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ON THE RECORD
RECORDED FROM TRANSMISSION: BBC ONE DATE:
08.04.01
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JOHN HUMPHRYS: Good afternoon. Pensioners
get an extra five pounds a week from tomorrow. Is it a pre-election bribe
or is the government really committed to making sure the elderly get a
decent income in years to come? I'll be talking to the Social Security
Secretary Alistair Darling. Rail fares are shooting up even though the
service is still dreadful. I'll be asking the Transport Minister if there's
anything the government can do about it. And we'll be reporting on whether
the General Election will undermine the peace process in Northern Ireland.
That's after the news read by Fiona Bruce.
NEWS
HUMPHRYS: David Trimble is a crucial
figure in the Northern Ireland peace process. Will the General Election
leave him damaged?
Our rail services
are in a parlous state... and now fares are going up. I'll be asking the
Transport Minister why they're allowing it.
But first pensions.
All the political parties know they need the "grey" vote when the election
comes in a few weeks from now. So it may be no coincidence that old people
will be picking up a decent increase when they collect their pensions from
tomorrow. An extra five pounds a week for single pensioners and eight
pounds for a couple. And two days ago the government launched its new
scheme to help people provide for themselves in their old age: stakeholder
pensions. Is that enough? I'll be talking to the Social Security Secretary
Alistair Darling after this report from Jonathan Beale.
JONATHAN BEALE: The choice has never been easy
whether it's chocolate eggs for Easter or nest eggs for the future. This
week the Government hatched another new pension plan. One that it hopes
will bring us a more secure retirement as well as helping to ensure its
own political success.
There are twelve million
pensioners in Britain and they're almost twice as likely to vote as those
aged between eighteen to twenty-four. In thirty years time the over sixty's
will make up a third of the electorate. Increasingly, political parties
ignore the grey vote at their peril. So has Labour done enough for those
who've already retired - and is it doing enough for those who're now planning
their retirement?
STEVE WEBB MP: The long term strategy has
a fatal flaw. The basic state pension will wither and die. The seventy-five
p that we had in this parliament is a taste of things to come.
FRANK FIELD MP: I would describe the current
lot of initiatives as initiatives taken with the best of motives which
will not survive the course.
BEALE: In the kitchen of Rococo
they aim to leave their customers with a sweeter taste. It's a small company
making and selling hand crafted chocolate. Earnings among the ten staff
are between ten and twenty thousand pounds. Just the sort of people the
government have in mind for its new stakeholder pension:
MICHAEL LOCKYER: They are cheap effective solutions
to individual pension planning with very, very good low charges dictated
by the Government and capped at one percent.
BEALE: It may at first appear an
attractive proposition. Forty per cent of the population have no pension
plans other than what the state will provide. Even the Government admits
that its basic pension is not enough to live on. For people like Ruth though
the stakeholder scheme has still not whet her appetite.
RUTH MORGAN: In my job I'm not on the minimum,
I'm above the minimum wage but even so my money is completely taken care
of with my every day expenses: the rent, the bills, looking after my child
and I would not be in a position to take out a stakeholder pension unfortunately.
LOCKYER: People in that sort of
income bracket tend to have a lot of other commitments maybe mortgages,
children, other expenses and pensions is perhaps on the bottom of the agenda
as far as they're concerned. But I think the stakeholder net itself has
been cast quite wide and they will be quite attractive to higher earners.
They're going be great tax planning vehicles for people who perhaps want
to pay into a stakeholder for their children, for their grandchildren,
for their wives.
BEALE: The challenge for the Government
is to get its target group to pour their wages into the new stakeholder
pension. Contributions are still meant to be voluntary though it might
not turn out as planned.
LOCKYER: I think that stakeholder
pensions at the moment, it isn't compulsory for employers to contribute,
it isn't going to be compulsory for employees to contribute, and I think
that at some point in the future the Government may well have to revisit
this issue and it might be quite unpopular. I think possibly they may have
to insist on compulsion, and it could be that employers will forced to
make a contribution into a stakeholder pension on behalf of their employees.
BEALE: That's a worrying prospect
for people like Chantal who're running a small business on a limited budget.
From October companies like hers will be fined if they haven't signed up
to a stakeholder scheme. She already feels the Government's burdened her
with excessive red tape, and doubts that staff will be enticed with what's
on offer.
CHANTAL COADY: I think it's extremely unlikely
that anyone will be subscribing to the stakeholder pension and from my
point of view I hope they don't, because if they do we've got to do the
deductions, we've got to administer the whole scheme.
BEALE: Even if the Government can
win round the sceptics, in the world of pensions there's still a bewildering
range of options. The government's promising a new second state pension
for those on three to ten thousand pounds. It'll replace the existing state
earnings related pension - or SERPS. The stakeholder pension is for the
group who earn between ten and twenty thousand pounds. Everyone can already
buy a personal pension, but may now wonder whether they're better off investing
in a stakeholder. An occupational scheme may still be the best investment
- but they're not available to everyone.
DAVID WILLETS MP: I'm afraid a lot of companies
are closing down their occupational pension schemes for new members and
telling people instead you must take out a stakeholder, often with a smaller
company contribution than there was before. So the danger with stakeholders
is that paradoxically hundreds of thousands of new people take out stakeholders
but they're not new pension savers - they're people who end up having a
less valuable pension than they would have had otherwise.
ADVERTISEMENT: "Scuse me, I'm looking for
some help with my pension options."
BEALE: The Government's embarked
on an expensive advertising campaign to give people advice. Opponents say
it shouldn't have confused them in the first place.
WILLETS: Being new Labour everything
has to be new, everything has to be redesigned, everything has to be renamed
and you've got a host of new schemes but the trouble is that especially
with pensions what's very important is to have stability. and because they've
abolished SERPS and brought in the second state pension instead, because
instead of sticking with personal pensions they've had to rename them as
stakeholders, because of all this they've generated enormous confusion
and uncertainty.
BEALE: Confusion is not confined
to future pensions policy. Those who've already retired are often baffled
by the Government's current initiatives and apparent fondness for form
filling. Labour's policy of targeting help towards the poorer pensioners
may be noble. But in practice it often involves having to answering pages
of questions to prove that a pensioner is on a low or modest income. And
perhaps not surprisingly many haven't bothered.
