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Earl Russell: My Lords, one point which I hope the Minister will not find unhelpful and I am sure the

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House may find helpful is this. How many years of the earnings link would it take to raise the basic pension above the level of the MIG?

Baroness Hollis of Heigham: My Lords, I have no idea what the future rate of earnings is likely to be. It is an impossible question.

I was about to conclude my remarks. I hope that I have persuaded your Lordships that while my noble friend's amendments, particularly Amendment No. 72, are a decent and honourable effort to address the problem that she perceives, I suggest in all humility that that is not the problem that we face. The problem that we face is one not only of pensioner poverty but of pensioner inequality. In order to make an impact on the lives of those who are so socially excluded that they cannot join the mainstream of our society, they need to receive an increase well beyond an earnings link. They need the targeted help that only the Government's policies will bring. Therefore, I hope that your Lordships will support the Government's position tonight.

11.15 p.m.

Baroness Turner of Camden: My Lords, I thank my noble friend for her explanation of government policy. Of course, she knows that I do not agree with it. I am grateful also to all noble Lords who joined in this very interesting debate. I share with the noble Earl, Lord Russell, his pleasure that so many people have come in to listen to my noble friend Lady Castle at this time of night. I believe that that is an enormous compliment to her.

However, frankly, I do not accept the arguments that have been advanced from the Front Bench this evening. First, the two amendments taken together would mean that one begins from the basis of MIG, which the Government agree is the basic minimum that anyone should be expected to live on, and would build on that by adding to it earnings-related increases in the years to come. I still believe that that would be an effective and fair way of dealing with the whole pension problem.

This evening, the Minister has repeated what she said in other debates: that many pensioners are extremely well off and that their incomes have risen faster in the past 20 years than have other incomes. I explained previously why I find that very difficult to accept, and perhaps I may do so again briefly.

First, as the Minister knows, in my working life I had a great deal of experience of negotiating occupational pension schemes. Most such schemes do not provide for increases even as high as that of the retail prices index. Most have a provision under which they rise up to a maximum of 5 per cent per annum or the RPI, whichever is the lower. In addition, we know that the basic state pension has not increased anywhere near in line with earnings; it has simply kept pace with the retail prices index.

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Therefore, those two aspects of pension provision in this country meant that the structure simply did not exist for pensioner incomes to rise beyond the level of earnings; in fact, they rose nowhere near earnings, even if taken together.

Lord Davies of Coity: My Lords, I wonder whether my noble friend is able to help me. I understand that we are able to evaluate the extent to which state pensions have increased. If one compares the level of occupational pensions in 1979 with their level today, we know that not all, but most, occupational pension schemes are based on final salary payments. If that is so and incomes have risen over that period, will not the level of occupational pensions have increased directly in relation to the increases in income?

Baroness Turner of Camden: My Lords, one must understand that very few people, I regret to say, had pensions based on a working life of 40 years. Most people had a chequered work pattern which did not produce the maximum final salary. In addition, as I indicated, very few occupational pension schemes had RPI increases. A person would do quite well to receive a maximum increase of 5 per cent per annum. That was during a 20-year period when the retail prices index was sometimes way above 5 per cent.

Therefore, the structure did not exist in the pensions provision industry to produce a situation in which over that 20 years pensioners would receive incomes in excess of the increase in earnings, which is what has been said from the Front Bench. That is what I meant when I said that I could not accept what had been said about the large increases that pensioners have received over the past 20 years.

Beyond that, I quoted figures in relation to public sector pensioners which show that most people in the public sector are not receiving enormous pensions. In fact, according to the federation whose figures I quoted earlier, the majority of them receive pensions of between £6,000 and £8,000 a year. That is scarcely wealth.

As I said earlier, most pension provision has been based on the assumption that people will receive the basic state pension in addition. With the basic state pension not having increased in line with earnings, which would have been expected 20 years ago when a large number of pension schemes were introduced, people will be much less well off than they expected.

I said earlier that I disagreed with the arguments about pension provision being so excellent that if we increased the basic state pension, far too many people who did not need it would get it. I also pointed out that the well off would lose it all in income tax. I have no objection to the fact that I will lose all my basic state pension in income tax. However, I dislike that argument being used against people who are far less well off and who could very much do with an increase in the basic state pension.

I return again to the argument about social insurance. Several noble Lords have said that the Government are doing the right thing in paying out

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only to the poorest people who need the money rather than giving money to people whom they do not think need it, but that is not what social insurance is about. The concept of social insurance that we have lived with for many years and that I believe to be the right policy--for many years this has been the policy of my party, the Labour Party--is that everybody pays towards it and people then receive a pension based on the fact that they have made those contributions. I do not know why we are departing from that principle, which I still believe to be right.

