Angela Watkinson

Conservative Party | Upminster

Council Tax

Angela Watkinson (Upminster): I start by echoing the sentiments expressed by my hon. Friend the Member for Bournemouth, West (Mr. Butterfill). A great opportunity was missed yesterday to address the looming crisis in pensions. It was a notable omission in the Gracious Speech that no mention was made of pensions, savings or benefit reform, which is needed urgently. The problem has multiple strands. The level of savings is now so low that many people are heading towards an impoverished old age. The withdrawal of pension fund tax credits by the Chancellor to the tune of £25 billion already—that is £5 billion a year over five years, and in fact it is worse than that because that funding would have been invested and would have grown—is the single most damaging contributory factor to the problems that beset both money purchase and defined contribution pension schemes. It is the worst stealth tax of all, with the possible exception of the council tax.

The London borough of Havering has historically been underfunded to the tune of £30 million, and last year received a 12.5 per cent. increase. As a result of the long-awaited review, which we all expected would benefit the borough, Havering now faces a worsening situation and another massive hike in council tax rates, possibly in the region of 30 to 40 per cent. Pensioners on fixed incomes will be affected worst.

Add to the withdrawal of pension fund tax credits the £1.5 billion a year shortfall in rebates on contracted-out schemes, and the current regime is unsustainable. People who have been making pension contributions during their working lives now receive pensions on retirement way below former expectations, and their standard of living is not what they had looked forward to or planned for. Add to that the urgent need to simplify the pensions and benefits system, which is far too complicated for most people to understand.

I often have people come to my surgery who have been utterly defeated by 40-page benefit application forms. On one occasion, an elderly couple came with their younger neighbours, who had attempted to assist them. The form had defeated not only the couple in question but their neighbours, and they had filled it in incorrectly. That put my elderly constituents in a worse position than they were in the first place because their application was rejected.

There is also a worryingly high level of personal debt in the country, running to several thousands of pounds per head. Rather than save, many people choose to spend not only the money that they have but the money that they do not have. One wonders what prospects some borrowers have of ever becoming free of debt.

I am sorry that the right hon. Member for Tyneside, North (Mr. Byers) is no longer in his seat because I would have been happy to assure him that there is nothing elite about this Conservative. I was brought up as what used to be quaintly known as respectable working class. I think that the respectable bit referred to not getting into debt, paying one's bills and managing one's budget, however small it was. I remember debt being something that was whispered about. Banks required references when people sought to open a bank account, to ensure that the account holder was of good standing. These days, we are all plagued by unsolicited offers of credit cards and loans, with little or no investigation as to the ability of the person to repay.

There must be countless people who are heading for an impoverished retirement on an inadequate pension, with debts that will have to be settled from their estate, if they have one. The problem of estate values in Upminster may not apply because property values have rocketed in recent years, but I have many pensioners who are asset rich and cash poor. They have never been rich. Many have earned only modest incomes during their working lives, and they are house owners only as a result of a lifetime of hard work, prudence and making economies—of turning out lights, turning down heating to save on electricity and gas bills and not going to the pub. Home ownership has not come easily to them, but has come from the constant struggle to keep heads above budgetary waters. Many find this struggle difficult to sustain in retirement, as huge increases in council tax hit fixed incomes hardest.

Moving house to realise capital is not an attractive option for elderly couples, still less for individuals, who have lived for decades in the same familiar home, of which they are rightly proud.

The number of elderly and disabled people who approach me for advice is increasing all the time. The Department of Work and Pensions does not provide a local pension office, instead it uses local voluntary organisations such as citizens advice bureaux, Age Concern and, in Havering, the Havering Association for People with Disabilities, which runs advice surgeries.

That is a positive step in one sense because it makes venues more accessible in the community, but no funds are available. The Havering association has only £18,000 in core funding. It seems very unfair that small local charities helping their communities should be expected to subsidise the Department. The association loses income by making a room available for an advice surgery that would otherwise have been let to another group at a charge.

I hope that the Department will consider transferring some of the savings made from not running local offices from its petty cash or its paper-clip fund to help small local charities like the association, which are providing services for local people. The Government must take up the challenge this year: they cannot afford further delay. They must now simplify the system, enabling and encouraging more people to provide for a secure old age.