Tory appeal to pensioners

GREY voters hold the keys to Downing Street. Today, it was the Tories' turn to woo the growing army of pensioners, as EADT Political Editor GRAHAM DINES reports from Blackpool

Blackpool: Wednesday October 7 2003

THE Conservatives have changed their minds. Having scrapped the earnings link with pensions 23 years' ago, the party has now pledged to restore it.

And they'll go further. A future Tory government will abolish means testing for pensioners.

The Tories are making an unashamed pitch for the grey vote, that increasingly important section of society when it comes to choosing a government. People are living longer - today's old aged pensioners could survive to vote in five general elections after they retire.

All political parties are desperate to impress the grey voters. But only the Tories are backing the call from pensioners' lobby groups to bring back the link that would increase pensions in line with earnings.

Margaret Thatcher, in one of the most controversial decisions of her premiership, decided that pay rises were driving up prices and it was unsustainable that pensions should increase at the same rate.

Instead, pensions became linked to prices, because it was the cheapest option.

However, the Tories and the successor Labour government have failed to curb pay settlements and over the next quarter of a century, pensioners' standards of living have fallen way behind those in work.

The matter became a massive political issue when in Tony Blair's first term, pensions one year rose by just 75p a week. And local government taxes have outstripped inflation by up to six times - in Suffolk this year, the Labour and Liberal Democrat controlled county council whacked up council tax by 18.5% with little regard for pensioners' ability to pay for it - leading to calls for pensioner householders to refuse to pay the tax.

Falling inflation has been coupled with a dramatic slump on the stock market and lower returns on investments, hitting the private income that many elderly people

Today in Bournemouth, the Tories pledged that a future Conservative government would increase the state pension in line with earnings.

David Willetts, the Shadow Secretary of State for Work and Pensions, said that over a four year period, more than one million pensioners would be taken off means testing.

"By then, a single person will be getting seven pounds a week more on their basic state pension," said Mr Willetts. "A couple will be getting £11 a week more."

Easy to promise, but how do you pay for it? When Barbara Castle urged the Labour Party three years' ago to restore the link, ministers shook their heads and said it would be financially crippling.

Mr Willetts acknowledged it would take "some tough decisions" to finance the move. "But I have not once proposed an increase in the social security budget and I'm not going to start now. It is already well over £100billion.

"This is not about spending more, but about spending better.

"We will do two things. Firstly, we will spend less on means-tested welfare - as the basic pension goes up in value, we will need to spend less on means-tested benefits.

"Secondly, we will abolish the useless schemes and wasted money of Gordon Brown's New Deal, because it just isn't working.

"On its own, this approach won't solve the pensions crisis. We need to do more - new incentives to save.

"We are going to see that savings are properly rewarded," said Mr Willetts. "Rolling back the means test is essential, because it removes the penalties for savings."

Tory plans for savings would work like this. "If you put in a few hundred pounds, the Government will put in a few hundred pounds as well. It could go into a personal pension, a company scheme, or perhaps a Lifetime Savings Account, the new savings product I announced last year.

"Ten years ago, Gordon Brown promised the Labour conference that the next Labour government would end the means test for our elderly people.

"Instead, he has increased means testing by more than 50%. And unless we do something about it, his plans will put more than 80% of pensioners on the means test."

These are the initiatives that will capture the headlines. But of equal significance is another move that will appeal to those campaigning on behalf of the elderly poor.

Mr Willetts promised that the Tories would find the estimated 1.4 million pensioners who don't claim the pension credit to which they are entitled because they find it so complicated, so intimidating and so humiliating that they don't even dare to apply.

"As a result they are the poorest pensioners of the lot. And they are being left further and further behind.

"Only our policy will help them. We won't leave them behind."

The Tory announcements are by far the most significant of any made during this year's political season. Echoing the Blackpool conference's "fair deal" slogan, Mr Willetts said the Conservatives' policy would give pensioners "the independence, security and dignity of a decent retirement."