STEVE WEBB MP: The government is fond of
saying that its strategy is to help the poorest pensioners but in truth
the really poorest pensioners in the land are the ones who are entitled
to these means testing benefits, but don't claim that entitlement because
the system is very complicated, because they don't want actually to fill
in long complex intrusive forms.
BEALE: Once again the Government's
had to turn to advertising to encourage pensioners to apply for its means
tested benefit.
THORA HURD: Did you know the Government
is identifying from its records some people who they think may be entitled
to extra money through its minimum income guarantee?
BEALE: Half a million haven't claimed.
And yet it still plans to introduce more means testing. The Government's
targeting those who've already had to break into their savings or who have
none at all. The minimum income guarantee ensures the poorest pensioners
have at least ninety-two pounds a week. From two-thousand-and-three the
Government have promised to bring in a new pensioners tax credit. This
is aimed at those with modest savings. The benefit tapers off for those
on higher incomes. But there is help too for pensioners regardless of
income. Free TV licenses for the over seventy-fives are among a series
of one-off payments. There's also a winter fuel allowance now worth two-hundred
pounds for the over sixties.
For Tina - Rococo's oldest
employee - there's a reluctance to go cap in hand to the Government.
Like her, all that most pensioners want is a decent basic state pension.
TINA LAMBI: Personally I would not ever
apply for anything like that because I think it should be given to you
without having to fill in forms or asking for it, that's how I feel.
RODNEY BICKERSTAFFE: We don't want a pension scheme
which is going down and down in value and people being told two things:
either you look after yourself in terms of private pension aid and private
pension insurance or secondly, well you can have more but you can only
have it by jumping through hoops, by filling in forty-page forms, by going
through the indignity if you want, the stigma of means testing, that I
call parading poverty.
BEALE: Ministers hope their long
list of initiatives will help eradicate pensioner poverty. But continuing
protests by the elderly show that they're not convinced. What they want
more than anything else is the guarantee of a decent state pension. And
many believe the only way they'll get that is by restoring the link with
earnings.
BICKERSTAFFE: I think that many people
thought that the Labour government was gong to say DNR - do not resuscitate
- to the basic state pension. But I think that it's resurrected now, I
think the debate is on, I think we've all to play for. And certainly I
think the Labour government in the years ahead is going to seriously have
to consider that the basic state pension isn't just the foundation, but
it's the mainstay.
BEALE: None of the main parties
at Westminster is offering to deliver the ultimate pensions gift - restoring
the link with earnings. Though just before the election Labour is offering
a significant rise in the basic pension - a sweetener after last years'
miserly offering.
WEBB: I think many pensioners do
feel let down that when there wasn't an election on all they got was seventy-five
p; they are not stupid, they know the five pounds is because there's an
election round the corner and they know that once the election is over
it will be seventy-five p again.
BEALE: Whether that turns out to
be true or not, even the Government doesn't claim that the basic state
pension will ever be adequate. Critics say nor will the alternatives people
will be buying instead.
FIELD: Before the end of the next
parliament the Government will have to return to pensions reform, and while
stakeholder will no doubt be able to be paraded around as increasing the
numbers of people with funded pensions - I think we will find, sadly, that
the group that most needs coverage from funded pensions are the least likely
to have taken out stakeholder - they either aren't interested or much more
importantly they haven't got the money to and therefore they won't and
therefore the issue of fundamental pension reform will return once again
for the next parliament to consider.
BEALE: Laying plans for the future
is never easy. But the problem for Labour is that its new pensions goodies
may have left people even more uncertain as to what the state will provide
once they finally retire from work.
HUMPHRYS: Jonathan Beale reporting
there.
JOHN HUMPHRYS: Alistair Darling, stakeholder
pensions, a step in the right direction many people say - but - and this
is a serious problem isn't it, it isn't going to attract enough people
who are on modest incomes, ten thousand to twenty thousand pounds a year.
It's not going to do it, is it?
ALISTAIR DARLING: Stakeholder pensions were designed
to be one part of a number of measures the government is introducing to
make sure that people have a decent income in retirement. Now at the moment
if..there are many people who don't have access to an occupational pension
through their employer, people for whom a personal private pension are
inappropriate because they tend to have higher charges and it was that
gap in the market that stakeholder pensions are designed to meet. Now I
believe that the signs so far are encouraging, two years' ago when we announced
stakeholder pensions some people said 'oh you won't get anyone to sell
them'. In fact there are now forty-four pension providers in the field
and I believe that over the years, more and more people on moderate and
higher earnings will get into funded pensions, of which stakeholder pensions
are an important part, but of course they are not the whole story but they
are an important part of it.
HUMPHRYS: It's one thing to get
people to sell them it's another thing to get people to buy them and you
don't really think that people like that youngish woman we saw in the
film there - Ruth - she said my income is completely taken up - I quote
"with everyday expenses". So you can't expect people like her to buy into
it can you.
DARLING: Let me set out our strategy.
The first thing that we did when we came into power was to sort out the
problems that we inherited with a growing amount of pensioner poverty.
That's why we introduced the Minimum Income Guarantee, that's why we have
increased pensions for everyone to make sure that all pensioners shared
in the rising prosperity. The second stage of our reform was to make sure
that long-term pension provision was improved. Now we've done two things
here. Firstly, as I said we have introduced stakeholder pensions to give
millions of people access to a funded pension who at the moment don't have
access to them. Remember one of the advantages of stakeholder pensions
is that because of their very low charging, then people will actually get
more pension for the amount of money that they put in. But, part of our
long-term reform also as your report makes clear, is to introduce the state
second pension which is specifically designed for people on low earnings,
who don't have money to put by, to put into a funded pension and that state
second pension actually doubles the amount of money people would have got
under the Serps scheme. So we are helping people on low pay, we are helping
people on moderate pay. The third stage, which we may come onto in this
discussion of course, is the Pension Credit which will mean for the first
time in the Social Security system, if you do actually do what governments
have asked you to do over the years and you save for your retirement, you
will get a credit, a reward for having done so rather than being penalised
for that thrift which is the system that we took over.
