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Willetts: A fair deal for everyone on pensions

Speech to Conservative Party Conference 2003

"I want to begin by thanking my team.

Oliver Heald, Terence Higgins, Nigel Waterson and Paul Goodman have worked so hard in a year when we have made great progress.

Today, I want to talk about our plans - the Conservative Party's plans - to deliver a fair deal for pensioners and savers.

But first…

…let me tell you -- about - Doris.

When the pundits talk about the contribution that older people can make to society I think of Doris Long in my constituency, Havant.

Doris devotes her spare time to raising money for local charities.

Do you know how she does it?

She gets sponsorship for abseiling down tall buildings.

The taller the better she says!

We call her daredevil Doris.

And by the way -- she's 89.

Tony Blair says we are at our best when we are at our boldest.

Thinking of people like Doris…

…perhaps we should adapt his slogan just a little bit and say…

…we are at our best when we are at our oldest!

But Tony Blair doesn't get that.

We've got a Prime Minister who just doesn't understand or respect older people.

In his speech last week he referred to pensioners in just two sentences.

But do you know how often he referred to himself - 82 times…

72 'I's and 10 'My's.

It's not education, education, education.

It's ego, ego, ego.

And…

…after what Labour e's done to our pensions…

…the sooner 'e goes -- the better.

The reality of our pensions crisis is simple and grim.

We are not saving enough to ensure we have a decent income when we retire.

And it all comes back to Gordon Brown.

Shortly after coming to office, Gordon Brown decided there was too much money in our pension funds.

He thought he could cream a bit off for his spending spree and no-one would notice the difference.

So he plundered our pension funds with one of his first stealth taxes.

Since then, he has taken five billion pounds a year from our pension funds.

And he will keep on taking it

-- five billion pounds

-- every year

-- year after year

So it's not five billion …

…or ten billion…

…or fifteen billion…

By now, he has taken a staggering thirty billion pounds out of the British people's savings.

That's two thousand, five hundred pounds from every single person saving for a pension.

One of Britain's great post-war achievements is being ruined -- by a Government that …

…doesn't understand it,

…doesn't value it,

…and doesn't believe in it.

And, as a result, people who have saved for years face an impoverished retirement.

That's why we have to get Britain saving again.

And there's only one party that can do it.

Our great party…

…under the leadership of Iain Duncan Smith.

What happens when savings lose their value?

People fall into dependence upon means-tested benefits.

And - as means testing grows -- the next generation give up any hope of trying to save.

And so we are caught - in a vicious cycle.

More and more means testing…

…less and less saving.

We have to break that pernicious cycle.

We have to roll back means testing…

…and once again reward people for saving.

Today, pensioners on means tests have to go cap-in-hand to the Government…

…and turn out their pockets…

…to prove they are poor.

Of course, as with everything - it's been modernised by 'New' Labour.

Nowadays, you have to persuade a call centre operator that you're…

"financially excluded"!

But the underlying reality is the same - and it's not pretty.

The latest means test - the Pension Credit - came in this week.

It's another Gordon Brown special.

But at least officials have provided a nice simple guide to how it works.

It's just what pensioners need - a bit of help to claim all the benefits they're entitled to.

And here it is…

I think -- I understand it.

But -- where's the fusebox?!

Labour's policies on pensions are taking this country in the wrong direction.

We can already see the results.

The savings in our pension funds…

…worth less and less.

The number of people with funded pensions…

…going down and down.

And the number of people dependent on means-tested benefits…

…going up -- and up -- and up.

Tony Blair boasts that he has no reverse gear.

Well, with trends like these -- he needs one.

Tony Blair doesn't understand what the pension crisis means for people caught up in it.

Let me give you some examples...

This is a letter from Jane, a widow in Gloucestershire.

This is what she wrote …

My husband and I were both in our late 70s, both with wartime service…

Last year I asked what benefits I could reasonably apply for.

This resulted in an official coming to our home and filling in endless forms, also taking photocopies of bank books, statements, recent bills and so much more.

Every intimate detail of our lives was scrutinised and committed to paper…

I felt degraded and humiliated by the whole system.

For the first time in my life my integrity seemed to be in question by a system whose attitude seemed to be 'guilty until proved innocent.

Personally I would rather cope with any hardship than become involved again.

I seemed to have little to gain but a lot to lose - my dignity, self-respect and my sanity.

Is that the sort of country we want to live in?

Of course it's not!

And we are going to do something about it.

Mary, an elderly lady from Leicestershire wrote to me as well.

She said…

…because we didn't waste our money and managed to save something towards our retirement, we are… penalised… for being thrifty…

I worked from 14 to 61 -- 47 years -- and now I am no better off than the woman who stayed at home..

I think it is time people like us were heard and given a fair deal which I am not getting now…

…please excuse the writing but my eyes are not as good as they were.

