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Mr. Peter Hain (Neath) : Will the Leader of the House find time next week to debate the future of the 999 service? It has emerged in the past few hours that British Telecom plans to hive off the service to an independent agency. That will have a massive impact on the quality of service-- [Hon. Members :-- "Why?"] I will explain why. Such a move will pose a massive threat to the quality of service. At present, the 999 service rides on the back of the general operator service. People can drop their general operator work and respond immediately. The proposal also involves shutting down many telephone operator centres, as a result of which those operating the 999 service will have no local knowledge.
This constitutes a severe threat to people's lives and security. Dogma is involved here. The aim is to ensure that British Telecom satisfies the City's objective by cutting its staff in post figures, rather than protecting the public. The Government should make a statement about the matter next week.
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Mr. MacGregor : I think that the hon. Gentleman has made a speech about the matter. I had hoped that he would say something about the allegations that he made about the computer issue. As I have said, those allegations are without foundation. I shall now reply to what the hon. Gentleman has just said. I know nothing of this report. I shall have to look into it.
Mr. David Tredinnick (Bosworth) : Will my right hon. Friend find time next week to debate the chaotic traffic position on one of Britain's arterial roads, the A5, which runs past my constituency? Is he aware that there have been serious accidents on that road? The fact that it has not been improved between Hinckley and Nuneaton means that jobs are being lost in the area, because land by the A5 in Hinckley cannot be developed. Will he deal with this matter with some urgency, please?
Mr. MacGregor : I will take up the point with my right hon. Friend the Secretary of State for Transport. However, I am sure that my hon. Friend will acknowledge that there has been a substantial increase in the road-building programme all over the country.
Mr. David Trimble (Upper Bann) : Although we welcome next Thursday's debate, can the Leader of the House assure us that the Prime Minister will take part in the debate so that, following his speech in Scotland last week, he can demonstrate an equal concern for the union with Northern Ireland and also show how we can have a form of decentralisation that is common throughout the United Kingdom? Secondly, on Tuesday's appropriation debate--
Mr. Speaker : Order. In business questions, can we have one question only, please?
Mr. Trimble : Then I shall save the second one for later.
Mr. MacGregor : I am sure that the hon. Gentleman will not think that simply because one of my right hon. Friends does not participate in a debate it means that he is not intensely interested in the question. My right hon. Friend the Prime Minister has made speeches on the Scottish devolution issue but does not take part in Scottish Grand Committee debates on the subject. I think that it is unlikely that my right hon. Friend will take part in the debate next week, but I have already discussed it with him, following the request that I had from the leaders of the three parties in Northern Ireland. I discussed it with my right hon. Friend before deciding on the business for next week, and I can tell the hon. Gentleman that my right hon. Friend was extremely keen to have that debate. As I say, it follows from the inititive that he took in Downing street.
Mr. Harry Greenway (Ealing, North) : Will my right hon. Friend arrange a debate on post offices for next week? It would enable me to say how well post offices operate throughout the borough of Ealing, generally speaking, and to draw attention to the proposed closure of the Church road post office, Northolt, which would be extremely serious and inconvenient for pensioners and for mothers with young children, among others. The House needs to discuss this very important issue. That post office should be saved.
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Mr. MacGregor : My hon. Friend is extremely assiduous in bringing the concerns of his constituents to the attention of the House. I am sure that he will find ways of doing so himself.Mr. Dennis Skinner (Bolsover) : May we have a statement on the £55 million that the Government have offered to Manchester in respect of its bid to hold the Olympic games there in the year 2000? That debate would have to take into account the fact that when Manchester made its previous bid the present Prime Minister, who has now agreed to that money, was Chancellor of the Exchequer and earlier Chief Secretary to the Treasury. He was the man holding the purse strings then, and he refused to give Manchester a single penny piece. Now he stands on the doorstep of No. 10 gloating about it. Are not the Tory Government guilty of a bribe a day to keep the voters at bay?
Mr. MacGregor : It is typically churlish of the hon. Gentleman to take that position in relation to the Government's decision to give very substantial support to Manchester's bid.
Mr. Jacques Arnold (Gravesham) : Could we have a debate next week on NHS fund-holding practices? My right hon. Friend may not be aware that the Marshlands practice at Higham in my constituency has been a fund-holding practice since last April. Since then it has vastly increased the treatment that is given locally, not least by bringing in consultants, it has cut its waiting lists and it is giving better value for money. Does my right hon. Friend not think it important that during such a debate we could highlight the fact that the hon. Member for Livingston (Mr. Cook) is so impressed by such an effective piece of NHS reform that he wants to scrap it and put that practice under the remote NHS bureaucracy?