HUMPHRYS: But let me stay with
the thought of stakeholder pensions for the moment and I am dealing here
as you know, with people on what you would describe I think as modest incomes,
that's to say ten to twenty thousand pounds a year. Your ambition if I
may remind you was to ensure that everybody earning more than ten thousand
pounds a year..twenty thousand pounds a year, should be and I quote "in
a secure funded private pension". Now you are not talking about that as
being a very clear ambition that they should all be in some sort of pension
such as that. You are talking about it as an option. So you have in effect,
scaled down your ambition haven't you.
DARLING: No, let me be very clear
about this. The government believes that if someone is on moderate or higher
earnings then they ought to be in a funded pension. That's always been
the position, set out clearly in the Green Paper we published in 1998,
it was the position then, it is the position now. What I was saying to
you was, stakeholder is one funded pension option, along with occupational
pensions or personal private pensions and the way in which we have changed
the rebate scheme, the amount of money that you get out of your National
Insurance Contributions to go into your funded pension, means that there..you
get a very good deal from the state as long..as well as with the tax relief
you can get because you can contribute up to three thousand six hundred
pounds a year. There are a lot of incentives there to encourage people
to get into funded pensions...
HUMPHRYS: ..but I mean - sorry
- that idea of contributing three thousand six hundred pounds a year to
people like Ruth is of course laughable. I mean as I've said to you, she
told us she couldn't afford anything. So what do you say to people like
her who is on a modest income and can't afford to pay into this scheme.
DARLING: What I say, at the moment,
assuming that that lady Ruth who you interviewed is employed, she is paying
National Insurance Contributions. Now I have no idea what her earnings
are and I certainly wouldn't seek to advise her from this distance on that
basis, but if you get somebody who is employed, they are paying National
Insurance, what I am saying to you is because of the way the system operates,
somebody on modest earnings, between about ten thousand and twenty-two
thousand pounds a year, would get an enhanced contribution from their National
Insurance into a funded scheme were she to go into a stakeholder pension
scheme.
HUMPHRYS: She'll still have to
pay.
DARLING: I also said to you John
that if she is earning less than that or you know she is on the sort of
cusp if you like between lower and moderate earnings, then she might be
better advised to stay in the state second pension, that's the reformed
Serps system where she would actually be getting double the benefit than
under the original Serps scheme. So what I am saying to you is, for someone
on low earnings, or someone there or there abouts, she might be better
off in the state scheme, but someone..generally speaking somebody as their
earnings rise above that, then they would probably be better off in a funded
scheme. Now what we have done is to ensure that the National Insurance
rebate system and the tax system is designed to reward people if they actually
do go into a stakeholder pension scheme. But whether or not it is appropriate
for her, clearly I don't know because I don't know how much she earns.
HUMPHRYS: Well we were assuming
that she earns between ten and twenty, I think it's something like fifteen
but of course I may be wrong about that, my apologies to her if I am wrong.
But there are five million people who have no pension, apart from the
basic state pension of course, no other pension apart from that. What
do you want that figure...
DARLING: If she is earning fifteen
thousand pounds a year, if she goes into a stakeholder pension then the
amount of money that she presently pays through her National Insurance
scheme into the state system because I assume that's what her arrangements
are at the moment, that would go in - if she went into a stakeholder scheme,
into a funded pot and all the evidence is that somebody going into a funded
pension, on that sort of earnings would do better than if they'd have stayed
in the state scheme. Now, clearly I can't give her personal advice for
obvious reasons but the way in which the National Insurance system works,
which she pays anyway, is that if it went into a funded pension, then she
might be better off as a result of that. And of course in years to come
if her earnings increase, then it would almost certainly be the case that
she can put additional money into a pension as she moves towards retirement.
HUMPHRYS: But you know that there
are many people like her who won't do that for whatever reason, it may
simply be because they feel they can't afford to, so ultimately, you have
to bit the bullet and say, it must be compulsory, mustn't you?
DARLING: No, you see, if you are
employed in this country at the moment, you have to contribute, there's
no question, it's not voluntary, you have to pay National Insurance. So
compulsion is already in the system and that lady Ruth, she's already obliged
to pay National Insurance Contributions which goes into a state pension
and about five per cent of it into her state second pension or Serps.
What I'm saying to you is, that for moderate earners, someone earning more
than about ten-thousand pounds a year, generally speaking, they will be
better off in a funded pension. Ideally an occupational pension but clearly
her employer doesn't have one of those, so from last Friday, stakeholder
pensions are being set up, where these investments are all pooled, they're
invested and generally speaking, all the evidence is that they get a better
return.
So compulsion isn't the
issue because there's already compulsion in the system. What is at issue
is the objective of making sure that more people on moderate and higher
earnings are in funded pensions because they would be better off and to
come back to the point you made right at your start to your programme,
you are right in saying the government strategy is to make sure through
a combination of state and funded provision, people have a much better
income in retirement. The stakeholder is one part of achieving that objective.
HUMPHRYS: And if they choose not,
let me return to the question of compulsion, I take your point about the
National Insurance pay-off, as it were, but if they choose not to do it,
would you consider, at some stage, compulsion? If you discovered after
a year or two years, or whatever it is, the thing simply isn't working,
people aren't going for this, would you then consider compulsion?
DARLING: As I said to you, people
like Ruth have no option. If you are employed in this country, your employer
takes your tax and your National Insurance Contributions away from you.
Your National Insurance Contributions go into the National Insurance fund,
which amongst other things pays for your basic state pension and the state
second pension. So compulsion is there anyway. But I mean, the key point
to focus on here is what we're doing is, as I say firstly we are making
sure that for lower earners the state system is much much better than it
ever was in the past because these people could never earn enough on their
own, that's why we've increased the amount of benefit they get through
the state second pension, it's almost doubled, trebled in some cases actually.
What we're saying for
moderate and higher earners is that you really ought to be in a funded
pension and that's why stakeholder pensions have been introduced because
at the moment, or up until Friday, people didn't have any choice in the
matter, there was nowhere for them to invest their money. Now there are
stakeholder pensions, they are low charges, one per cent, and that's already,
you can see the effect of that across the whole industry now. They are
portable, you can put money in, there are not penalties if you stop for
a while and then contribute. So that it benefits low paid people, it benefits
women who take time off to care for her children or for other relatives.
