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The Minister for Pensions (Mr. Ian McCartney): We have frequent contact with both the Confederation of British Industry and the Trades Union Congress to discuss a range of pensions issues, including final salary pension schemes. As my right hon. Friend the Secretary of State for Work and Pensions made clear in his recent speech to the TUC conference, it has to be worth while for employees to save, confident in what they will get in return, and easy for employers to contribute. We need a framework that builds partnership in pension provision not mutual aversion to responsibility.
Mr. Lloyd: Does my right hon. Friend recall the so-called employers pensions holiday, when they ceased to make contributions to pension schemes? It was actually more like a pensions strike. Is he aware that one strong motivation for getting rid of final salary pension schemes is that, even on the better alternatives, employers save up to a third of their costs? That means that employees receive a final pension much worse than they had anticipated. What do the Government intend to do to ensure that employers recognise that they must make a contribution?
Mr. McCartney: I thank my hon. Friend for that question. Like him and all my ministerial colleagues, I want a maximisation of employer contributions as an investment in their work force. The whole point of the simplification review and the discussions is to develop a partnership between the Government, employers and trade unions so that each of us takes responsibility for every aspect of developing a pensions policy for the future that will guarantee investment and a secure pension. During the next few weeks, when the reviews are published, I hope that there will be productive discussions with the CBI, the TUC and others to ensure that when the Government set out their radical approach to those matters there will be a common, binding agreement on the way forward.
Geraint Davies: When my right hon. Friend reviews pensions facilities and the partnership for the provision of pensions to which he referred, will he examine the fundamental relationship between employer contributions, employee contributions and state contributions? In doing so, will he consider the Australian model, which requires a certain level of employer compulsion in respect of any named pension fund in exchange for tax relief and productivity deals, in the knowledge that the only certain way of obtaining long-term pension contributions is by getting more jobs? That is something that we are doing and that the Opposition never did.
Mr. McCartney: I am absolutely certain that, with those involved in the simplification review and in preparing the reports, the Government will consider a range of issues, including international comparisons, to try to encourage investment by employers. When the review is published we can join in a debate, after which I hope that we shall see the way forward to ensure a secure
Mr. David Ruffley (Bury St. Edmunds): The Chancellor of the Exchequer's Robert Maxwell-style pension raid is costing the average contributing member of a pension scheme £400 a year. Will the Minister take this opportunity to say sorry to those pension holders?
Mr. McCartney: The hon. Gentleman has a brass neck asking that question, when there was a £34 billion mis-selling of pension funds under a Tory Government. It took the Labour Government to make sure that money was put back. A Conservative Government halved the value of SERPSthe state earnings-related pension schemetook it off widows and forgot to tell them about it. This Government put that money back. A Conservative Government put 3 million people on the dole and those people lost pension rights because of it. Grow up.
Mr. Andrew Mitchell (Sutton Coldfield): Surely the Minister understands that everyone knows that the Government's response to the crisis in the pensions industry has been woefully inadequate. Will he admit that the £5 billion a year raid on pension funds was a dreadful error of judgment? As the Secretary of State is in the mood to apologise today, will he also apologise on behalf of the Chancellor of the Exchequer to the millions of people who face a lower income in their retirement?
Mr. McCartney: The hon. Gentleman is another man with a record as long as his arm. He was a pensions Minister who made such a botched job of it that his constituents rightly got rid of him. Perhaps he would like to tell us about the letter that he received from the[Hon. Members: "Answer the question."] I am answering the questionOpposition Members may not like the answer[Interruption.]
On 7 March, the hon. Member for Sutton Coldfield (Mr. Mitchell) received a letter from the Opposition spokesperson on pensions, who asked him to prepare a plan for the privatisation of the basic state pension. Perhaps he will stand up and apologise to the House for trying to get rid of the basic state pension.
David Winnick (Walsall, North): Should we not make it absolutely clear that the full responsibility for ending such schemes lies with employers, and that they must be held accountable? Going back to what was said earlier, is it not sickening that while so many employees could well be driven into acute financial hardship, if not poverty, in their retirement, those who make the decisionsthe directorsare rewarding themselves with fat cat pension schemes, option schemes, bonuses and the rest to ensure
Mr. McCartney: My hon. Friend is absolutely right. There has been greed and greed with great excess. There is no doubt about that, but in simply saying that fat cats are wrong, we have got to do something about long-term stability and arrangements for the basic state pension, the state contribution and the private sector contribution to the future of pensions. That is what the Pickering review is about. At least the Government are prepared to advocate proposals on behalf of pensioners and to introduce schemes to eradicate the poverty that exists, a new pension scheme to prevent it in future and a new partnership between the Government on one hand and employers and trade unions on the other to ensure investment by employers in pension schemes and the certainty that when people retire they get a fair pension for the contribution that has been made.
Mr. David Willetts (Havant): May I tell the Minister that the CBI and the TUC were represented at our pensions summit last week? He might try getting them together as well. Does he agree with the TUC that the United Kingdom pensions system is in crisis? What does he think of the latest evidence of that crisis? The Caparo steel group, which is headed by a Labour peer, Lord Paul, is trying to close down its final salary pension scheme. Lord Paul is trying to get his workers into the Government's pet stakeholder scheme instead. So a Labour peer is trying to impose a Labour policy on members of a trade union affiliated to the Labour party, and what is the reaction? They take industrial action in protest. Something is seriously wrong with the Government's pensions policies if members of a Labour-affiliated trade union are taking industrial action against the policies that the Government are pursuing.
Mr. McCartney: My understanding is that the hon. Gentleman's summit was more of a molehill than a summit and that he made virtually no contribution to the debate on pensions. It was nothing more than a cheap publicity stunt.
The hon. Gentleman mocks stakeholder pensions. In a year, more than 800,000 people who did not have a pension vehicle for their retirement have now got one and more than 90 per cent. of employers who did not provide access to one now do so, but that is only a start.
As for the former members of British Steel, the hon. Gentleman should remember that his Government stood back and allowed that company to be butchered and tens of thousands of jobsnot just pensionswere lost in steel and mining communities. The whole purpose of the stakeholder pension arrangements and the simplification review is to get the common agreement of employers, first, to continue with defined benefit schemes; secondly, where those schemes do not exist, to get stakeholder pensions where employers have never before contributed to employees in the labour market; and, thirdly, to get a new partnership between employers, the Government and trade unions. If we can achieve that during the debates that will take place this summer following the simplification review, we will have gone a long way to establishing a new pensions settlement in Britain.