Mr. MacGregor : I am grateful to my hon. Friend. I want to find every opportunity to highlight the benefits that general practitioner fund holding is bringing to GPs and their patients. My hon. Friend has done that well today. I am sure that his constituents will observe the benefits that are being brought to them--benefits that the Labour party would wish to take away.
Mr. Alun Michael (Cardiff, South and Penarth) : Will the Leader of the House agree to a debate next week on early-day motion 715, tabled on an all-party basis, dealing with the pursuit of peace in Somalia? [That this House welcomes the news that, under the auspices of the United Nations, an agreement has been signed between leaders of the two warring factions in Southern Somalia ; is concerned that fighting appears to be continuing and calls on the British Government and the international community to redouble efforts to achieve a lasting peace in Somalia ; draws attention to the fact that the parties who are involved in the fighting in the south have no claim, separately or together, to represent the people of Northern Somalia ; calls on the international community to recognise that the people of the North have expressed a wish for independence as the Republic of Somaliland ; notes that there are very close links between the North and the Somali communities in Britain ; notes also that the North suffered for years in a hidden war under the regime of ex-president Barre during which time families, relatives and friends of British Somalis were killed or fled the country ; notes that there has been relative stability in the north for the past year
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under a de facto government which includes the Somalia National Movement and other northern groups ; and calls on the British Government and the international community to do all they can to ensure that the representatives of the North are involved in peaceful discussions aimed at achieving a peaceful and long-term settlement by agreement, including settlement of the request for recognition by the Republic of Somaliland in the North.]Will the Leader of the House accept that this is given special and increased urgency because of a letter that I received today from the Under- Secretary-General of the United Nations, Mr. James Jonah, in which he refers to recent consultations in New York with what he describes as
"the two Somali factions--Interim President Ali Mahdi Mohammed and General Mohammed Farah Aideed."
That omits the interim Government of the north, who wish independence as the Republic of Somaliland. The north is the area with which the Somalis in Britain have contact and where they have many relatives and friends who have suffered through the hidden war over the past 10 years that has left many dead and many refugees. Does the Leader of the House agree that we should debate this matter and ensure that the House, the international community and the United Nations bring all parties to the table to try to achieve peace? Does he agree that that would be better than the danger of the south being led by one faction and the north being left out of the peace deliberations? I am sure that the Leader of the House and the Minister of State, Foreign and Commonwealth Office, will agree with the facts as I have described them. Can we have an opportunity to raise the issue publicly?
Mr. MacGregor : I do not see an opportunity for such a debate in Government time next week. It could be undertaken in ways that are available to hon. Members to raise topics. I am not aware of the letter to which the hon. Gentleman referred, but I have seen the early-day motion. As he knows, the Government welcome the United Nations initiative on Somalia. I understand that a conference is to be held in Mogadishu later this month to which all factions will be invited.
Mr. John Marshall (Hendon, South) : May I join those who have asked my right hon. Friend the Leader of the House to arrange an early debate on the national health service? Is my right hon. Friend aware that a recent visitor to the Manor House hospital in my constituency described it as a unique hospital with a very high quality of care for patients, many of whom are members of the TUC?
Is not it a double standard to say that private health care is good for members of the Trades Union Congress and bad for the rest of us? Is my right hon. Friend aware that the visitor who displayed those double standards was none other than Mrs. Glenys Kinnock?
Mr. MacGregor : I agree with my hon. Friend that that shows the Labour party's hypocrisy on this issue. It devotes so much energy to condemning those who pay for their hospital treatment through hospital subscriptions, thus adding to the resources of the health service, as do many at the hospital to which my hon. Friend referred. Such people also help hospitals to raise substantial sums, a process which the Labour party also criticises. I
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understand that Mrs. Kinnock was praising that fund raising at the hospital last week. It seems that there is one law for TUC members and another for everyone else.Mr. Win Griffiths (Bridgend) : Many people will be disappointed that the Leader of the House did not announce a debate next week on the future of Kuwait, bearing in mind the fact that tomorrow is the anniversary of its liberation. The Leader of the House will know that many people from this country and others died or suffered to free Kuwait but, now, a year later, 1,053 Kuwaitis are still being held by Saddam Hussein. I have spoken to families who were prisoners of war and had to leave relatives behind when they returned to Kuwait, so they know that they were alive.