These stakeholder pensions will be of immense benefit to the pensions system
and as I say, they're giving options that were never never there in the
past.
HUMPHRYS: Let's look at the basic
state pension then. You'd accept that secondary pensions can be a fairly
complicated issue. The problem with the basic state pension now is that
that too is very complicated because of all the means testing that is involved
at various stages in the process. You were supposed, New Labour was supposed
to move away from means testing, we have more now than we ever had before.
DARLING: We don't actually, it's
almost exactly the same as it was when we came into office because of course,
what's happening is this - if you look at pensioner incomes today, the
average pensioner income is a hundred-and-forty-one pounds a week. Now
the reason it is that is because a lot of people are now retiring with
very good occupational pensions. You know one in six pensioner couples
are retiring on over twenty-one thousand pounds a year. The problem is,
there's a lot of pensioners at the other end of the income scale, who only
have the basic state pension, or in fact there's a million pensioners who
don't even have that. Now a one-size fits all approach doesn't work.
So what we've done is this. Firstly, you've got the Minimum Income Guarantee,
which actually you can now complete a form that's only ten pages long,
well from October, ten pages long, or you can apply for it over the phone,
you've got...
HUMPHRYS: ...and of which half
a million people don't get still.
DARLING: I'll come onto that point
because I think that....those figures are misleading. We've got the Minimum
Income Guarantee which from tomorrow goes up to ninety-two pounds fifteen
a week. So what we're saying is no pensioner should be living on less
than that. Now that ninety-two pounds fifteen a week compares to only
about sixty-eight pounds that the Tories left us when they left office
four years ago. So there is the Minimum Income Guarantee. That is the
only way of getting money to the pensioners on low incomes. If you don't
have the Minimum Income Guarantee, if you're opposed to it as the Tories
are, then you will find that pensioner poverty will grow and I don't believe
that pensioner poverty has any part in a civilised society...
HUMPHRYS: ...yes but it...
DARLING: ...the second thing you've
got to do John, is to make sure that for those millions of pensioners and
there's about five million of them, who've saved a little bit of money,
they've got maybe a modest occupational pension, or they've got a little
bit of money in the bank, that they're actually rewarded for their thrift.
Under the present system, under the system we inherited from the Tories,
they are punished because of it. When the pension credit comes in from
2003, then those pensioners will get an additional cash top-up. So the
system is quite simple, Minimum Income Guarantee that ill rise to a hundred
pounds in two years' time, the pension credit, which is designed to make
sure that where people have saved modest sums, they get a cash top-up for
having done it and the longer term reforms to make sure that everybody
who can save has the opportunity to do so.
HUMPHRYS: But the Minimum Income
Guarantee is fine if you apply for it and if you get it but as you've acknowledged,
many people don't do that, either because they think it's terribly complicated,
or because they think, wrongly certainly, but nonetheless because they
think it is in some way demeaning, so they don't do it. Let me remind
you what Rodney Bickerstaffe said in that film, what most people want is
a decent income so they don't have to rely on means tested benefits. The
stigma of means testing that I call, he said, I call parading poverty.
DARLING: Yes, but as Rodney well
knows because I've had many hours of discussions with them, that the only
way to help the generation of pensioners we now have who only had the state
pension, or in some cases, not even that, including, you know, some of
his own members, is to have the Minimum Income Guarantee. But you know
let's deal with this point since you raised it. We wrote to two and a half
million pensioners who we thought might be eligible for the Minimum Income
Guarantee. Now just under a million responded. So the old argument that
somehow it was stigma, or that people you know, didn't want to get in touch,
you know, seems to me to have fallen away, because a million people got
in touch with us. Now when we looked at the circumstances of those million
people, what do we find. We find that most of them don't qualify because
they've either got a modest occupational pension, or alternatively, they've
got, you know, they've got some modest savings in the bank.
Now when the pension credit
comes in in two years' time, these people will be rewarded for their thrift.
Let me give you an example. At the moment, if you've got an occupational
pension of twenty pounds a week, going on top of your basic state pension,
you get nothing for your thrift. Under the new system, that same person
would get an extra twelve pounds a week to reward them for their thrift.
Now I think the Social Security system ought to be rewarding thrift, not
punishing it. Last point on this John, you talk about stigma, nobody has
any compunction whatsoever about claiming tax allowances to which they're
entitled. Nobody has any problem with that...
HUMPHRYS: ...oh, different area...
DARLING: ...well it's not because
what we're saying is, that where you've got somebody on a low income then
there is no reason whatsoever why they should not get that money then...
HUMPHRYS: Well, why then, why did
Tony Blair himself say three years ago - two-and-a-half years ago - there
are problems if you move to too much means testing, as you can see with
pensioners who do not take up Income Support. The Prime Minister thinks
it's difficult.
DARLING: It wouldn't surprise
you to know that the Prime Minister finds himself in complete agreement
with our pensions policy, but he won't .......
But the problem we inherited is that when we came into office there were
about two million pensioners who were living on - their incomes were so
low that they were on Income Support. Now, we've got to deal with that
problem. You can take the Tory view and say, well we don't believe in
giving these people any help, tough luck, we'll leave you to get on with
it. That's what they did for their eighteen years. I believe that there
should be a minimum, a guarantee for pensioners. Age Concern for example
last year, said that they - that pensioners shouldn't live on less than
ninety pounds a week. I agree. That's why from Monday, tomorrow the Minimum
Income Guarantee will rise to over ninety-two pounds,. It will go up to
a hundred pounds in two-thousand and three, but that on its own isn't enough.
You've got make sure that where that nearly half the pensioner population
has actually got modest savings or a modest occupational pension, you can't
just say to these people: well, tough luck. You should say to these people:
you've done what you were asked to do, now let's reward you for your thrift,
let's not punish you as the Tories seem to want to do.
HUMPHRYS: But many people believe
that the basic state pension is what it should be all about, and this increase
that we've now had, five pounds, is seen by many as a pre-election bribe.
