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9.33 pm

Mr. Tim Boswell (Daventry): In spite of its delayed start, or perhaps because of it, the debate has proceeded at a cracking pace. I have recorded 20 speeches, all of which—even the Secretary of State's—have added something to the discussion. We do not always hear much of substance from the right hon. Gentleman, but today he made the welcome announcement that earnings will be treated broadly like savings under the legislation. We look forward to hearing the details of that and to discussing other points in Committee. Even those other Labour contributors who might be regarded as trusties all had something of interest to say. My hon. Friends and our newly acquired associates in the reasoned amendment also made telling contributions.

There is a degree of mutual understanding of the fact that there are some problems, even if only of complexity. I suppose that in his daily life the average, not very well off, older person has quite enough to deal with in terms of difficulties with transport, hospital appointments, local law and order and so on, without worrying too much about the theology of pensions—whether the pension he

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receives, or hopes to receive if he has not yet retired, is sourced primarily from the state and the taxpayer or from private provision. As has been said this evening, what people want is an adequate income. The signs are that they are not getting it now and the position of those who will retire in future may be worse rather than better, which nobody in the House wants.

I am surprised that the Government have not claimed any credit for the 4.1 per cent. increase in the basic retirement pension this year, or claimed it as absolution from the error of the 75p increase in the past. They are committed to a minimum annual increase, even if it is above the inflation rate. While the increase seems substantial, it is interesting how quickly it is absorbed in my county where, for example, council tax is to rise by about 12 per cent. It is well known that the number of pensioners who fail to claim the council tax benefit for which they are eligible is even higher than those who do not claim the MIG. Those examples put the state pension increase in context.

I am not sure how often Ministers are let out to talk to ordinary people, but I could not help but be struck when I attended a meeting last week in the House with the Greater London Pensioners Association—not my natural soul mate—by the intensity of its members' feelings about their situation. Words like "betrayal" were bandied about, and were not being applied to the Opposition. One lady gave a trenchant summary:

That was said some time before we tabled our reasoned amendment.

Let me say, almost at the outset, that we have no problem with the Government's objectives or motives. They have a good stated objective of reversing the proportions of 60 per cent. state provision for retirement and 40 per cent. private provision, although we have doubts about whether they will succeed. We recognise that the Bill would provide additional resources for pensioners of at least £2 billion in the first full year, no doubt mounting to an astronomic figure if the measure lasts the course. The essence of our amendment, however, is that the money could have been spent to better effect; it is being frittered away and is going in the wrong direction.

Ministers need to come to terms with the fact that not all is well on the pensions front. I happened to pick up the money section of The Sunday Telegraph yesterday. It is stuffed with problems; one article on the front page says that the Government's annuity reforms are "unworkable", and the main headline concerns a row about auditing stakeholder pensions. Turning the page, the personal finance editor on page 2 describes stakeholder pensions as

Then there is the implosion of final salary schemes under the searchlight of FRS17 and the general current advice that the level of contracting-out rebates on offer makes it sensible for many holders of personal pensions to opt back into the state second scheme. That is all the more reason for the Government to come clean about the function and purpose of the state second pension, created inadvertently through mistaken analogy with SERPS, which was set up for a different purpose, without crucial details about its future course, for example the date at

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which it becomes flat rate. Whatever we say about who is the friend of the pensioner, we can be sure that the Government are friends of a broadly friendless second pension system.

Of course, we do not mind Labour giving more money to any pensioner, but we do not accept the tangled and complicated way in which it is doing so. No doubt the Secretary of State rather prides himself on being an intellectual—he is not the only one in this place, of course—and no doubt he can understand how his new system works. I might be able to claim that my single brain drifts in and out of understanding of the system, but in terms of the system's basic intelligibility to the electorate on the doorstep, it is an absolute no-go area. The less intelligible the system, the less likely people are to make well-informed choices about their retirement planning, and the greater the shock that they may encounter, as the hon. Member for Hendon (Mr. Dismore) said.

The Government may well find that the costs of the system will escalate and become unsustainable. It is a very heavy price to pay for a temporary fix to the incomes of some but not all poorer current pensioners—those who manage to take up the benefit and/or who suffer no natural downturn in their income while enjoying the pension credit.