In addition, the Kuwaiti Government, whom we saved and restored, are discriminating against members of the New Democracy Movement there and are refusing to allow observers to ensure that the elections are fair. I hope that we can have a debate about that, because we need to expose the hypocrisy of the Kuwaiti Government and we need to achieve true democracy as the United Nations intended.
Mr. MacGregor : It would not be right for me to comment in business questions on the issues that the hon. Gentleman has raised, but I recognise the importance of having a debate on Kuwait at some point. The difficulty is simply that many important issues are being raised, and at the request of the Select Committee on Foreign Affairs we shall discuss Yugoslavia in next week's estimates debate. It is just a question of if and when one can fit a debate in.
Dr. John Reid (Motherwell, North) : May I first express regret that the Leader of the House lowered himself by replying to what was obviously a planted personalised and
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despicable attack on the spouse of a politician? I do not think that that speaks volumes for his confidence about the forthcoming election.May we have a statement next week on the Government's attitude, especially the Prime Minister's, to national stadiums? We welcome the fact that £55 million may be made available for a stadium in Manchester, but is the Leader of the House aware that meetings have been held and repeated requests made to people up to and including the Prime Minister, by myself and colleagues from Lanarkshire, for a commercially viable proposition for a new national football stadium in Lanarkshire, which would service all sports, would create 3,000 jobs and would require finance, private sector led, of less than £20 million--less than half the amount needed for Manchester? May we have a statement to explain why that cannot be provided, as it would create jobs and an unparalleled resource in Scotland? Only £3.5 million is offered for the patch-up job that is to be done on Hampden.
Mr. MacGregor : I do read newspapers, and I was aware of the report to which my hon. Friend the Member for Hendon, South (Mr. Marshall) referred. [Interruption.] I will tell the hon. Gentleman why. I think that it speaks volumes for my dislike of hypocrisy. It was perfectly right to draw that issue to the House's attention. On the hon. Gentleman's second point, Manchester made a specific bid for the Olympics and it was right for my right hon. Friend the Prime Minister to consider it. I am well aware of the working party on Lanarkshire and of the significant sums that are being proposed and spent in the area. I agree that it is right to do so because of the particular difficulties that have been created by the need to restructure the Lanarkshire economy.
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Pension Rebates Review
4.22 pm
The Secretary of State for Social Security (Mr. Tony Newton) : With permission, I wish to make a statement on the outcome of the regular five- yearly review on the level of national insurance rebates for people contracting out of the state earnings-related pension scheme--SERPS--and on our plans to build on the huge success of personal pensions introduced in 1988 in extending individual choice, opportunity and ownership.
In respect of the contracted-out rebates, I have today laid the relevant reports by the Government Actuary and myself, with a draft amending order and regulations, to establish the level of rebates for the period beginning in April 1993, which need to be set within the present financial year in accordance with the Social Security Pensions Act 1975 and the Social Security Act 1986.
As the House knows, employment which is contracted out of SERPS attracts a rebate on class 1 national insurance contributions. For the five years from April 1988 to April 1993, it is set at 5.8 per cent. of earnings between the lower and upper earnings limits--2 per cent. on the employee's contributions and 3.8 per cent. on the employer's. The rebate is based on the cost to salary-related occupational pension schemes of providing the guaranteed minimum pension which such schemes must provide as the condition of contracting out.
An additional 2 per cent. incentive is payable from the national insurance fund to people in occupational pension schemes which newly contract out of SERPS between 1988 and 1993 and to people who contract out of SERPS in favour of a personal pension. That 2 per cent. incentive ends in April 1993.
The level of rebate required to provide guaranteed minimum pensions in contracted-out schemes is, naturally, falling, because the cost of the transitional arrangements that we introduced for older employees as part of our 1988 pensions reforms reduces in each new quinquennium as those people reach pension age. In the consultation paper issued last autumn, the Government Actuary indicated his initial view that the appropriate rate for 1993 to 1998 would be 4.68 per cent. In his final report to me, following extensive consultation, he has concluded that the range of uncertainties caused by the European Court of Justice Barber judgment concerning equal treatment in occupational pension schemes, which will take some time to resolve, make it more sensible for the rebate level to be based on the costs for the first three years of the period only, which he assesses at 4.77 per cent.