The reality is, isn't it, that you are not committed, you are not committed
to increasing the basic state pension so that people won't have to worry
about money in future. What this is, is leaving open the possibility that
we might have another seventy-five per cent - a seventy-five pence increase
for the next year's pension or the pension after that?
DARLING: Well, despite what Willetts
and Webb had to say, no party in this country is going to restore the earnings
link. You know that's been the case for many years, and that's likely
to remain the case. But...
HUMPHRYS: So we won't have another
seventy-five pence increase?
DARLING: Let me directly answer
your question. The problem is that the gap between pensioner incomes in
this country, between the better off and the poorest is as wide, or was
as wide in nineteen-ninety- seven as it was forty years earlier. To give
the same amount to everyone the poorest and the richest alike doesn't make
any sense. What we have done, and I think it's the right policy to pursue,
is firstly to hugely increase the amount of money that the poorest pensioners
get, as I say, up from sixty-eight pounds four years ago, all the Tories
were prepared to allocate, up to ninety-two pounds-fifteen from tomorrow,
and rising to a hundred pounds in two years' time. The second thing that
we wanted to do was to make sure that those large number of pensioners
that you know, were pretty - not well off - on modest incomes - should
also see the fruits of their thrift, that's why we're doing the pension
credit, and of course we've also made tax changes. Remember that seventy
per cent of pensioners either pay no income tax or only at the ten pence
rate, so we're helping those modest pensioners, but to give exactly the
same to the poorest pensioner and to say, Margaret Thatcher, seems to me
to be an absurd policy.
HUMPHRYS: Okay.
DARLING: Now I don't believe that,
and it's not surprising actually that no major political party wants to
return to that system. What is crucial though is to make sure we maintain
and increase the Minimum Income Guarantee which the Tories oppose, to make
sure that you make the long term reforms, so that people can save for the
future, and at the same time make sure that saving and thrift and prudence
are rewarded, that's what the pensioner credit does, and the increases
in pension tomorrow, the five pounds for a single pensioner, the eight
pounds for a pensioner couple and the increases planned for the following
year are a step towards achieving a situation where all pensioners not
only share in the country's wealth, but at the same time they can look
forward to a decent income in retirement in the future.
HUMPHRYS: Alistair Darling, many
thanks.
DARLING: Thank you.
HUMPHRYS: The peace process in Northern
Ireland has staggered along over the years from one crisis to another.
At the moment it's more or less on hold. Everyone's waiting for the elections
in June. But David Trimble, the first Minister and leader of the Ulster
Unionists, may be waiting with more trepidation than most. It's assumed
that the elections will give a boost to those parties and politicians who
have always been opposed to the Good Friday Agreement and on the other
side of the divide, to Sinn Fein. So where will that leave Mr Trimble?
Iain Watson reports.
IAIN WATSON: An idyllic scene - if this
were rural England, the biggest worry about delaying elections would be
whether foot-and-mouth could be brought under control. But this is County
Fermanagh in Northern Ireland where the stakes are higher. The town at
its centre, Enniskillen, was devastated by an IRA bomb on Remembrance Sunday
1987, killing eleven people.
Enniskillen has tried to put the past behind it but the future remains
uncertain. Momentum in the peace process has been stalled until after
the General and Local Elections, bringing dangerous uncertainty for all
the pro-agreement parties -but in particular, the result of these elections
could place a question mark over David Trimble's future.
PETER WEIR MLA: Clearly I think it is a
crucial election for David Trimble. He could either be vindicated by this
election or find himself politically finished.
GERRY ADAMS MP: Well the Lord helps those who help
themselves and one of the very good things that pro-agreement Unionists
could do, is to tell the world and their voters that they are pro-agreement
Unionists and that they do support the agreement.
WATSON: Here in the Fermanagh and
South Tyrone constituency, David Trimble's party used to be given a clear
run by fellow Unionists. But no longer. This time anti-agreement Unionists
are mounting a challenge and in doing so, could split the Unionist vote
and hand the seat to Sinn Fein. That in turn would bolster their ambitions
to become the largest nationalist party across the province. But in some
other seats David Trimble's candidates could lose out to those of Ian Paisley's
DUP and a nightmare scenario for the British government is that on June
eighth, David Trimble himself becomes the only pro-agreement Unionist left
at Westminster.
WEIR: David Trimble is
the one that perhaps has the best chance of getting in, I think would be
favourite in his own constituency but looking around the other seats, it's
difficult to see where you could predict any degree of certainty of a pro-agreement,
another pro-agreement Ulster Unionist getting elected.
WATSON: James Cooper, is vice president
of the Ulster Unionists and a staunch supporter of David Trimble. Along
with the Chairman of the local Chamber of Commerce, he's inspecting a creamery
which closed down recently and is discussing the need to bring more investment
to the far West of the province. He feels the optimism which accompanied
the signing of the Good Friday agreement three years ago needs to be sustained;
so long as the peace process continues, business opportunities will improve.
JAMES COOPER: For the first time, we have
real prospects of attracting in inward investment money from the United
States and from Europe. We are now at a stage where we can credibly sell
Northern Ireland as an attractive place for investment and that is something
that has been a change and a significant change with the agreement, so
we must sell it, on the basis of providing stability and opportunity and
that's one of the back-bones of the agreement.
WATSON: Maurice Morrow, a Minister
at Stormont, has been selected by the DUP to fight Fermanagh and south
Tyrone; he's angry that David Trimble is sitting in government with Sinn
Fein; he says they're inextricably linked to the IRA, which attacked his
home town of Ballygawley.
MAURICE MORROW MLA: About fifteen years ago, the IRA arrived
with a barrack buster bomb and forced their way in and shot two constables
here in the police station.
WATSON: There's speculation Maurice
Morrow may stand down to avoid splitting the Unionist vote and handing
the seat to Sinn Fein but he says he'd only do so if the Unionists replace
their candidate with someone more to his liking.
MORROW: When the Ulster Unionists
signed the Belfast agreement they aligned themselves on the same side of
the agreement as Sinn Fein IRA and the SDLP. They effectively split the
Unionist community - that in fact was the design of the Belfast agreement,
to split the Unionist community and they have said that they are putting
someone up who is a protagonist for the Belfast agreement. We are now left
with no choice, but to go forward and stand in this election and give the
people in this constituency who are opposed to the agreement an opportunity
to do that in this forthcoming election.
