contemporary median income after housing costs). Today's pensioners are less likely to be living in relative poverty after housing costs than the population as a whole.

In 1997, the poorest pensioners, who received Income Support, lived on around £69 a week (equivalent to £98 a week in today's prices). Today pension credit ensures that no pensioner needs to live on less than £130 a week or £198.45 a week for couples). This represents an increase in income by almost a third in real terms. And many of those on pension credit will also be entitled to additional support through housing benefit and council tax benefit.

The Pension, Disability and Carers Service continue to promote take-up of benefits for those entitled. This involves data matching to identify entitled non-recipients, home visits for vulnerable customers, targeted local marketing and media campaigns, a simple claim process involving telephones as well as paper claims and ever closer working with partner organisations. The Department is also looking at innovative ways of using information that we already hold to make payments of pension credit more automatically to entitled non-recipients.

In the Pensions Act 2007, we made a commitment to continue to uprate the pension credit standard minimum guarantee at least in line with average earnings over the long-term. The Institute for Fiscal Studies (IFS) has commented that without this, it is likely there would be significant increases in pensioner poverty in the future.

We have also made a commitment to re-link the uprating of the basic state pension to average earnings. Our objective, subject to affordability and the fiscal position, is to do this in 2012, but in any event by the end of the next Parliament at the latest. This will benefit almost 12 million pensioners.

The Government use a basket of three key thresholds of income, after housing costs, to measure pensioner poverty. The most commonly used figures relate to those with incomes below 60 per cent. of contemporary median income, after housing costs. However, the Department does not have a commitment to eradicate pensioner poverty in the same way it does for child poverty.

The Work and Pensions Select Committee report on its inquiry into tackling pensioner poverty, which was published in July 2009, recommended that the Government should make its commitment to tackling pensioner poverty explicit and formally commit to eradicating pensioner poverty.

After fully considering this recommendation we do not believe that establishing a formal target for the eradication of pensioner poverty would be the right approach. It is entirely right that the Government should commit itself to the eradication of child poverty, but the context for pensioners is not the same. Pensioners' incomes are affected by the work, caring and saving that they have undertaken during their working lives. The Government believe that this "something for something" contributory principle, whereby people are rewarded for their positive engagement with society during their lives is a critical component of our system of support for older people. Through our pension reform we are putting in place a framework which will enable people to build up a decent pension from the state and provide a foundation for further saving. We need to make sure that our policies balance cost, poverty alleviation and maintaining incentives to save.

We believe that our reforms will achieve this balance and that our published Public Service Agreement, which explicitly commits to "Tackle poverty and to promote greater independence and well-being in later life", is the right framework for tackling pensioner poverty and we will continue to report progress against this indicator.

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To ask the Secretary of State for Work and Pensions (1) what estimate she has made of the number of pensioners resident in Coventry South constituency to have been lifted out of poverty since 1997; [319027]

(2) what estimate she has made of the number of pensioners lifted out of poverty in the UK since 1997.

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The Government use a basket of three key thresholds of income, after housing costs, to measure pensioner poverty. The most commonly used figures relate to those with incomes below 60 per cent. of contemporary median income, after housing costs.

Estimates of the number of pensioners who have been lifted out of poverty are not available, as each year different households are surveyed to produce low income statistics that are published in the Households Below Average Income series. However, information is available about the net change in the number of pensioners with incomes below 60 per cent. of contemporary median income.

These figures only allow a breakdown of the overall numbers in poverty at Government Office Region level. Therefore, information is available for the West Midlands Government Office Region, but not available for the Coventry South constituency. Three-year averages are used to report regional statistics as single-year estimates are subject to volatility. Figures are quoted to the nearest 100,000.

In the three-year period 1997-98 to 1999-2000 there were around 300,000 pensioners in the West Midlands with incomes below the 60 per cent contemporary median (equivalent to 28 per cent of pensioners in the region). The latest information relates to the period 2005-06 to 2007-08 in which there were around 200,000 pensioners in poverty (18 per cent).

Since 1997-2000, there has been a reduction of around 100,000 pensioners in the West Midlands Government Office Region with incomes below 60 per cent. of the contemporary median income. This equates to a 10 percentage point reduction in pensioner poverty.

At a national level, we do not need to use the three-year averages and can use the individual yearly figures. However, figures for 1997-98 cover Great Britain only, as Northern Ireland data did not become available until the following year.

In 1997-98 there were around 2.9 million pensioners in poverty in Great Britain, which equates to around 29 per cent. of all pensioners. The 2007-08 UK figures show that around 2.0 million pensioners were in poverty, equating to around 18 per cent.

Between 1997-98 and 2007-08 the number of pensioners with incomes below 60 per cent of the contemporary median income reduced by around 900,000.