Pension provision through the basic state pension is not a charity. It is something to which people believe that they have contributed and to which they therefore have a right. It is not at all surprising that so many pensioners feel hard done by, because the basic pension has not been increased as they expected.

I do not intend to seek a vote on this issue this evening, but it will not disappear or run into the sand. We may well come back to it on Third Reading.

Noble Lords: No!

Baroness Turner of Camden: My Lords, it is very late at night to vote on a major issue. It is 11.20 and we still have a right to come back to the issue at Third Reading. I repeat, I shall not seek a vote at this time of night because I think it inappropriate to start voting so late on something that many of us regard as very important. I think it wrong to call a vote at 11.20 and I never gave any indication that I would do so. I therefore beg leave to withdraw the amendment.

Noble Lords: No!

The Deputy Speaker (Viscount Simon): My Lords, is it your Lordships' pleasure that the amendment be withdrawn?

Noble Lords: No!

The Deputy Speaker: My Lords, the Question is, That the amendment be agreed to.

On Question, amendment negatived.

Lord Graham of Edmonton moved Amendment No. 72:


    After Clause 37, insert the following new clause--

INCREASE OF BASIC RETIREMENT PENSION

(" . The weekly rate of the basic retirement pension shall be increased in April each year in line with--
(a) the percentage increase in the general level of earnings during the preceding year; or
(b) the percentage increase in the retail prices index during the preceding year;
whichever is the greater.").

The noble Lord said: My Lords, in view of the fact we have been told constantly this evening that Amendments Nos. 71 and 72 hang together and as this is a very important subject, I beg to move Amendment No. 72.

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11.25 p.m.

On Question, Whether the said amendment (No. 72) shall be agreed to?

Their Lordships divided: Contents, 6; Not-Contents, 84.

Division No. 3

CONTENTS

Castle of Blackburn, B.
Cocks of Hartcliffe, L.
Faulkner of Worcester, L. [Teller]
Graham of Edmonton, L. [Teller]
Park of Monmouth, B.
Turner of Camden, B.

NOT-CONTENTS

Acton, L.
Ahmed, L.
Alli, L.
Amos, B.
Andrews, B.
Archer of Sandwell, L.
Bach, L.
Berkeley, L.
Bernstein of Craigwell, L.
Billingham, B.
Blackstone, B.
Borrie, L.
Bragg, L.
Brennan, L.
Brooke of Alverthorpe, L.
Brookman, L.
Burlison, L.
Carter, L. [Teller]
Chandos, V.
Clarke of Hampstead, L.
Cohen of Pimlico, B.
Crawley, B.
Davies of Coity, L.
Davies of Oldham, L.
Desai, L.
Donoughue, L.
Dormand of Easington, L.
Dubs, L.
Elder, L.
Evans of Parkside, L.
Evans of Temple Guiting, L.
Evans of Watford, L.
Falconer of Thoroton, L.
Farrington of Ribbleton, B.
Filkin, L.
Gale, B.
Gavron, L.
Gibson of Market Rasen, B.
Goldsmith, L.
Goudie, B.
Gould of Potternewton, B.
Greengross, B.
Grenfell, L.
Harris of Haringey, L.
Harrison, L.
Haskel, L.
Hayman, B.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Howells of St. Davids, B.
Hughes of Woodside, L.
Hunt of Chesterton, L.
Hunt of Kings Heath, L.
Jay of Paddington, B. (Lord Privy Seal)
King of West Bromwich, L.
Lea of Crondall, L.
Macdonald of Tradeston, L.
McIntosh of Haringey, L. [Teller]
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
Massey of Darwen, B.
Mitchell, L.
Pitkeathley, B.
Ponsonby of Shulbrede, L.
Puttnam, L.
Ramsay of Cartvale, B.
Rendell of Babergh, B.
Renwick of Clifton, L.
Richard, L.
Rix, L.
Sewel, L.
Shepherd, L.
Simon, V.
Stone of Blackheath, L.
Symons of Vernham Dean, B.
Tomlinson, L.
Turnberg, L.
Warner, L.
Warwick of Undercliffe, B.
Whitaker, B.
Whitty, L.
Wilkins, B.
Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.

22 Jun 2000 : Column 560

Clause 38 [Preservation of rights in respect of additional pensions]:

[Amendment No. 73 had been withdrawn from the Marshalled List.]


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