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Mr. Nigel Forman (Carshalton and Wallington): Can I clarify what the hon. Lady has said, which is open to
misunderstanding? If people tragically die before they can be compensated, their families, their estates and their relatives get the compensation.
Ms Harman: It will be too late for them. As a direct result of Government policy, they will have had a lower standard of living in retirement than they were entitled to. The Secretary of State and the Tory Government have shown no remorse about the personal loss and hardship that they have caused so many people. Far from it: they are trying to sweep the issue under the carpet and press on with their dogmatic and ideological proposals to get rid of all state provision and privatise all pensions.
The Government say that under their new scheme costs will be held down. Under the Financial Services Act 1986, they have always had the power to cap charges and have never used it. Their track record is to allow charges to soar. Why should we believe them now when in recent years they have allowed people's savings to be eaten up in costs and charges?
Mr. Clifton-Brown:
One of the planks of my right hon. Friend the Secretary of State's proposals is that the market will drive down charges. This lunchtime, I was with one of the major mutual companies, which reckons that it can provide one of my right hon. Friend's pensions at about 0.5 per cent. of the fund value each year. Moreover, the top-up could be provided free of charge, so I do not know how the hon. Lady gets the idea that those private pensions will cost more.
Ms Harman:
The Secretary of State asserted that, under the new scheme, charges will be lower than under existing personal private pension schemes because marketing costs, which form the greater part of the costs and charges that eat up so much of people's savings, will be brought down. As people will have to invest in those private pensions, the companies will not have to spend so much on marketing. The problem with that is that the Secretary of State fails to recognise that the system still offers a choice between different private providers. The advertising and marketing costs will be not a response to try to increase the market but a response from each personal private pension company to try to increase its market share. With more funds in play, it will be even more worth while to spend more on marketing and advertising, and to offload the charges on to people trying to save for their retirement.
Ms Harman:
I shall not give way.
Mr. Flynn:
Will my hon. Friend give way?
Ms Harman:
I shall give way to my hon. Friend.
Mr. Flynn:
I congratulate my hon. Friend on how she has coped with the bad-mannered interruptions of Tory Members, who are all suffering from bad cases of pre-defeat hysteria.
What assessment has my hon. Friend made from the nonsensical replies that she and many other hon. Members had to our questions printed in Hansard in the past few days, on how the Government reached the figure
of £175? Conflicting answers printed on the same day say that the Government have worked on the assumption of an annual earnings increase of 1.5 per cent. and of 2 per cent. That will make a difference, as a percentage of average earnings in 2040, of between 18 and 26 per cent.--an enormous difference. The Government are confused. What assessment--
Mr. Garnier:
On a point of order, Mr. Deputy Speaker. Is it in order for the hon. Member for Newport, West (Mr. Flynn) to make a speech instead of an intervention when the hon. Member for Peckham (Ms Harman) refused to give way to perfectly reasonable Conservative Members?
Mr. Deputy Speaker:
Interventions should be brief and to the point, but it is not uncommon for hon. Members to stray from that in this House.
Ms Harman:
My hon. Friend the Member for Newport, West (Mr. Flynn) is absolutely right. Although the Government's proposals are barely a week old, they are already unravelling. The Government contradict their figures on the costs and benefits day by day.
The Government have made it clear that their pensions priority is to spend 40 years and more than £300 billion privatising state pensions. Labour does not share those priorities. We agree with the Secretary of State, however, that we cannot go on as we have for the past 18 years because it leads to poverty and insecurity for too many. Our approach, however, is different. There is not one type of provision that is right for everyone. People have different lives and different family and work patterns. We cannot have a one-size-fits-all pension privatisation. Everyone should have access to a pension that offers security in retirement and the largest number of people should have a stake in their own pension scheme and be encouraged to make further savings.
We shall do that through partnership between the public and private sectors. We shall keep the basic state pension not means-tested. We shall keep SERPS as a choice, particularly for the low-paid and for carers. We shall protect occupational pension schemes and provide a new low-cost stakeholder pension for those who do not have an occupational pension and for whom a private pension is simply too costly.
Those fortunate enough to be in an occupational pension scheme will have the benefit of employers' contributions as well as their own, but the Tories have encouraged more than 1 million people to opt out of occupational pensions. Basic pension plus will undermine them further. We want occupational pension schemes to be strengthened and, where possible, extended. We shall keep constantly under review the issue of regulation brought in by the Government. We shall aim to reduce the burden on employers in terms of the cost of compliance while continuing to protect the public interest. We shall introduce an investors in pensions award to recognise and encourage employers who make excellent pension provision for their employees.
However, millions of workers cannot join an occupational pension scheme because they are in a small firm and are more likely to move between jobs. For them,
the current choice is between SERPS and a private pensions but the benefit of SERPS has been halved and the costs and charges of private pensions are too high. There is clearly a need for a value-for-money, funded pension scheme that gives those people both flexibility and security at low cost. That is why we have been working with the financial services industry to formulate a new funded second pension--the stakeholder pension.
Stakeholder pensions will help to provide decent income in retirement for people who currently fall through the net. We want to encourage new partnerships, for instance between insurance companies and groups of small businesses in one industry or with employee organisations to provide stakeholder pensions. People in those new schemes will get a better pension because of reduced costs due to economies of scale. They will be able to take breaks in employment without being unfairly penalised.
Our approach to SERPS is based on choice. No overwhelming case has been made for ending SERPS as a choice, which is why we shall keep it for people who want to be in it and want to use it as a benchmark by which to judge second pensions. SERPS can also play a role in providing pensions for those--usually women--who care for elderly or sick relatives. Many of those people face retirement on means-tested benefits, but crediting them into SERPS could help to ensure that they gain a pension in their own right in recognition of the work that they do, which is unpaid but important to the community. Together with our proposals to ensure equal treatment for women, that could greatly reduce reliance, and hence public expenditure, on income-related benefits for those in retirement.
I wish to outline our proposals for today's pensioners. We shall defend the basic state pension from the Tories. Under Labour, it will not be means-tested and it will rise no less than prices. Our first priority, however, will be the poorest pensioners. One million pensioners do not receive the income support to which they are entitled. We shall examine how to help the poorest pensioners through our plans for a pension entitlement in addition to the basic state pension--replacing not the basic state pension but income support. It will ensure that people receive what they are entitled to without having to fill in a 35-page form.
The Government have failed 1 million people. Among the poorest are retired people who are too proud to have to jump over all the hoops and hurdles which the Government place before them in order to get the income support to which they are entitled.
Mr. Edward Leigh (Gainsborough and Horncastle):
Will the hon. Lady give way?
Ms Harman:
I will not give way.
We shall get rid of the stigma of income support, replacing it with a pension entitlement. We shall make it easier for pensioners by making it possible to claim at a far wider variety of outlets.
Mr. Robert G. Hughes:
How much will it cost?
Ms Harman:
The hon. Gentleman asks how much it will cost. We are talking about an entitlement for the poorest pensioners, which the Government have failed to allow them.
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