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7.16 pm
Sir Norman Fowler (Sutton Coldfield): I do not accept--neither, I am sure, do other Conservative Members--the criticism just uttered by the hon. Member for Stratford-on-Avon (Mr. Howarth), who was, after all, elected to the House as a Conservative Member of Parliament. In my view, if he wanted to have the authority to speak on behalf of his constituents, he should have called a by-election. Had he done so, of course, he would have been defeated. He has, I fear, no authority in the House.
I had not intended to catch your eye, Mr. Deputy Speaker, until I heard the fairly extraordinary speech of the hon. Member for Peckham (Ms Harman). It is a pity that she has just left the Chamber. It seemed that she exposed and set out quite a dramatic change on Labour's policy on social security in 1997 and, we assume, as far as the election.
When I last spoke on social security about a year ago, I raised the issue of the earnings uprating of pensions--a matter on which, at every election, when I was Secretary of State for Social Services, I was attacked by the Opposition. I was attacked in 1983 and 1987. I was told that the Government were being far too mean and were not showing sufficient regard to elderly people. In 1992, the same attack was deployed once more. When I suggested a year ago that the Labour party was in the process of changing its policy to the policy that the Government had pursued, I was accused of scaremongering.
Just in case the hon. Lady's words were not quite understood--she read out a formula that had no doubt been put before her by another member of the shadow Cabinet--I point out that she confirmed that the Labour party has abandoned its pledge on the earnings upratings of pensions. There is no question about that. It is one of the most massive U-turns in social policy that I can remember in the past 25 years. I now know why she has disappeared, but if another Labour Front Bencher wants to deny that I will happily give way. Labour Members know that their policy has changed. I do not understand why they do not come clean and admit it openly, so that the public know where they stand.
The debate, including the speech of the hon. Member for Peckham, has been fascinating and significant, because it has shown that the Labour party has come to our position on the uprating of the basic pension. It has also come to our way of thinking on the whole pensions area. That is what the hon. Lady's speech implied.
When I reformed pensions in 1985-86, I was fought all the way by the hon. Member for Oldham, West (Mr. Meacher)--I do not know what has happened to him--and others in the Labour party. I was told that the state earnings-related pension scheme was sacrosanct and could not be changed. We believed that the public wanted a pension that they could call their own, not just a pay-as-you-go scheme, such as the state earnings-related scheme, which is not a funded scheme. The public wanted
a funded scheme of their own. We wanted to retain the basic pension, but we argued for an occupational or personal pension scheme as a second tier.
At that time, various things were wrong with occupational pension schemes, so we reformed them. Early leavers were a problem, for example. We also wanted to provide other options. Occupational pension schemes covered a vast number of people, but they had not increased over the years. We wanted to give the public the further option of a personal pension. We thought that that was right and sensible. Our policy has been followed and is held up as an example in other countries.
Mr. John Denham (Southampton, Itchen):
Will the right hon. Gentleman give way?
Sir Norman Fowler:
Let me finish this point.
The marketing of personal pensions occurred after I had left the Department, and was popular with the public. The concept of personal pensions was excellent and was widely supported.
Mr. Denham:
Will the right hon. Gentleman take this opportunity to apologise to the House for the fact that millions of people are now having to have their pensions policies reviewed because of misselling? Was misselling part of the concept, or merely something that went disastrously wrong?
Sir Norman Fowler:
The hon. Gentleman takes me on to the point that I was about to make. I do not defend the misselling of pensions. Companies missold those pensions: it was nothing to do with the Government. It is usually wrong to advise someone in an occupational scheme--
Sir Norman Fowler:
Before the hon. Gentleman intervenes again, he should let me finish my reply.
It is usually wrong to advise someone in an occupational scheme to move to a personal pension, for the simple reason that the employer makes a large contribution to an occupational scheme. When that advice has been given, it has often been wrong. There have not been millions of cases, but pensions have been missold.
The difference between that misselling and the mistakes that were made in the past on state pensions is that the problem of misselling is being put right. It is perhaps being put right slowly--too slowly, some may argue--but it is being put right, unlike the mistakes to which I shall refer in a moment.
Mr. Denham:
Does the right hon. Gentleman feel no sense of embarrassment about the Government advertisements that showed, for example, someone upside down in a straitjacket promoting personal pensions and saying, "Now you are free to leave your employer's pension scheme"? Does he feel no embarrassment about the fact that the Government created the environment in which misselling took place?
Sir Norman Fowler:
I do not feel embarrassed about that, or about giving the option of personal pensions to millions of people. If the hon. Gentleman is saying that
When inflation was coming down, Barbara Castle changed the method of uprating: she went from the historic to the forecast. Guess what? In current money, that saved between £1 billion and £2 billion. That money has been lost to pensioners permanently. I invite the hon. Gentleman to return to the Dispatch Box and give us a pledge that when or if Labour is returned to power, he will restore that, £1.5 billion to pensioners. Is that Labour's policy? I hear no reply and I see no movement, apart from an embarrassed shuffle. He knows perfectly well that what I am saying is absolutely true.
Mr. Denham:
Let us get the record straight. The basic state pension increased in value under the last Labour Government by 18 per cent. in real terms. That is the true record of the Labour Government.
Sir Norman Fowler:
The hon. Gentleman has missed the point. I am well aware of the line taken in press releases issued by Transport house, Walworth road or wherever the Labour party is now. The Labour Government fiddled pensions. They made public spending savings of more than £1 billion. No one seriously disputes that--everyone knows that it is true. It is in Barbara Castle's autobiography, it is in Denis Healey's biography and it is a simple matter of common knowledge. The difference is that the difficulty over personal pensions is being put right, whereas that mistake has not been put right, and, to judge by the embarrassed silence among Opposition Front Benchers, it never will be put right.
It is a pity that the hon. Member for Rochdale (Ms Lynne) is no longer present. I hope that both Opposition parties will agree that the real lesson to be learned from the misselling of pensions is that the public need far better and more extensive independent advice on pensions. If we give more options, advice should go with them. There should also be advice from the Department of Social Security. I am concerned when people come to my advice surgery having made decisions about social security and pension benefits that are obviously wrong and not in their interests. The problem of how to advise the public should be re-examined, and much more should be done in the public and private sectors.
The debate is now on new ground. I am beginning to understand Labour's policies step by step: in each debate another veil is lifted. Despite the huffing and puffing of the hon. Member for Southampton, Itchen (Mr. Denham), Labour has no intention of abolishing personal pensions. When I was reforming the pension system, I would have preferred to scrap the state earnings-related pension scheme. Such a pay-as-you-go system simply creates a debt for future generations. I wanted a system that we could afford. Every analysis of pensions in Europe points to the British system as affordable compared with virtually every other European system. We must obviously meet the obligations that we have already
made; there is no question of not doing so. In the future, however, I would move away from the pay-as-you-go, state earnings-related pension scheme.
Mr. Denham:
When is the Secretary of State going to do that?
Sir Norman Fowler:
Before the hon. Gentleman asks my right hon. Friend whether he will do that, I had better ask the hon. Gentleman the same question. I had assumed that traditional Labour party policy was to defend SERPS to the death. That is what Labour Members have been saying year after year. The hon. Member for Oldham, West certainly said that, and so did his successors.
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