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It is not true that pensioner poverty has not been tackled. We have spent a great deal of money on tackling it and we have made a big difference to the poorest pensioners, who have seen the largest gains. The hon. Member for Rochdale should at least admit that we will spend £15 billion a year more by 2020 under the pension
reforms. As I have said, 57 per cent. of pensioners will pay no income tax from 2008.
The hon. Member for North-East Hertfordshire (Mr. Heald) made one of his usual contributions, which I always enjoy. He and I have been in the House a long time and spent a lot of time on Select Committees together bantering about our different views of politics and how society should be run. However, I have never known him be so cheeky as to pray in aid Barbara Castle. He also talked about SERPSthe state earnings-related pension schemeand professed great outrage that it had been cut so often, but he failed to remind the House that the Tories introduced the largest ever cut in SERPS in the Social Security Act 1986. That was in between cutting the link with earnings and telling people, as they descended into poverty, with child poverty doubling and pensioner poverty soaring, that if it was not hurting, it was not working. I congratulate the hon. Gentleman on his sheer brass neck.
On the Government proposals to claw back money by introducing an upper accruals point early, the flat-rating of SERPS was one of the recommendations of Adair Turners Pensions Commission, and it had cross-party consensus when it was published. There was a statement in the House and the Conservatives said that they agreed with it. The Bill will essentially achieve that, but all those who have spoken tonight have said that they are against it. What are we to believe? The hon. Gentleman mentioned increases in national insurance contributions, but the biggest increase was in 1985, when the Conservatives abolished the upper earnings limit for employers. That was done by Nigel Lawson.
I know that Barbara Castle, who was a doughty fighter for social justice, a fantastic Labour Minister and a particular heroine of mine, would have congratulated the Government on their work in attempting to abolish pensioner poverty. She would also have noted with interest the effect of the state second pension and the pension reforms. Many people underestimate the radical nature of those reforms. The Bill is in essence a paving Bill that will ensure that the reforms to the pension system can be put in place. When they are completed they will reduce the number of years of contributions required before individuals qualify for a full pension from 44 years for men and 39 years for women to 30 years for everybody. That is a substantial and progressive change that Barbara Castle would have been proud to introduce herself. I am sure that she would have congratulated this Labour Government on doing so.
Another aspect of the pension reforms with which the Bill will assist is the crediting in of those people caring for older people and those with disabilities, as well as children, for the first time. That is something that Barbara Castle campaigned on all her life. Indeed, she used, as a main reason for the original introduction of SERPS, the broken earnings records of many women. The changes involved in the state second pension and other pension reforms will, for the first time, ensure that women are not disadvantaged by broken earnings records. Crediting in will start in 2010, and we can look forward to the once unthinkable achievement that 90 per cent. of women, like 90 per cent. of men, will qualify for the basic state pension in their own right by 2020. Barbara Castle campaigned for that all her life and she would be extremely proud that it is to happen.
The hon. Member for Broxbourne (Mr. Walker) smelt rats and talked about stealth taxes, as did the
hon. Member for Putney. However, if they agree that there should be a balanced package as part of the pension consensus, it is unfair to try to claim that the bits that increase tax are bad while failing to mention the bits that return that income in the form of the tax changes that are part of the package. It is important to consider the package as a whole. I reject the view of many Opposition Members that the measure is part of a stealth tax. Actually, it is part of an extremely balanced package that will enable the pension reforms that I have just mentioned to be brought into effect at the same time as the changes in personal tax rates. That will lead to our having the lowest rate of income tax in 75 years and will mean that we get 200,000 children out of poverty and 600,000 pensioners out of paying tax. We must continue to pursue that aim and the Bill will enable us to do that.
Rob Marris: Does my hon. Friend agree that the phrase stealth taxes is completely meaningless? We in the House know what taxes are; we debate them all the time whether on Finance Bills or Bills such as this. The phrase stealth tax is emotive and meaningless and is typical of the empty rhetoric from the Opposition.
Angela Eagle: My hon. Friend is obviously right to call me to order on that point. I must stop internalising these heavily accented phrases and realise that any tax rise appears in the Red Book, is not carried out behind everybodys back and is there for everybody to see.
When the hon. Member for Broxbourne was smelling a rat, he said something with which I have difficulty. He said that the nicest Treasury Ministers had been sent to the Front Bench to sell this measure.
Angela Eagle: Not only does my right hon. Friend the Chief Secretary feel insulted because he does not think that he should be left out of the phrase the nicest Treasury Ministers, but I feel insulted because the hon. Gentleman is ruining my reputation by making out that I am nice. By trying to compliment those on the Front Bench, he has succeeded in insulting us all. Perhaps that was his original intention.
The hon. Member for Putney was not the only one to say that the Bill would somehow remove parliamentary scrutiny of the upper earnings limit by abolishing the seven-and-a-half times limit on where the upper earnings limit can fall. If she had been a bit more generous, she might have admitted that the Bill will use the affirmative resolution procedure, which means that any future changes to the upper earnings limit will have to come before this House and the other place and be subject to a debate with a potential vote. I do not see that that change should give anyone cause for concern in terms of parliamentary scrutiny. The House always considers extremely carefully affirmative resolutions that come before it. I do not think that the hon. Lady should worry too much that any future increase in the upper earnings limit will somehow go through the House without anyone noticing.
The hon. Lady talked about the potential burdens on business, and she is right to say that the changes before us rely on an increase in administration. However, I
have to point out to her that that will be modest even if, as with all these things, it is regrettable. The Conservative party signed up to the flat-rating of the state second pension and that will require the administrative change to be made, so the only difference is that it is being made three years earlier than planned. I assure her that we have had detailed conversations with the appropriate members of the business community to see whether we can minimise the burden.
Jim Sheridan (Paisley and Renfrewshire, North) (Lab): My hon. Friend will be aware of the importance of national insurance contributions to our public services and, in particular, to the health service. Will she perhaps expand on what would happen if the Bill were defeated tonight and on how that would impact on public services?
Angela Eagle: My hon. Friend is right. I suspect that Opposition Members will have to explain to their constituents, perhaps over the Christmas period, why they went into the Lobby to vote against taking 200,000 children out of poverty and 600,000 pensioners out of tax.
As the Bill goes into Committee, clearly a number of points will have to be debated at greater length. I am sure that my right hon. Friend the Financial Secretary will look forward to having those debates. However, let me once more remind the House what the Bill will achieve. First, it will allow us to deliver a package of changes that will create one of the simplest personal tax structures of any developed country so that the two main rates of income tax apply to the same bands of income as the two rates of national insurance contributions for the first time in our history. Secondly, the Bill returns the timetable for the introduction of a simple flat rate state second pension scheme to around 2030, as recommended by the Pensions Commission, rather than its being delayed by several years. The Bill simplifies our personal tax system and it brings forward the simplification of our state second pension system. I commend it to the House.
That the following provisions shall apply to the National Insurance Contributions Bill:
1. The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee.
2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on 22nd January 2008.
3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Consideration and Third Reading
4. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and Third Reading.
7. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed . [Tony Cunningham.]
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