Christmas Bonus (Specified Sum) Order 2008

The Committee will be grateful, although doubtless not as grateful as pensioners and those on the specified social security benefits, for the noble Lord’s explanation of this beneficent order which, for one year only, raises the annual Christmas bonus from £10 to £70, but in two chunks. There is £10 before Christmas, which has almost entirely gone out—the Minister would be able to confirm that— and £60 some time between January and March, without, importantly, affecting such benefits as pension credit. One of your Lordships told me a story about the first year of the Christmas bonus. It seems that a retired miner in Scotland went into the post office to get it. In those days, it was the norm to get social security benefits in cash from the post office—alas, no longer. Once he had it in his hot hands, he announced loudly, ““I’m damned if any bugger is getting any of this””, marched straight over the road to the pub and spent the lot. I assume it was on drink, as history does not relate whether some was spent on cigarettes, which, according to James Bond, as I remember, double the hangover. Being a habitué of both vices, I could not possibly comment. Needless to say, he was carried back home completely paralytic. That is exactly what the Government are hoping will happen now—not paralytic pensioners, but for pensioners to do their bit toward what the German Finance Minister calls ““crass Keynesianism””, spending our way out of recession. Indeed, paragraph 7.5 of the Explanatory Memorandum says as much. Pensioners will, of course, be most grateful for the extra money, the second £60 of which they may not receive until March. The problem is that spending is likely to be the last thing they will do. Officials, if not the Minister, will remember research that was carried out either by the DWP or the Department for Social Security—I cannot remember the exact date—on what pensioners do with any small amounts of extra money that they receive. I mention pensioners in particular as they are to receive 85 per cent of the £900 million that this order will cost the taxpayer. The research revealed that most pensioners saved it for a rainy day, perhaps for the boiler breaking down or for their funeral. What the other recipients will do with it is totally unknown. I am very much afraid that the pre-Christmas £10 will be spent and that the post-Christmas £60 will be saved or used to pay off debt. This hardly helps the economy in the way the Government hope. It will have exactly the effect that the reduction in VAT is having—and I agree with the noble Lord, Lord Oakeshott, on that point. We will await the results of spending over Christmas, which will be revealed in the new year. I doubt that it will be very different from last year’s Christmas spend. Spending billions of pounds on preserving the banking system in this country is something of which we all approve, but, as my noble friend Lady Noakes almost said, putting small amounts of money temporarily into the economy simply will not have the effect the Government hope it will. It is quite possible in this recession, as my right honourable friend David Cameron said the other day, to help pensioners and others on benefits who pay tax by giving them a short tax holiday; the trick for the Government is to get help to those who do not pay tax. I am afraid that the prognosis for this order is not nearly as good.