WATSON: At the last General Election
David Trimble's Ulster Unionists were clearly the largest party with ten
seats at Westminster. The SDLP had three, while Sinn Fein and Ian Paisley's
DUP had two apiece, with an independent candidate taking the remaining
seat. But last year the Ulster Unionists lost South Antrim to the DUP
in a by-election and may not win it back. And now, some Ulster Unionists
fear that as many as five more parliamentary seats across the province
could be vulnerable to the other main parties.
Here at the devolved assembly at Stormont, Alex Kane is an adviser to
pro-agreement Unionists; and he's press officer of the Ginger Group Reunion,
which tries to get the benefits of the Good Friday Agreement through to
all Unionists. but he's not hopeful. Although the local elections were
delayed here at David Trimble's request, Alex Kane fears that up to a third
of the party's councillors could also be on the way out.
ALEX KANE: Well I think the nightmare
scenario would be three seats, but if they had the local council elections
on the same day, they could also lose fifty to sixty councillors. But
the other problem of course facing Trimble is that a majority of the candidates,
that Unionists will have to vote for, are anti-agreement, so no matter
how successful he personally is, he cannot win on that simple headcount.
WATSON: One of these anti-agreement
Unionists prominent in the ranks of David Trimble's party is assembly member
Peter Weir. He's been selected as the official Unionist candidate to fight
the seat of North Down at the next General Election -though he's currently
in a protracted court battle to stop pro-agreement Unionists from deselecting
him.
WEIR: I think what is happening
in North Down is symptomatic of a lot of the tensions that are existing
within various parts of the country, within the party and I think that
can't bode well for a good electoral performance. If you've got a party
where a lot of people don't like each other, where they strongly disagree
with one another, that's not something which the electorate will find particularly
attractive, irrespective even the merits of the agreement or not.
WATSON: David Trimble could do
with a bit of help from some unlikely allies - if the IRA begin decommissioning
ahead of the General Election then David Trimble's electoral prospects
would be improved. But don't hold your breath. Over the years Sinn Fein
have been gaining on the SDLP as the predominant Nationalist Party and
if they do even better at this election then that could be seen as endorsing
a strategy which has brought Sinn Fein into government without the IRA
handing over any of their guns.
Michelle Gildernew is
the fresh face of new look, soft focus Sinn Fein - but she intends to build
support in the constituency by evoking the memory of a previous Republican
victory. It was twenty years ago that a prisoner on hunger strike became
the MP for Fermanagh and South Tyrone
MICHELLE GILDERNEW: Bobby Sands' victory was our
first stab at electoral politics in this phase of the party's history and
I hope that I can live up to the legacy that Bobby Sands has left.
WATSON: Michelle Gildernew isn't
in a mood to offer succour to David Trimble.
GILDERNEW: It doesn't help when other supposedly
pro-agreement parties continue to dig themselves deeper into holes of their
own making. So I think you know there is no chance of the IRA decommissioning
this side of an election but it has to be said too, the IRA's commitment
and their courage and the initiatives that they are taking have not been
reciprocated and have not been recognised by the Unionist Party.
WATSON: While Sinn Fein's candidate
expects no decommissioning before the election, their President can't guarantee
that the IRA will make any progress before the end of June, which is the
government - and David Trimble's - proposed date for the handing over
of terrorist weapons
ADAMS: It isn't a deadline. I mean
look at the Good Friday Agreement, clearly it isn't a deadline. I actually
see personally and as part of a leadership that it's crucial that we go
back into negotiations with an increased mandate. I think it's crucial
to send a message to those who don't like Sinn Fein's peace strategy, send
a message off that it's popular, that it's endorsed. I think it's necessary
to vindicate what we have been doing.
WATSON: It's likely that the SDLP
will retain the three Westminster seats that they hold, but if enough SDLP
supporters vote tactically for Sinn Fein then Gerry Adams' party has the
potential not only to hold the two seats they have but to add two more,
taking their tally to four.
ADAMS: There is a four per cent,
less than four per cent separating the four main parties in the north and
in this election, or the next election, Sinn Fein intends to be the largest
party. Not the largest party in the nationalist side, but the largest party
in the state
WATSON: Indirectly, this man could
help David Trimble; he's Tommy Gallacher, SDLP candidate in Fermanagh and
South Tyrone, with a high enough vote he could split the Nationalists and
prevent Sinn Fein taking the seat; he reminds voters that he has always
argued for peaceful change.
TOMMY GALLAGHER MLA: I remember being here in the late
Sixties at a rally where there about a couple of thousand people from County
Fermanagh who took part in their local Civil Rights march from the far
end of town walking up to the Diamond here. The Civil Rights campaign
was overtaken by the violence and for many years human rights suffered
right across the community.
WATSON: His party has rejected
an electoral pact with Sinn Fein to boost Nationalist representation so
he'll be competing with Gerry Adams's party for votes.
GALLAGHER: I am very confident because
of the role the SDLP has played throughout its lifetime that we will continue
to be the largest party on the Nationalist side and we'll continue to be
the party best placed to deliver all elements of the Good Friday Agreement.
WATSON: But Trimble-aid could take
a more direct form. The former US President Bill Clinton will return to
Northern Ireland next month to help sell the benefits of the agreement
to all communities. But it's hoped his intervention may just rekindle the
waning enthusiasm of some pro-agreement Unionists. And the British government
will also do what they can to sustain confidence in the Good Friday Agreement
this side of the elections
The all-party negotiations
here at Hillsborough on the peace process have been stalled since January
but the government wants to resurrect them as soon as the elections are
over.
The Northern Ireland Office
has drawn up a series of briefing papers looking beyond the election and
one discusses the possible consequences of a Unionist meltdown in the polls.
There are fears that not enough pro-agreement Unionists will turnout on
election day. Over the next few weeks there will be a campaign to try to
boost voter turnout and government ministers while being careful not to
endorse any particular party, will be co-ordinating a series of speeches
to try to sell the economic benefits of the Good Friday Agreement.