I do hope you didn't mind me writing to you and I do hope you will reply.

Of course I didn't mind.

And I replied -- as best I could.

I said that -- as Conservatives -- we understood her problem.

But it is only now…

…at this Conference…

…that I can give a full reply to Mary…

…and Jane…

…and the millions of people like them.

This is it…

Throughout your life…

You did the decent thing.

You paid your National Insurance.

You built up some savings.

And now -- all these means tests make everything you have done -- worthless.

You did the right thing…

And now you're being punished for it.

I tell you now…

…on behalf of our Party…

…on behalf of our Leader, who has long been dedicated to this cause…

I tell you now…

…that is going to change.

We - will - get - pensioners - off - the - means - test.

It's not going to be easy.

But if we are going to roll back the state…

…we're going to have to roll back the means test.

Our elderly people…

…in their retirement…

…want their dignity back.

And there's only one way we can do it…

We plan to increase the value of the basic state pension…

…so that it is worth more than the means test.

And the sooner we start -- the sooner we can get there.

That's why the next Conservative Government will increase the state pension in line with earnings.

And -- as a result -- within four years --over a million pensioners will get off the means test.

By then, a single person will be getting seven pounds a week more on their basic state pension.

And a couple will be getting eleven pounds a week more.

Those are the figures.

It's -- 7 -- -- 11.

It is going to take some tough decisions to finance this.

But we will know that we are taking our country in the right direction.

I have never once proposed an increase in the social security budget… …and I'm not going to start now.

The social security budget is already well over - a - hundred - billion - pounds.

So this is not about spending more.

It's - about - spending - better.

And we're going to do two things.

First, spend less on means-tested welfare.

It's a natural process…

…as the basic pension goes up in value…

…we will need to spend less on means-tested benefits.

Second, we will abolish the useless schemes and wasted money of Gordon Brown's New Deal…

…because - it - just - isn't - working.

But on its own, this approach won't solve the pension crisis.

We - need - to - do - more.

We need new incentives to save.

Labour have introduced their scheme -- the stakeholder pension.

It tells you all you need to know about 'New' Labour.

First -- come up with the snappy name.

Second -- pass lots of new - laws - and - regulations - to force companies to set up schemes.

Third -- proudly announce that you've succeeded because 350,000 schemes have been set up.

And finally -- move on to a new "eye-catching initiative".

But there's - just - one - snag.

More than three-quarters of these schemes have no money in them.

They - are - empty.

There - is - a - hole - where - the - fund - is - supposed - to - be.

It's a Polo pension!

We are going to take a bolder approach.

We are going to see that savings are properly rewarded.

Rolling back the means test is essential…

…because it removes the penalties for saving.

But we need to do more.

And we will.

Here in Britain, we have a device to compensate companies for the cost of providing their staff with a pension.

It's called a Contracted-Out Rebate.

But -- like Labour -- -- Rebates aren't working -- -- -- -- Anymore.

But Rebates are still costing us eleven billion pounds a year.

Why not take that money -- and put it into new incentives to save…

Incentives -- that are clear and comprehensible.

Incentives -- that work -- today.

We will consult with the savings industry on how to do it.

Because -- if we use that eleven billion pounds properly…

…we will transform Britain's savings culture.

When you go to Sainsburys, they don't say here's a contracted-out rebate.

They say…

…Buy One Get One Free!

Well -- why don't we do the same for pensions?

If you put in a few hundred pounds, the Government will put in a few hundred 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.

This is a radical proposal.

It gets to the nub of the issue.

It's what Conservatism is all about.

It goes with the grain of human nature.

It rewards people for doing - the - right - thing.

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 - fifty per cent.

And, unless we do something about it, his plans will put more than eighty per cent of pensioners on the means test.

We are determined to do something about it…

To rebuild security in old age…

To restore dignity in retirement.

And we must do it - first and foremost -

for the one million four hundred thousand pensioners Gordon Brown seems happy to leave behind.

One point four million people - that's how many pensioners Gordon Brown predicts won't even claim the pension credit they're entitled to…

Because they find means testing…

…so complicated

…so intimidating

…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.

So…

…Doris … Jane … Mary…

…now you know…

…what we Conservatives - stand - for.

We stand for a fair deal for you.

A fair deal for all pensioners and savers.

A fair deal that will give today's pensioners the independence, security, and dignity, of a decent retirement.

A fair deal that will give today's savers

a fair reward for their saving.

Once more -- everyone will know --

That for every pound they save…

…they will be a pound better off.

That will be a - great - step - forward.

We can go forward from this Conference with our heads held high.

You can go forward -- knowing that only the Conservative Party has the right approach for our pensioners and savers.

And Doris and Mary and Jane can go forward -- knowing that their retirement is safe in our hands."

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