Prime Minister Misrepresents Lib Dem Pensions Policy - Cable

11.25.00am BST (GMT +0100) Wed 8th Sep 2004

Liberal Democrat Shadow Chancellor Dr Vince Cable today responded to Prime Minister Tony Blair's comments in Parliament by saying: "The Prime Minister totally misrepresents the Liberal Democrats' proposals for financing our commitment to improved pensions for the over 75's. He confused the costs for one year with the figure for a lifetime of a parliament.

"Our pension's policy to lift older pensioners out of means testing is estimated at £12.5 billion over the first Parliament. Our programme is fully costed and based on the Government own figures, as are our projected savings.

"Our savings in Government spending to finance the pensions package come from several sources:

• Because of the scrapping of means testing and pensions credit for large numbers of older pensioners there are considerable savings within DWP. Moreover we envisage considerable savings in DWP from bringing housing benefit within a standardised system instead of, as now, being administered by local councils - many of them very inefficiently. Together the savings would amount to £2 billion over a Parliament.

• £8 billion over a parliament comes from deep cuts in the bureaucracy and in various industrial support schemes of the DTI when we abolish the department. The savings amount to just over 1 quarter of the projected DTI budget of £30 billion over the next Parliament. Some of the more useful activities of the DTI like science funding for universities would be routed thorough the department for Education. Many businesses also argue that DTI schemes are a very wasteful use of tax payer's money.

• £1 billion over a parliament would come from slimming down the Treasury to its size in 1997, before Gordon Brown massively expanded it, and from cost saving measures such as more realistic charging by the office of National Statistics.

• The remaining £1.5 billion would come from savings we have already highlighted in DEFRA and DCMS. Both would have their budget frozen at current cash levels.

"Our pensions policy accounts for roughly half of the £25 billion which the Liberal Democrats' have promised to spend over a Parliament above Government spending commitments. The full amount is offset by cuts elsewhere of which the DTI is the largest. The remaining £12.5 billion is allocated to high priority areas like education and is financed by cuts in other programmes such as the Government's baby bond scheme.

"I will be sending the Prime Minister details of our figures for his information in order that he does not inadvertently mislead Parliament again on this issue in future."