'A DEBT OF GRATITUDE TO OUR PENSIONERS'

05 DECEMBER 2001

There is always a danger that national politics misses out on the things that really matter to people. This was brought home to me last month when I went to a coffee morning at the Sutton Trust hall in Cleadon Park.

A pensioner came up to me and asked that I guessed the big news of the week for them. Afghanistan? The health service? No - they had just received in the post their £200 Winter Allowance, in plenty of time for them to choose how to spend it over the Christmas season.

Last week in Gordon Brown's Pre Budget Report, the headlines were stolen by his frankness and honesty about the health service. Yes it is a great British institution. Yes it is full of outstanding staff. Yes reform is needed so it works better. And yes, if we want a world class service then we are going to have to pay for it.

The government has shown in can run the economy, and shown it has big ideas for health service reform, so now is the time to debate where to get the money from. There is no point willing the ends if we do not will the means. I will return to this in a future column.

But beneath the headlines there was big news for Britain's pensioners, like the ones I met in Cleadon Park. The basic pension is going up next April, by £3 for a single pensioner, and £5 for a couple. And the Chancellor confirmed that under Labour the £200 Winter Allowance will continue to be paid, tax free, every year. But that is just the start of it.

There are 17 000 pensioners in South Shields. There are three outstanding problems that the government is setting out to resolve.

First, while other European countries suffer from the cost of pensions, in Britain the problem has been adequacy of state support. So the Government is now committed to ensure that pensioners without savings will be guaranteed a minimum income of £100, and every pensioner couple £135, by 2003.

Second, how many times have you heard people say that pensioners with small savings, for example from an occupational pensions scheme, get no benefit for their saving? Well from 2003 the Pension Credit will reverse that situation: pensioners with up to £23 per week in savings income will receive 60p for each pound of income. So if your income from your occupational pension is £10 per week, the government will give you an extra £6 per week.

Third, for better off pensioners, they are currently required to purchase an annuity with the lump sum that they get from their occupational pension. The system was introduced because of the problems that emerged in the 1980s with pensions mis-selling, but it restricts choice. The government want to balance security with freedom of choice, and have set up a review to find ways of reforming the system.

Many pensioners were born and bred in South Tyneside. We all owe them a debt of gratitude for their contribution to the country and the community. Now, at last, we will be able to show that gratitude with a pensions system that gives them a decent income in retirement.