I accept his view and his recommended figure, subject only to rounding the figure to 4.8 per cent. Accordingly the regulations laid today provide for a rebate at that level from April 1993. I propose that it should be split 1.8 per cent. for employees and 3 per cent. for employers.
In my statement to the House about the Barber judgment on 26 June last year, I said that we would be consulting the pensions industry and other interested parties on the implications of equal treatment for the current arrangements for contracting out. Those consultations are under way, and it is clear that changes will be needed to the basis on which pension schemes can contract out of SERPS. In considering what those changes should be, we intend now to give particular consideration to the scope for moving from flat-rate rebates to rebates
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related to age, at least for personal pensions and possibly also for other contracted-out schemes. Decisions on how to achieve equality in state pension age, on which I published a discussion paper in December, will also have an important bearing on the many complex and detailed issues which will need to be resolved. In carrying forward this work, our aim will be to ensure a sound basis for the continued operation and development of salary-related schemes and to expand further the new opportunities for millions of people created by our changes in the 1980s, which opened the way to contracted-out money purchase schemes and personal pensions and gave greater scope for individuals to enhance their retirement provision with additional voluntary contributions.Personal pensions in particular have proved an outstanding success. More than 4.6 million people have chosen to save for their retirement by contracting out of SERPS in that way, taking advantage of the choice, flexibility and portability which such pensions can provide. Many of them would not have had access to an occupational scheme, and they also include many who would not previously have planned ahead for retirement in this way.
The flat-rate nature of the rebate has, however, meant that the advantages of personal pensions have been greater for younger people than for older ones. As I said earlier in my statement, we intend to examine the scope for age-related rebates more generally. Meanwhile, however, we have decided that it would be right to take an early step in that direction in relation to personal pensions. Accordingly, we propose that from April 1993 there should be an age-related additional rebate of 1 per cent. over and above the basic 4.8 per cent. contracted-out rebate for personal pension holders aged 30 or over.
This is a further important step in encouraging the development of personal saving for retirement. Coupled with our firm and continuing commitment to the basic rate retirement pension, protected in value, it will, I believe, be welcomed in the House and outside.
Mr. Michael Meacher (Oldham, West) : Will the Secretary of State tell the House what he pointedly omitted to tell it? What is the cost of the 1 per cent. bribe for private pensions which he is announcing for people aged 30 or more who will be given age-related rebates? Will he confirm that the bribe will cost about £600 million over five years, which is equivalent to more than £350 for every pensioner on income support?
Will the Secretary of State also confirm that the whole package will cost £7.1 billion of taxpayers' money now in order to save about £4 billion in reduced benefits at some stage in the next century, so the net cost is more than £3 billion, which is equal to £300 for every pensioner in the land? Why did not the right hon. Gentleman's statement acknowledge that the National Audit Office and the Public Accounts Committee have strongly condemned-- [Interruption.] I notice that Conservative Members do not like to be reminded of the degree of the bribe being given by the Government in this pre-election period or of the losses to ordinary pensioners.
Will the Secretary of State confirm that the National Audit Office and the Public Accounts Committee have strongly condemned him for wasting nearly £9.5 billion of public money in the past five years in order to save only £3.5 billion in reduced benefits, and for losing another
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£800 million in tax revenue ? Will he confirm that he was also castigated for so depleting the national insurance fund by those manoeuvres that he has had to transfer nearly £2 billion of national insurance expenditure to general taxation, and that that is the equivalent of about 1 p on the basic rate of tax ?Is not it clear that, not only in the Budget but 12 days beforehand, the Government are hell-bent on bribing people with everyone else's money-- including that of the poorest people ? The Government say that they believe in choice, but is not it clear that they choose sweeteners for a select group of private pensioners at the expense of nearly 2 million of today's pensioners who are left in poverty ? How can the Secretary of State justify spending £600 million on private pensions when an ordinary single pensioner has seen his or her pension cut by more than £17 a week, compared with Labour's earnings formula ?
Why does the right hon. Gentleman feel that it is so necessary to bribe people to join private pension schemes ? Is it because private pensions cannot compete with occupational pensions or with SERPS ? Why does not the right hon. Gentleman treat SERPS, occupational pensions and private pensions on a fair and equal basis, so that people can choose the best value for money, rather than being manipulated into the Government's preferred ideological option ? Before the Secretary of State asks what Labour will do, I shall tell him that we shall abolish the current 2 per cent. bribe, and that we shall not implement the new 1 per cent. bribe in April 1993. Our priority is today's pensioners, who are in far greater need and who have been treated so shabbily by the Government for the past 13 years.