The local paper in Fermanagh
was founded by William Trimble - apparently no relation to David. But the
better known Trimble may regret having no editorial control because the
paper's front page highlights the continuing battles within Unionism. So
if all the attempts to persuade enough pro-agreement unionists to go to
the polls fail, then the predominance of the Ulster Unionist Party is under
threat and that would spell bad news for David Trimble.
WEIR: I think he would
have grave difficulty if we find ourselves as the second party of Unionism.
I think that people would find that very difficult within the party to
accept and I think there will be at least a need for a change of direction
for the party and potentially under those circumstances I think the leader
would have to look at his position as well.
WATSON: The people of Northern
Ireland will be hoping that the peace of the Fermanagh countryside will
become everlasting. But the local and General Elections could be a watershed
here. If enough Ulster Unionist support seeps to Ian Paisley's DUP, then
David Trimble could see the backing for a pro-agreement strategy in his
own party drifting away.
HUMPHRYS: Iain Watson reporting
there.
JOHN HUMPHRYS: The railways are still not
back to normal. Some say it'll be a very long time before they are. And
yet railway companies are pushing up the cost of a ticket. This past week
Virgin announced a whacking ten per cent increase for some journeys. How
can they get away with it? Should they be allowed to get away with it?
The Transport Minister is Lord MacDonald.
Passengers understandably
are furious Lord MacDonald, should they be allowed to get away with it?
LORD MACDONALD: Well at the moment there's nothing
that we can do about that particular rise which I think is very regrettable
because it's not the kind of message you want to be sending out when you
are getting passengers back on the railway. All I can say is if you look
over the last four years, in fact the train fares have gone up at the same
rate as inflation. We have got a formula that says for a lot of the fares
there has to be inflation minus one per cent. But they are freeing companies
like Virgin to change their fares on some schedules and that's what Virgin
have been doing here.
HUMPHRYS: And it sends completely
the wrong signal doesn't it. I mean you've asked them to explain themselves
to the Strategic Rail Authority but in reality that's a bit of an empty
gesture, because as you say there's nothing you can do.
MACDONALD: Well it's really for the passengers
to look at it and say well can we get to Manchester more quickly by air
or by coach. In the end...
HUMPHRYS: ..or by car...
MACDONALD: ..or by car, is there an alternative
service we can take. They are in a marketplace, as I say it's doesn't help
my strategy that they should behave like that but there's nothing that
we can do to a sovereign company like Virgin to inhibit them on this particular
area. Although we do pay them considerable subsidies every year on Virgin
and they have also had money back from the Strategic Rail.. a bit from
the Strategic Rail Authority but a lot of money back from Railtrack in
terms of compensation. But they still say they're losing tens of millions
and that's the reason for the increase.
HUMPHRYS: You say it doesn't help
your strategy. The fact is it blows a huge hole in the side of it doesn't
it, because you want people to use their cars less and to use the trains
more.
MACDONALD: We do but this is only one particular
line. These are the Inter-City lines that are suffering most. If you look
at the overall figures you'll find that in fact we have got over ninety
per cent of trains running normally now and over eighty per cent of those
running punctually.
HUMPHRYS: Can I come to that in
just a moment because you've mentioned the question of money - who gets
what money and in a sense passengers are losing twice here aren't they.
Their trains are delayed so they lose in that sense, then what happens
is that the TOC - the Train Operating Companies - have to be bailed out.
Now there are three ways in which they can be bailed out. One is you push
the fares up as has just been happening, two you cut back on investment
which you don't want to see happen of course, and three more money goes
from the taxpayer. You have already given them, we have already given them
one-point five billion pounds and that is the only option isn't it, ultimately,
is to give them more money out of the public purse if we want to see things
improve.?
MACDONALD: No, I don't believe that's the
case John. I think that what we've got to do is make sure we get value
for money for what the public invests in the railway and the public has
to invest in the railway to keep the fares down. I think that's inevitable,
in fact our subsidy..
HUMPHRYS: Invest more is what I
am saying..
MACDONALD: We are investing more of course...
HUMPHRYS: More still is what I
am saying..
MACDONALD: We may have to invest more still
because we are planning to invest sixty billion private and public across
the next ten years in improving the railways, but if we want a bigger better
railway then we will have to have public investment but we want to see
private investment alongside that.
HUMPHRYS: Yeah, but the problem
with that private investment is that's fine and half of that sixty billion
is supposed to be private isn't it. But the trouble is that's tied into
increasing use of the railways, in other words tied in increase in income.
If we start seeing people using the railways less as we surely will if
prices go up like this, then that isn't going to happen.
MACDONALD: But remember this is a very
selective Virgin increase, across the railways as a whole, as many people
now are using the railways as this time last year, so there hasn't been
that Hatfield effect...
HUMPHRYS: ..it's dropped from what
it was...
MACDONALD: It's dropped a little bit than
what it would have been but in fact the figures do stand up, there are
as many people as were travelling this time last year. There's over ninety
per cent of the trains are now running normally, there's about eighty per
cent of those running punctually and it was about eighty-six per cent before
Hatfield. So it's not an entirely bleak picture.
HUMPHRYS: Not entirely bleak but
pretty bleak because those figures are predicated on a continuing increase,
not a leveling off, a continuing increase and you seem to be acknowledging
that you may have to give them more money than it is planned from the public
purse.
MACDONALD: We plan to put in about sixty
billion out of the hundred and eighty billion in the ten year transport
plan. There will be...a few billion more will go to rail as against other
modes like road. So yes it will be a little bit more there but we believe
that we will get better value for money than you would have got in the
past because we have got tougher regulation here and we believe better
leadership through this new Strategic Rail Authority that we've set up.
