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Mr. Deputy Speaker: Before I call the next speaker, I point out that there is a 12-minute limit on all Back Benchers' speeches, but an awful lot of Members are still trying to catch my eye. It would be extremely helpful if they could take slightly less than their allotted time, in which case fewer of them will be disappointed.
Mr. Andrew Mitchell (Sutton Coldfield): I start by drawing the attention of the House to my interests, which are laid down in the Register but which do not abut directly to the contents of the debate.
This is turning into a most interesting occasion. It has always seemed to me that the House has a duty, in pensions legislation, both to address the needs of today's retired people and clearly to lay down long-term plans because the effects of legislation last such a long time. The comments made about that by the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) and the right hon. Member for Birkenhead (Mr. Field) were particularly important.
I say to the Minister that although I shall certainly support the amendment, I have not yet decided whether, if the amendment is defeated, I shall support the Bill in the Lobby, so I will listen particularly carefully to her response to the debate.
Mr. Mitchell: The hon. Gentleman is attempting to lead me down a cul-de-sac, and if he listens he will learn why I am in some doubt about how I will vote on the Bill if the reasoned amendment, which I strongly support, is defeated.
The Bill is certainly muddled and complex, and in many ways it is a waste. That is why I welcome the reasoned amendment, which makes it clear that the Bill has a number of serious faults. It proposes a tremendous increase in complexity and means-testing, and the erosion of the incentive to save. In addition, we have to ask whether better use might be made of the money by targeting it on those who need support.
I shall deal first with the massive extension of complexity and confusion. The hon. Member for Newport, West (Paul Flynn), who knows a great deal about this subject, is confused, and I, who used to be a Social Security Minister, am pretty confused about the effects of the Bill. It does not begin to pass the doorstep test, nor to live up to the description offered by Baroness Hollis, who said that the Bill is the final piece of the Government's pensions strategy jigsaw. Personally, I prefer the judgment given by Sue Ward, of the Northern Pensions Resource Group, who said that it reduces the Government's strategy to incoherence.
My hon. Friend the Member for Havant (Mr. Willetts) referred to the Institute for Fiscal Studies, which says that it remains unclear how the credit fits in with the other parts of the Government's pensions strategy, notably stakeholder pensions and state second pensions. Andrew Dilnott said that he could not envisage the state second pension lasting much beyond the introduction of the pension credit. I shall pass over the interaction between the credit and housing benefit and community tax benefit. The Government say that no one will lose out, but the upper capital limits are still in place, so it is simply not clear how that would work. Gordon Lishman of Age Concern says that we constantly get into the position of saying, "We really don't want to start from here." On the ground of complexity, I have grave doubts about the measure.
Secondly, the reasoned amendment mentions the massive increase in means-testing. The Government should heed the eloquent words of the right hon. Member for Birkenhead. He is right: there will be great complexity and low take-up. Not one third, but two thirds of pensioners are to be drawn into the means-testing net. I cannot understand how anyone can argue that one targets through a means test that draws in two thirds of pensioners. Depending on what the Government choose to say about uprating, it is possible that more than two thirds of pensionersup to 70 per cent.will be drawn into that net before long. It is impossible to square that with the Government's commitment to a 60:40 funded pension policy.
The Secretary of State mentioned the Association of British Insurers, whose members deal with 97 per cent. of insurance business in the UK. The ABI is concerned that pension credit may not encourage three specific groups who have been mentioned to save: the self-employed, those with small savings, and those without full basic state pension. The complexity is itself a disincentive to save. The Bill makes it more difficult to tell people that they will always be better off if they save.
The Government are getting into a terrible muddle with their pensions policy. There was some merit in the IPPR scheme in that it was clear, concise and would have put the money into the basic state pension, the advantages of which have been made clear by several hon. Members. I do not support the IPPR approach, but it is with a deep and growing sense of unease that I watch the way in which pensions policy is developing. I believe that we should to an increasing extent have funded basic state pensions for everyone. I want my party to commit to that, and I want the Government to do so as well.
Recently, the Secretary of State said that he thought that it was impossible to get young people to focus on providing for themselvesI think that he told the Select Committee on Work and Pensions that young people prefer to go clubbing. He may be right, but it is wrong and a conceit of politicians to believe that young people expect the state to look after them in their old age. They do not believe that now.
Some time ago at Cumberland lodge, I had the opportunity to speak to some Oxford PPE graduates about social security. They had had the pleasure of a visit from a new Labour Minister to talk about new Labour's approach to social security, and they invited me to talk about the old Tory approach. I discussed several aspects of social security, including pensions. For 45 minutes, every question asked by those young people, who were of an age at which I would have regarded anyone interested in pensions as a bit of an anorak, centred on pensions.
Young people today know that they cannot rely on the state to provide for their old age. It is right that, on as consensual a basis as possible across the House, we seriously reconsider the possibility of providing funded basic state pensions for everyone who is now entering the labour market.
I would not say it was a blueprint, but for all its faults the scheme launched by my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) was a significant contribution to the debate. Unfortunately, it was launched during the run-up to the 1997 general election and so did not receive the cool and calm scrutiny it merited. The timing was not good and there were specific problems owing to the industry not believing statements about the tax position of the scheme, but it was a step in the right direction.
The scheme, worked up and refined, was also mentioned in the Conservative manifesto at the last general election, but I would like the debate to extend far beyond the Conservative party. Serious consideration should be given to the opportunities that would accrue were we to start funded pension provision for all those now entering the labour market.
It would be in the finest traditions of spreading power and ownership widely throughout societytraditions that enthused my party to create a property-owning democracy and to sell council housesto ensure that there were funded basic state pensions for everyone in future. I urge my Front-Bench colleagues to give serious consideration to a "pension plus mark 3" approach, which would ensure that considerable advantages are available to those who start work now and in futureadvantages that have not been available to the present generation.