Previous Section Back to Table of Contents Lords Hansard Home Page

Baroness Hollis of Heigham: My Lords, it is important to be precise and I do my best within this House to be precise. But we also know that information is useful only in so far as it is understood and accessible to people. One of the problems for the DSS--I am sure that I do not speak just for myself when I say this--is that DSS detail is obscure, difficult, complicated and intimidating. That is why so many people, including elderly people, do not take up the benefits to which they are entitled. If "pretty" is a shorthand for making something accessible and friendly, then it should not be at the expense of precision. We need it to ensure that people know their rights.

Baroness Castle of Blackburn: Is not the reason why the state pension is due to decline to 10 per cent. of average earnings the fact that the previous government abolished the link for the uprating with the movement of average earnings, which incidentally I introduced when I was Secretary of State, which is no doubt why Mrs. Thatcher abolished it? Is it not worrying that the only thing the Government propose to do in the lifetime of this Parliament is to extend the means-tested benefit--an improved form of income support--to the poorest pensioners when we need to get back to pensions as of right and which are adequate for people to live on?

Baroness Hollis of Heigham: My Lords, my noble friend makes two points. The first concerns the

21 Jul 1998 : Column 711

adequacy of SERPS. She is right to say that it was sliced away by the previous administration. To restore those slices--in other words, to reinstate the value of SERPS to what it was in 1978 when my noble friend had the pleasure of introducing it into our lives--would, by 2030, cost £29 billion extra a year. That is what we are talking about. That is why the Government do not feel that it is appropriate to go down that road.

My noble friend asked whether income support is an adequate alternative to raising the basic state retirement pension. At this stage we are not suggesting that these are alternatives. We are saying that we have a problem of poorer pensioners now; they are not in the labour market, but already dependent on pension; they are not claiming income support and are well below the poverty line. As my noble friend will know from yesterday's Question, we are seeking to raise their income support entitlement so that they have a basic pension of at least £75 a week from next April. But, for future pensioners, we believe that the right way to proceed is to continue to build the economy in order to produce decent jobs so that people can enjoy a decent second pension in their old age.

Lord Skelmersdale: My Lords, perhaps I may take the Minister back to her original Answer. As someone with an acknowledged interest in these matters, why did it take the Question of the noble Baroness, Lady Castle, to prompt her to read this pamphlet?

Baroness Hollis of Heigham: My Lords, I read a great deal of literature. This pamphlet came out a few months ago. I was not aware of the new cover or the rewriting of it. The content is the same as the basic DSS pamphlet but it now has the charter mark for the Plain English Award. I think it is delightful. However, if I were to bring to the House all of the literature produced by the DSS, I would need a couple of wheelbarrows or more.

Earl Russell: My Lords, while we speak of pensions as of right, will the Minister undertake to look again at the Goode Report on the regulation of private pensions to consider whether enough has been done to implement the safeguards it proposed and, in particular, whether it should be impossible for employer trustees to dismiss employee trustees or pensioner trustees?

Baroness Hollis of Heigham: My Lords, that is, if I may put it this way, a hang-over question from the Pensions Act 1995, with which the noble Earl, Lord Russell, and myself and others of our colleagues were very much concerned at the time. In a way we are waiting to see whether the fears we expressed at the time have been realised. I have not been made aware of any such fears being realised. That may be because, although it has happened, I have not been briefed to that effect. However, I will check to see whether my honourable friend Mr. Denham in another place, who has responsibility for that portfolio, has had any information to suggest that our worries, as illuminated by the Goode Report, have come to light and whether we need therefore to review this matter.

21 Jul 1998 : Column 712

Baroness Byford: My Lords, the pamphlet refers to a variety of choices for second pensions. Is the Minister aware that great concern was expressed about the effect the abolition of the advanced corporation tax credit would have on individuals, businesses and local authorities with regard to pension provision?

Baroness Hollis of Heigham: My Lords, I wondered whether we would be revisiting ACT, as indeed we have. The Government's position has been made clear on several occasions. We believe that the best basis for a secure second pension is the nature of the economy, the quality of its growth and the security of its investment. Since 1992 the value of UK equities has risen by 107 per cent. Two-thirds of that has been capital growth and only one-third dividend growth. In other words, the value of the pensions we receive has depended on the capital increase in growth, which in turn depends on the investment in, the nature and the strength of our economy. What matters for someone's pension is the health of the economy, which in turn determines the investment record of the pensions portfolio, which in turn also reflects whether an individual may have a secure job and can build up that entitlement. It also depends on the investment track record of the individual pensions manager. It is perhaps worth noting that ACT represents just one-tenth of the difference between what a good pensions manager will do and a poor pensions manager will do to the same type of fund.

Japanese Economy

3.5 p.m.

Lord Newby asked Her Majesty's Government:

    What action they are taking, in conjunction with their European Union partners, to prevent a collapse of the Japanese currency and economy.

Lord McIntosh of Haringey: My Lords, the economic situation in Japan is clearly of great importance to the recovery in Asia and the world economy as a whole. The UK, with its G7 and EU partners, has been actively engaged with Japan offering advice and encouragement as it seeks to resolve its economic problems. The economic and financial situation was discussed by heads of state at the Asia-Europe meeting in London, at the Birmingham G8 summit and by EU Finance Ministers at the Cardiff European Council. Officials have participated in extensive discussions, most recently at a meeting in Tokyo on 20th June between G7 and Asian Finance Deputies.

Lord Newby: My Lords, I thank the Minister for his Answer. But does he agree with me that, despite the importance of the Japanese economy to British and European economies, our response has been pretty inadequate, particularly in relation to that of the US and China, not least because of Europe's preoccupation with preparations for the single currency? Does he further agree that the sooner the single currency is in operation, with Britain as a full participant, the sooner Europe will be able to punch its weight in international financial affairs?

21 Jul 1998 : Column 713

Lord McIntosh of Haringey: No, my Lords, I would not agree that our response has been "pretty inadequate". Clearly, the United States has a particular interest, but we have been fully pulling our weight with our European partners. However, the fundamental fact is that we have no status to intervene with the Japanese economy any more than the Japanese have to intervene with ours.

Lord Dean of Beswick: My Lords, my noble friend said that we have been offering advice and assistance. But have the Japanese Government indicated any intention to abandon some of their disgraceful restrictive practices which over the years have prevented people like us from exporting more to Japan?

Lord McIntosh of Haringey: My Lords, I think my noble friend is referring to alleged restrictive practices of a considerable time ago. The difficulty with British exports to Japan is much more in relation to the ability of the Japanese to pay rather than restrictive practices.

Lord Moynihan: My Lords, given that Japan has the second largest economy in the world, that its foreign exchange reserves stand at more than 200 billion dollars, that its personal savings are around 10 trillion dollars and that eight of the world's largest 15 banks are Japanese, does the Minister agree with Chancellor Kohl's assessment that, if Asia is ailing now, then Europe will be ailing tomorrow?

Lord McIntosh of Haringey: My Lords, I can broadly confirm the accuracy of the noble Lord's figures about the Japanese economy. Our immediate concern with the Japanese economy is not about its overall strength. Even pessimistic forecasters are looking to a decline of only 0.9 per cent. this year and some increase next year. Our particular concern has to be with the stability of the Japanese financial system and, as the noble Lord rightly said, the importance it has in world financial markets. That is the crux of our concerns.

Next Section Back to Table of Contents Lords Hansard Home Page