Interview with Sky television on pensions

2 December 2005

Transcript of interview given by Tony Blair in Budapest with Sky News.

Read the interview:

Interviewer:

OK. Now it is in the news in London, but while you have been meeting in here, there has actually been a demonstration by pensioners outside, not British pensioners, Hungarian pensioners. But nonetheless the matter of pensions is very much on people's mind, and there seems to be a perception that Adair Turner has come up with a report that has been widely welcomed and the Chancellor has simply said: I am sorry mate, you have got your sums wrong, we can't afford it. Which do you back, do you back Lord Turner or do you back Gordon Brown?

Prime Minister:

Well the Chancellor is not saying that at all, he is simply saying that any proposals have got to be affordable. I actually think they are very exciting proposals that Adair Turner has put forward, I think they offer us the possibility of a long term solution to the problems that we have in Britain on pensions, but as you rightly say, as you can see by the demonstration here in Hungary, every country has a problem on how it deals with increasing numbers of people in retirement. And if we are able to do that on the basis of political consensus across the parties as well, well that would obviously be a huge bonus for the country. But Gordon is absolutely right in saying that any proposals have got to be affordable.

Interviewer:

Yes, but they are apart in principle here, because what Adair is saying is that as a nation we have to be prepared to pay more, going up 1% of our national wealth by about 2020. What he is also saying is any savings in the system, such as women working longer to the age of 65, shouldn't be pocketed by Gordon Brown, but they should be recycled into pensions. Now do you accept (a) that we need to spend more of our national wealth on pensions through the tax and benefits system; and (b) that any savings within the system should be reinvested in pensions?

Prime Minister:

Well there are two separate points there, but on the first I would accept, and I am sure Gordon would accept, everyone will accept that if there are more people in retirement you have got to spend more on pensions.

Interviewer:

... actually for the amount of money to go down ...

Prime Minister:

No, because they are simply projections if you leave the system as it is, but the fact is, let's be under no doubt, it is under this Chancellor of the Exchequer that pensioners, particularly poorer pensioners, have seen significant increases in their income. We are spending £11 billion a year more in 2005 than we were in 1997 on pensioners. Now as for what happens going forward if there are savings, now I think that everybody again accepts that you have got to have a system that is overall affordable, but we are going to have to pay more because more people will be in retirement. And this links in very strongly with the welfare reform proposals because we also have to make sure we have a larger percentage of people at work. If we don't get a larger percentage of people of working age at work, then that means that we are unable to afford the welfare state.

Interviewer:

Adair Turner says less means testing, do you support that?

Prime Minister:

I think that everyone supports that in the forward perspective. The reason we have done the pension credit up to now is because that was necessary to reduce pensioner poverty, and we have done it - 2 million pensioners lifted out of acute hardship. I think everybody, and again including the Treasury, accepts that in the longer term you don't want to get to the situation where you have got 70 - 80% means testing, and no-one has got any intention of doing that.

Interviewer:

So it is not dead, the Turner report?

Prime Minister:

No, absolutely not, and I think if you speak to Gordon he will say exactly the same. And all that the Treasury are saying, perfectly rightly, is that you have got to make sure anything you put forward is affordable. But I think all of us see this as a basis now to develop a consensus in the British pensions system.