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Personal Pensions
4. Mr. Jim Cunningham: To ask the Secretary of State for Social Security if he will make a statement on his power to determine the levels of fees and charges levied by providers of personal pensions. [36959]
The Parliamentary Under-Secretary of State for Social Security (Mr. Oliver Heald): We have always made it clear that competition and disclosure are the preferred means of ensuring that charges levied are not excessive. We have no plans to use the powers referred to.
Mr. Cunningham: Given that £16 billion is paid out every year in pension rebates--£4 billion of which goes on fees and charges--and that the people that are most affected are the poorer in society, when will the Minister do something about the 25 per cent. charge?
Mr. Heald: There are 5.6 million people with personal pensions in Britain, and 99 per cent. of them are as well off--or better off--as if they had remained in the state earnings-related pension scheme, typically by up to £1,000 a year on their pension at today's prices. That is not my view, but the view of the Securities and Investments Board. What is more, in its recent report, "Disclosure: One Year On", the Personal Investment Authority suggests that competition and disclosure are
working, and that there is evidence of lower charges and better surrender values. The Government's policy is working, and there are no plans to introduce powers of the sort that have been referred to.
Mr. Wilkinson: Will my hon. Friend take time during the summer recess, like the Select Committee on Social Security, to go to Chile to see how state-approved personalised pension schemes that are funded really work to provide both a very high level of benefit in retirement and an engine for growth, which has been sustained at over 6 per cent. per annum over the past few years?
Mr. Heald: Like the Select Committee, my right hon. Friend is considering visiting Chile to see the progress that has been made there. We should not forget that, in the United Kingdom, £600 billion is invested in private pension provision. That gives a much better future for people in this country than would otherwise be the case.
Income Support
5. Mr. Hutton: To ask the Secretary of State for Social Security what percentage of children are in households dependent on income support; and, as a percentage of total children, how this compares with 1979. [36960]
Mr. Burt: In Great Britain, 25.6 per cent. of children are members of families where income support is claimed. A direct comparison with 1979 is not possible.
Mr. Hutton: I thought that the Minister would say that a comparison was not possible. Is it not clear that such a shameful figure reveals the extent of the failure of the Government's economic and social policies since 1979? Will the Minister take the opportunity now to apologise to the millions of families and children who have been so badly let down by the policies that the Government have pursued?
Mr. Burt: A direct comparison is not possible because of the different structure of the benefits involved. The hon. Gentleman's point about the number of children in receipt of income-related benefits reflects, first, a rise in unemployment, which was not experienced by the United Kingdom alone, and, secondly, a change in the structure of families.
The Government's response has been to work hard to reduce unemployment, which is why unemployment has decreased so spectacularly in this country. Our unemployment record is much better than those of our partners in Europe. Secondly, in terms of family structure, we have done all that we can through the benefit system to encourage people into work, and to ensure that there is a benefit structure that assists lone parents to get back into work and finds ways of encouraging people to look after themselves. That is the proper response of government.
Mr. Bill Walker:
Does my hon. Friend agree that there is something sick and sad about people who do not realise that the take-home money that has been available since 1979--to people from all grades and of all standards--has increased substantially, and that that includes the moneys available to those on benefit? The sadness is that the more we help people, the more we are chastised.
Mr. Burt:
My hon. Friend makes a more than valid point. Average income has increased for all family types
Mr. Wicks:
The Minister says that there is no comparison with 1979. The Library informs me, however, that, in 1979, 7 per cent. of children were dependent on means-tested benefits, whereas 26 per cent. are now. Does not the fact that one in four children are dependent on means-tested benefits show the Government's neglect of Britain's children? Given that, in 1979, Conservatives promised to reduce dependency on the state, will the Minister tell us what has gone wrong?
Mr. Burt:
It seems that the hon. Gentleman was not listening to the earlier exchanges. There is no valid comparison, because of differences in benefits. The Government have tried to reduce dependency by getting people back into work and altering the benefit structure to ensure that people go from welfare into work. That is something that the hon. Gentleman should support. It is in direct contrast to the Labour party's policy of work to welfare, first by cutting child benefit for 16 and 17-year-olds and, secondly, by introducing a minimum wage, which would reduce the job opportunities of many families and make their children much poorer.