The Government's package is an abuse of public funds. It bribes people to join expensive and highly risky private pension schemes and cheats today's pensioners of money that they need. They have a right to that money, and we shall ensure that they get it.
Mr. Newton : The hon. Gentleman's last remarks did not surprise me in the least. They were absolutely in line with his party's relentless hostility to almost every extension of choice and ownership, whether in housing, in shares or, as now, in pensions. More to the point, I should like to know what the hon. Gentleman means by saying that he would abolish the 2 per cent. incentive. That is due to come to an end at the end of the forthcoming financial year in any event. He could abolish it, and change the status quo, only by taking away commitments that have already been made and taken into account in existing pension contracts, thus retrospectively disturbing arrangements that people had already entered. I hope that the hon. Gentleman will wish to clarify that matter at some stage. I cannot confirm, because I do not fully recognise some of the figures that the hon. Gentleman used, what he said about the cost to the national insurance fund. However, I can tell him that as a result of the rebate which I have announced--the basic rebate from April 1993, combined with the disappearance of the 2 per cent. incentive and the addition of the 1 per cent. age-related addition for people over 30--there will be a substantial reduction in expenditure on rebates from the national insurance fund, arising principally, of course, from the reduction in the basic contracted- out rebate.
The last point on which I want to touch goes to the heart of the hon. Gentleman's comments and his hostility
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to the rebate system. The figures that he uses persistently include the basic contracted-out rebate as well as the personal pensions incentive--Mr. Meacher : That is what the National Audit Office says.
Mr. Newton : I heard that. I wonder whether the hon. Gentleman has read what the Institute of Fiscal Studies--usually one of his favourite bodies--said last week about the NAO report :
"The majority of the cost of personal pensions arose from the cost of the contracted-out rebate"--
the basic rebate introduced by the Labour Government in the mid-1970s. The institute continued :
"An obvious corollary of the NAO's argument that the cost of personal pensions was excessive is that the cost to the National Insurance Fund of rebates to occupational pension schemes is also excessive."
If, as I suspect, that is the hon. Gentleman's view, he should come clean. He will not be happy until there is no alternative to state provision and whatever the state decides to provide.
Several Hon. Members rose--
Mr. Speaker : Order. I know that this is an important statement, but we have an equally important debate on Welsh affairs today. I will allow questions to go on until 4.55 pm ; then we really must move on because I will have to put a limit on speeches in any event in the Welsh debate.
Sir Robert McCrindle (Brentwood and Ongar) : Is not it clear that personal pensions represent one of the greatest successes of the Government, and that as a result of their introduction millions of our fellow citizens enjoy the prospect of a very good pension? That has been brought about by the incentives that are so deplored by the Opposition. My right hon. Friend will find that there are many Conservative Members sitting behind him who will warmly endorse what he has done in the past and even more warmly endorse today's news that the 1 per cent. rebate will apply on an age-related basis. Finally, is not it clear from what the hon. Member for Oldham, West (Mr. Meacher) said that the millions of people who have become holders of personal pensions over the past few years will wish to know whether his remarks imply that there is to be some retrospective action by an incoming Labour Government which would not only show Labour's well-known opposition to the concept of personal pensions but put in jeopardy the pensions which have been built up over the past five years?
Mr. Newton : Taking my hon. Friend's last point first, it is certainly true, if the words of the hon. Member for Oldham, West (Mr. Meacher) meant what they appeared to mean, that they would involve depriving average personal pension holders of about £5 a week of contributions to their personal pensions which they have already committed.
Mr. Newton : I take that sedentary observation as confirming what I say--it is precisely the commitment made in the last shadow Budget. We all wait with bated breath for the next shadow Budget.
