Tuesday 22 April 2008

Vote to Restore Pensions Link to Earnings Blocked by Government

The media has focused for the last few days on the threat of a rebellion by Labour MPs on the abolition of the 10p tax rate but tonight there was an equally important vote in Parliament that has gone ignored by the press.

The House of Commons was debating the final stages of the Government's Pensions Bill. An amendment was moved and supported by a number of Labour MPs to urge the Government to set a date for the restoration of the link between earnings and pensions.

The background to this issue is that as part of her attack on the welfare state Mrs Thatcher broke the link whereby state pensions would be increased each year by either the increase in inflation or earnings, whichever was the highest. Raising pensions only in line with inflation has meant that pensioners have lost out on over £35 a week.

In opposition the Labour Party promised to restore the link to earnings and after a long and hard campaign by pensioner organisations, particularly the National Pensioners Convention, Gordon Brown as Chancellor had to concede to restoring the link. However he only promised to do this at the earliest in 2012 and possibly only by 2015 if he judged the economic situation permitted.

This bitterly disappointed the pensioner groups because many current pensioners would simply not be alive by that time to enjoy the benefits of the restoration of the link. In the meantime 2 million pensioners remain in poverty. It is estimated by the Government that 60% of pensioners will eventually be forced to rely upon means tested benefits but the Government's own figures demonstrate that 40% of pensioners do not claim the means tested pensioner credits they are entitled to.

Tonight's amendment called upon the Government to announce the date when the earnings link will be restored in its next pre budget report. So it was hardly a revolutionary demand. Nevertheless the Government opposed it and despite 20 Labour MPs voting against the Government the amendment was lost. It's an irony that 24 hours after the Government was able to find £30 billion to bail out the banks who have profiteered at our expense over the last decade, it can't find less than a half a billion to fulfil a longstanding pledge to our pensioners. It demonstrates quite clearly where the Prime Minister's priorities lie.