Mr. Thurnham:
Is the Minister aware that, in France, child benefit can be withdrawn in cases where children persistently truant from school? Will he bear that in mind when considering any new proposals for paying child benefit?
Mr. Burt:
My hon. Friend makes an interesting point. I understand that the provision in France is rarely used. The Department for Education and Employment and local authorities work extremely hard, through their welfare officers, to ensure that children appreciate the benefits of, and the need for going to, school. I am sure that my hon. Friend agrees that it would be a shame if, as children approach further education at the age of 16, they faced a Labour Government who would take child benefit away from them.
6. Ms Quin:
To ask the Secretary of State for Social Security what recent representations he has received about changes in reduced earnings allowances. [36961]
14. Mr. Morgan:
To ask the Secretary of State for Social Security what recent representations he has had in relation to the implementation of the reduced earnings allowance rule. [36969]
The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans):
A number of hon. Members have written to Ministers about these changes.
Ms Quin:
Does the Minister appreciate the distress and hardship that has been caused to many people who have come to rely on this allowance? In my constituency surgery, male pensioners have broken down in tears as a result of the changes. At the very least, could not some transitional help be made available to such people?
Mr. Evans:
I fully appreciate and accept the argument that those who have had the benefit altered are affected adversely by that and are not happy with it, but the position is clear. Reduced earnings allowance is to compensate for reduced earnings, and retirement allowance is to compensate for a reduced retirement pension. The intention of Parliament in 1988 was that, when people passed pension age and ceased to be in regular employment, they passed from one allowance to the other, but the way in which the rules operated were arbitrary and unfair, and a number of people who, for excellent reasons, under the arrangements as they were, have lost reduced earnings allowance and passed to retirement allowance, might fairly complain that some have gained and that they have lost. We have made the scheme reasonable and consistent.
Mr. Morgan:
Does the Minister agree that British citizens such as my constituent, Reg Beck, had the right to expect that, when they were told that they would receive reduced earnings allowance for life, that meant for life--not that it would suddenly be cut off in March 1996 by this gimcrack and mean legislative change?
Mr. Evans:
Reduced earnings allowance should never have been awarded for life. There are only two circumstances in which that can have happened.
Mr. Flynn:
What did the Minister say on "Welsh Lobby"?
Mr. Evans:
I shall come to "Welsh Lobby" in a moment.
One is when a party had retired before pensionable age and, due to the defects in the rules, could never thereafter pass from one allowance to the other. A number of persons in that category have been so notified. We are also aware of a small number of cases in which the Benefits Agency has erred. There is a scheme for compensation for official error if financial loss can be shown to have arisen directly from it.
Mr. Harry Greenway:
I welcome the scheme announced by my hon. Friend for rectifying official errors, but does he agree that on this question the Opposition are shedding crocodile tears? When will he take into account their intention, if they are ever elected, to get rid of child benefit for children between the ages of 16 and 18? As always, they say one thing and do another.
Madam Speaker:
Order. Supplementary questions must relate directly to the main question. This is a serious issue.
Mr. Wigley:
Is the Minister aware that I have in my hand a letter from his Department to a constituent of mine giving a categorical assurance in black and white that he would receive reduced earnings allowance for life, and that he, like countless others, has undertaken his financial planning on that basis? Given what the Minister has said, and what has been said on the "Welsh Lobby" programme, will he now give an undertaking that everyone, but everyone, who has been losing money under the changes will now receive compensation for those losses?
Mr. Evans:
Ministers have made it clear that each case that is put to us will be looked at most carefully.
Mr. Bradley:
May I press the Minister further on that point? Did he say on television that, where the reduced earnings allowance has caused hardship, he will review those cases? What criteria will he use to do that? What level of hardship must have applied? How much money will he put forward to ensure that hardship can be alleviated for the hundreds of people who budgeted to receive the reduced earnings allowance for the rest of their lives?
Mr. Evans:
Some 4 million files are in the process of being looked through and carefully reconsidered, because the test as to whether someone received one allowance or the other after retirement was not working properly under the old regulations. We estimate that about 2,500 people, to whom compensation in the region of about £10 million will be paid, were wrongly transferred under the old arrangements from one allowance to retirement allowance. Every case will be looked at to see whether that happened.
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