I am grateful for my hon. Friend's earlier observations, which were entirely true. We have enabled millions of people who were not in occupational pension schemes to
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embark on a new form of saving for their retirement, a form which gives them greater flexibility and choice. What is more, there are some signs, admittedly from limited survey information, that about 40 per cent. of those people are putting more than the rebate into their personal pension schemes. In other words, this has had an important effect in stimulating personal saving for retirement.Mr. Archy Kirkwood (Roxburgh and Berwickshire) : The Secretary of State knows that I do not share the hostility emanating from the Opposition Front-Bench spokesman, the hon. Member for Oldham, West (Mr. Meacher), to private pensions. But may I repeat the question that the hon. Gentleman sought to ask? What is the Government Actuary's assessment of the cost of the 1 per cent. additional rebate? I well understand the reason for trying to include an age-related element, but, without the 1 per cent., would not that have been equally possible by using a figure of less than 4.8 per cent. for those under 30 and more than 4 per cent. for those over 30?
Mr. Newton : The estimate of the cost to the national insurance fund of the 1 per cent. additional rebate that I have proposed is about £175 million a year. Against that, savings of the better part of £2 billion a year will arise from the other changes which I announced today--including my confirmation of the fact that the 2 per cent. incentive will disappear in April 1993. I hope that that is reasonably clear.
On the wider point that the hon. Gentleman raised, I reiterate that I am grateful for his general support for extending choice and opportunity in the way that we have sought to do.
Mr. Anthony Nelson (Chichester) : If the growing number of elderly people are to be assured of a decent pension in future without placing an impossible taxation burden on the rest of the work force, bearing in mind that pensions are paid for on an annual basis, is not it essential that personal pension provision is increased and is not it right that the Government have come forward with this welcome statement, which amounts not to a bribe but to a much-needed bonus for self-reliance and self-provision?
Mr. Newton : Yes. I obviously very much agree with my hon. Friend. The fact that 4.5 million of our fellow citizens have taken advantage of those opportunities, together with many more in company-operated money purchase schemes--of which 20,000 have been created since 1988--shows that that is meeting a widespread wish for people to make more choices for themselves and to have more say over their own provision for retirement. That will be welcomed generally almost everywhere, except among Opposition Front-Bench Members, as a sensible way to proceed.
Mr. Frank Field (Birkenhead) : As someone who is committed to free choice--whether to belong to one's trade union at GCHQ, to buy one's own council house or to have control over one's pension assets--may I return the Secretary of State to the costs of the proposals? What was the cost in respect of the national insurance fund of the rebate during the first five years and what is it in the second
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five years? Or, in this pre-election period, is the statement that there is no such thing as a free lunch being put to one side?Mr. Newton : I have given the figures requested by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood). The House must focus on the extent to which, as a result of the kick-start that we have provided through the incentive introduced in 1988, there has been a massive expansion in the number of people saving for their own retirement and, as I said a moment ago, many people now put in more money than they receive from the rebate itself. I have no doubt that that is in the interests of the development of a sound, long-term structure for pension provision, for reasons that were made clear in the supplementary question asked by my hon. Friend the Member for Chichester (Mr. Nelson).
Mr. Patrick Nicholls (Teignbridge) : Does my right hon. Friend agree that, when those people who are thinking of contracting out consider the exchanges that have taken place in the House today, they would do well to bear in mind that the hon. Member for Oldham, West (Mr. Meacher) was quoted in The Star on 28 August 1991 as saying that there was no way in which any political party would commit itself to a common retirement age of 60 because the cost would be enormous? Does not that show that when the hon. Member for Oldham, West has a choice between common sense and party dogma, at the end of the day, he will always opt for party dogma?
Mr. Newton : I can confirm that. If we had required confirmation other than from me--and I suppose that people might expect me to confirm that--that was all too clear in the response of the hon. Member for Oldham, West to my statement this afternoon.
Mr. David Winnick (Walsall, North) : Is the Secretary of State aware that the erosion and undermining of SERPS have caused immense damage to those who will retire in future and will undoubtedly mean that, despite what he has said, many people will have to live in poverty unless--as we hope--a Labour Government reverse what he has done? Is there not a lesson to be learnt from what has happened with the Mirror pension scheme which is, admittedly, an occupational scheme? Theft and swindle in that scheme have meant that many pensioners simply do not know whether they will have a decent retirement. What has happened could happen elsewhere in occupational pension schemes or in the kind of schemes to which the Secretary of State referred.
Mr. Newton : I do not accept either of those points. The changes that we made to SERPS in 1988 were a necessary part of putting pension provision on a basis that was sound for the future and that was likely to be affordable by future generations. The worst thing one can do in respect of pensions is to make promises, upon which people rely, about what would be paid in 30 or 40 years time, but which prove to be unsustainable.