HUMPHRYS: Let's look at this question
of re-nationalising the railways. To which of course, the government says
absolutely no way. But why not use all this investment that we're talking
about, if you're going to give one and a half billion pounds is the figure
I've just mentioned, to Railtrack. Why not use that to buy a stake in Railtrack,
rather than just say look, here's the money, now you invest it as you think
fit, or as we think fit maybe. But nonetheless, why not say we will have
a stake in it because what the Select Committee who looked into this whole
question of re-nationalising said, it is unacceptable that the taxpayer
should be compelled to bale out a private monopoly company that has acted
so incompetently without taking any stake in the company in return. Had
a point, didn't it? bail
MACDONALD: Well, emotionally and politically,
you've got to have some sympathy with that. It looks, on the face of it,
like a solution. But I think in closer inspection you discover that it
takes too long, it costs too much, there would be years of upheaval. There
would be an investment freeze across the railways and what we're looking
for is the doubling of investment in the railways really against recent
times and that would be delayed for many, many years and we don't believe
it's the right course to take. What we need is more investment and better
management and better regulation. That way, we'll drive the growth of
we believe of about fifty per cent more passengers across the next ten
years.
HUMPHRYS: But it's possible that
you're going to meet an awful lot of voter resistance here, isn't it.
If you keep piling taxpayers' money into a system and the company that
is running that system is making a pig's ear of it and it's tax and its
shareholders ultimately benefit from that money, people will say, what's
going on here? Why should my hard earned taxpayers' money go to help out
these people?
MACDONALD: Well, you can see that the deal
that we did with Railtrack this week, in fact reduced their share price
because the shareholders realised that in under our deal they wouldn't
get any extra dividends, the money would have to be invested in making
sure that that railway ran properly because we've got a Regulator who's
looking at it very closely. We still want to expand the railway but we
are not prepared to let Railtrack be an inhibition on that, so we've said
to Railtrack, you can still invest but it'll be alongside the Strategic
Rail Authority and other groupings who will help us expand the railway
as in fact Bechtel and others have helped us build this new Channel Tunnel
rail link. We'll be doing the same in many other areas of the rail network.
HUMPHRYS: Their ability to invest
of course is directly effected by the reduction in their share price.
If a company is worth a fraction of what it once was then it has less to
invest and it can attract less investment.
MACDONALD: Well, if a company is badly
managed, then its shareholders will be punished and that's what's happened
this week. The shareholders then decide that the board representing their
interests will have to take action make sure the company...
HUMPHRYS: ...so British Rail, British
Rail, I'm going back a bit aren't I, Railtrack is badly managed, there's
no doubt in your mind about that?
MACDONALD: Railtrack admits it's been badly
managed...
HUMPHRYS: So why then, it returns
to the question of taking a stake in it doesn't it. Yes in the short term
there would be some complications, as you say, but in the long run, if
we had this badly managed company and we keep pumping money into it, it's
chucking good money after bad, isn't it?
MACDONALD: Well Railtrack will be appointing
a Public Interest Director, who will keep an eye, we believe, on it.
HUMPHRYS: One man?
MACDONALD: Well, it'll be somebody in the
board and well positioned inside the board to be the eyes and the ears
for the public interest...
HUMPHRYS: ...only one vote...
MACDONALD: I don't think it'll come to
a vote, I don't think it's about that. Railtrack isn't I accept a normal
PLC, a normal public company because it's got a vital national asset and
also it receives public subsidy. We have therefore come up with a statement
of principles that covers operations with Railtrack and we believe that
that's the best way forward, more management, better investment. We believe
it'll be an expanded railway and a better run railway in future.
HUMPHRYS: Right, better run railway.
When is it going to be back to normal? You keep using this figure of
ninety per cent but in December you said that at the end of June, that's
last December you said at the end of January, things, January, not June,
everything would be fine, in January, you said it would be over by Easter,
all these problems, what's the latest forecast? You're in danger of losing
your credibility aren't you?
MACDONALD: Well, we said that by the end
of January largely back to normal. What we've got now is about ninety-two
per cent, these are the figures that I got just a day or two ago, ninety-two
per cent of all trains running - but around the country and in the commuter
areas it's about a hundred per cent. In terms of punctuality, as I say
the latest figures I have show about eighty-two per cent on punctuality,
as against eighty-six per cent pre Hatfield.
HUMPHRYS: ...well...
MACDONALD: And punctuality's defined in
a various, you know, in a number of various ways, but it's trains that
are within five minutes...
HUMPHRYS: ...and in some cases
they cook the books in effect, because the timetable's been rewritten so
often, nobody knows what punctual means any longer. I mean if I give you
an example of the West Anglia Great Northern, it won't be back to its pre
Hatfield state until, that's cross-country of course I'm talking about
now, until next year.
MACDONALD: We've got about two or three
of the lines where we have problems, west of Exeter for instance, London
to Norwich, London to Milton Keynes and of course we've got a lot of work
going on on the West Coast Main Line as well because that's the biggest
engineering project of its kind in Europe, about six billion pounds of
work being done there. So that's the other paradox here, that we're investing
at last to try and upgrade the British railways which have been starved
of investment for decades, but there's a cost there in disruption. When
we talk about the speed restrictions we have post Hatfield, but at any
normal time on the railroad there's about two-hundred speed restrictions
on and unfortunately, that will continue as we rebuild the railway, but
we believe...
HUMPHRYS: ...exactly...
MACDONALD: ...but we believe through that
rebuilding we will get to a railway which runs much better...
HUMPHRYS: ...when...
MACDONALD: ...we've said that we're very
largely back to normal by Easter, by May, the Regulator has, the Regulator...
HUMPHRYS: ...that is not the experience
of the passengers, it really isn't...
MACDONALD: It depends as I say as how you
interpret these figures and you're obviously understandably querulous John,
but what I'm told by the companies and I don't believe that they would
be misleading me, is that we are largely back to normal with over ninety
per cent of these trains running and for instance, in the commuter areas
around London, closer to a hundred per cent.
HUMPHRYS: Maybe you should get
out on the trains more and talk to the companies less...
MACDONALD: Well, I do. I was on them just
yesterday and fortunately they both ran on time.
HUMPHRYS: Well, I talk to a lot
of people who use them and they say, they're rubbish, not to put too fine
a point on it.
MACDONALD: Yes, I can understand the frustration.
I share the frustration of the passengers but I assure you we are investing
to make it better.
HUMPHRYS: Lord MacDonald, thank
you very much indeed.
HUMPHRYS: And that's it for this week
and indeed until after Easter. We'll be back on April 29, in the meantime,
if you're on the Internet, don't forget our web-site. Good afternoon.
...oooOooo....
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