The operation of the pension service is of growing concern, which has been echoed not just on the Conservative Benches. I do not know whether the Under-Secretary of State for Work and Pensions, the hon. Member for Liverpool, Garston (Maria Eagle), has any experience of fighting bush fires, but she now has a second one breaking out with the Public and Commercial Services union. In addition to the concern that it has expressed on security matters in relation to Jobcentre Plus, it has recently circularised members expressing concerns about the local accessibility of the pension service.

I note that the Trades Union Congress in its evidence to the House of Commons inquiry on pension credit emphasised specifically that the Government should take particular care to communicate the way in which the credit will work to all pensioners. With the greatest respect to Ministers, one cannot do that on the internet when only 10 per cent. of pensioners are silver surfers—although we hope that that number will increase. Pensioners need to be able to get through on the telephone, although they also need the opportunity of seeing a person who can give them advice and, indeed, reassurance on what is to happen.

Behind all this is a much more substantial fact. The spectre of the means test is being fattened up by the Government's new approach to it. Whatever the Chancellor of the Exchequer may have said in opposition, when means-testing was anathema, it has become the centre of Government pension policy. It spreads its tentacles: two thirds of pensioners very soon and perhaps three quarters in due course will be caught up in the system.

Mr. Levitt: If the hon. Gentleman believes that it is right to attack poverty by providing more means to those who are most in need, how would he go about identifying those who need the greatest help?

Mr. Boswell: I think that we have already discussed the fact that there will need to be a means-tested safety

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net, as there is provided by the minimum income guarantee already. The hon. Gentleman will appreciate that it is unreasonable to expect a detailed prescription in the three or four minutes remaining to me, but I can tell him and the House that we are convinced because of one simple fact that the Government are not going about this in the right way. If, even on the minimalist estimates, one in five of those who are entitled to the MIG are not claiming it, how much less likely is it, particularly when income changes, that pensioners will claim pension credit? Nearly everything in policy seems to be going the opposite way from the Government.

I find it striking that the recent IPPR report concluded after 18 months, though it was rubbished by the Secretary of State in 10 minutes, that

It also indicated that it had not started with the assumption but that it would be recommending an increase in the basic pension.

I find it remarkable that so many Members of Parliament from different parties have associated themselves with our reasoned amendment. I cannot remember when that has happened before. I believe that it reflects a number of genuine concerns across the House. First, there is a pensions crisis. It is already apparent but has not come to a head. Secondly, means-testing is not the way to solve that crisis because it involves disincentives to save, and complexity is the greatest disincentive of all. Beyond that, there is the current pressure on funded pension provision: the reduction, for example, of employer contributions; the erosion of income by the Chancellor's pensions tax, and the decline in final salary schemes. The Government may end up with a huge and unsustainable contingent liability to support pensioners' incomes. There is also the issue of whether moneys could have been better spent.

As my hon. Friend the Member for Havant (Mr. Willetts) said, Beveridge understood that universal benefit, given careful targeting, can meet most specific needs. There is a real problem, especially for older pensioners, many of them female, in achieving adequate income. Help could be given to them without creating a cat's-cradle of means-tested incentive.

The final drivers to the amendment are perhaps more general. Pension provision, above all aspects of social policy, is long term. I think sometimes of my new granddaughter, who has not yet reached the age of one year. It might be sensible for me to take out a stakeholder pension for her. The signs are that she will have to work up to the age of 70 to provide herself with an adequate pension.

As politicians, we cannot allow our ego or our own pet nostrums, or political positions, to get in the way of agreed decisions that will affect the quality of life for the next few generations. We need to get on side people of good will, even including, if possible, the Government. We need to get them behind a programme of, preferably, agreed and well-targeted reforms. The Bill does not provide those reforms.

There is perhaps even one wider consideration that is worth mentioning briefly. The Opposition amendment, which has the support of other parties, is a reasoned

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amendment, and a reasonable amendment too. I have supported the Conservative party throughout my adult life because I believe strongly, as I always have, that the party of Wilberforce, Shaftesbury and Disraeli has had something worth saying on social policy. It has real achievements to its name in this as in other areas.

I am pleased that this side of Toryism is reawakening. I say to everyone in the House that when we reach out in the spirit of consensus to help disadvantaged people, I hope that they in turn will respond.

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