If I understood the other part of the hon. Gentleman's question alright, where people are members of a contracted-out scheme whereby the undertaking is to ensure guaranteed minimum pensions, in the relevant circumstances such schemes are underwritten by the state.
Mr. Michael Irvine (Ipswich) : Does my right hon. Friend agree that, in the light of the appalling fraud
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perpetrated on the pensioners of the Maxwell-controlled companies, the case for personal pensions is stronger, because with personal pensions it is up to the individual pensioner to choose who manages that pension and in whom to place his or her trust?Mr. Newton : There is certainly a wide range of advantages in money purchase schemes generally and in personal pension schemes in particular. The Government are trying to achieve, and have done so successfully, a wider spread of different kinds of opportunity for people to make provision for their retirement.
Mr. Derek Enright (Hemsworth) : The Secretary of State will be aware that many of the assets of the pension fund of the Mirror Group are in the possession of the banks. Is he willing to order the banks to restore those assets, or will he let them get away with that bare-faced robbery?
Mr. Newton : The hon. Gentleman will realise that I have no power to order the banks to do anything. However, he will have noted the observations of some of the banks over the past few days. I cannot embroider on them or add to them.
Mr. Tim Smith (Beaconsfield) : Is my right hon. Friend aware that his statement is most welcome, not only because it builds on the huge success of personal pensions but because it introduces for the first time the concept of an age-related rebate? Is not it clear that the hon. Member for Oldham, West (Mr. Meacher) is against variety in pension provision and against choice in pension provision and wants to destroy personal pensions? Not content with that, did not he make it clear when we debated occupational pensions in 1990 that he wanted to impose such huge burdens on occupational schemes that many employers would withdraw altogether?
Mr. Newton : That is absolutely clear. One of the remarks in that regard, about which the hon. Member for Oldham, West is no doubt proudest although I do not think that he has said it since, is his remark of 20 June 1990 that the Labour party planned to
"turn the pensions market on its head."
That is a fine way of guaranteeing people security in retirement.
Mr. Dennis Skinner (Bolsover) : Is not the truth of the matter that the electors will be bewildered by a Government who reckon that they are strapped for cash and who will have a public sector borrowing requirement of £30 billion after the Budget but who are handing out £6 billion to a small group of people from the pockets of others? Who is going to benefit? Those who will benefit are the merchant banker Tory Members of Parliament, some of whom have spoken today, and insurance companies that give money to the Tory party so that it can fight elections. That is not only bribery ; it is hypocrisy as well.
Mr. Newton : I think that the hon. Gentleman might study the whole package of changes that were made in 1988 to which he referred. He might also just remember that I have made it clear several times this afternoon that the net result of what I have set out, including the necessary adjustment of the basic contracted-out rebate, is not a large increase in expenditure.
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Mr. John Greenway (Ryedale) : My right hon. Friend's statement will be warmly welcomed by the pensions industry which has been greatly concerned about the problem of older pension contributors opting back into SERPS because of the current arrangements. I doubt whether the pensions industry would have been as pleased with the hostility towards the industry shown by the Opposition.
On a technical point, I welcome my right hon. Friend's commitment to an age -related rebate in future. Will he ensure that, in due course, those provisions are taken together at the same time as his proposals for a state pension age which is the same for men and for women? The two will not work unless they are carried out together.
Mr. Newton : If my hon. Friend reads my statement carefully--it was admittedly a rather long paragraph--he will register that I have linked in one paragraph the action that will need to be taken in the wake of the Barber judgment in respect of occupational pension schemes, the action that will need to be taken following discussion on the state pension age, and the examination of age-related rebates. I certainly note my hon. Friend's point. He and many others will recognise that, if it is possible to find a way through more generally on age-related debates, it would be a significant further improvement in the whole structure of pension provision.
Sir Anthony Durant (Reading, West) : Does my right hon. Friend agree that the Government's pensions policy has encouraged many much younger people to take up pensions and those on much lower incomes to take out personal policies?
Mr. Newton : Yes. My hon. Friend is absolutely right. Personal pensions have proved particularly popular among young people with relatively modest incomes. Typically, the personal pension holder receives about three quarters of average earnings. Fifty per cent. of them are under 30 and 80 per cent. of them are under 40. As I said in my statement, I regard as one of the great merits of personal pensions the fact that large numbers of people who historically would not have been thinking ahead and planning for retirement--we all remember the old Pearl Assurance advertisement--have started to do so. That is a major gain.
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