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6.58 pm
Mr. Jeremy Corbyn (Islington, North): I welcome the opportunity to take part in a debate about future pensions policy, but, of course, we can look at such matters in
different ways. The debate, which has been promoted by the Government, has so far been about the continuing destruction of the universal welfare state and the promotion of the interests of private insurance companies and pension providers.
That systematic theme has run through Government policy for the past 18 years, and I hope that 1 May will bring some liberation from the gobbledegook of market economics that has dominated this country throughout that period. [Laughter.] Conservative Members may laugh, but of course they may not be here after 1 May, anyway.
Yesterday afternoon, I had the great privilege of attending the Greater London Forum for the Elderly annual meeting. Members of Parliament from three parties were there: the hon. Member for Harrow, East (Mr. Dykes), a Conservative Member, the hon. Member for Southwark and Bermondsey (Mr. Hughes), a Liberal Democrat, and myself. We were joined later by my hon. Friend the Member for Peckham (Ms Harman), who gave a speech.
At the meeting, which was large and extremely representative of pensioner forums in every one of the 32 London boroughs, the forum put forward its manifesto for London's pensioners. Those people have given their working lives in all sorts of areas, including working at home caring for people, working in factories and administration. They are seriously concerned about the lot and plight of pensioners, so they argued for a new Greater London authority, which they thought would at least give some opportunity for promoting pensioners' interests. They argued specifically for the restoration of the link of the state pension with earnings, which I support, for the preservation of the state earnings-related pension scheme, and points relating to cold weather payments, zero rating of domestic fuel and concessionary television licences.
There was much discussion about the problems of community care, hospital services, travel permits, environmental planning, housing, leisure facilities, education and the need for pensioners to be able to lobby effectively to achieve their aims. Pensioners need to be able to put forward their case and demands.
What ran through the manifesto was a revulsion at the consensus among so many broadsheet newspapers and on television that all that matters is getting rid of the existing state pension scheme and bringing in a private scheme. The forum's voice was unreported yesterday, so I am using this opportunity to convey the sense of anger and outrage among older people about the way in which they have been treated--they the generation who brought in the welfare state.
Mr. Heald:
Does the hon. Gentleman accept that he should not try to put forward a case which is not true--that the earnings link would be restored and SERPS rebuilt under Labour? He talks about people being liberated in May. That is not the policy of his Front-Bench team, is it?
Mr. Corbyn:
I said that we would be liberated from the Tory Government on 1 May, and that we shall be. However, the Minister should be aware that the Labour party is committed to a process of statutory consultation with pensioner organisations, which the Government have never done. Indeed, I understand that they have often refused to meet the National Pensioners Convention or to
Mr. Heald:
I have met Jack Jones.
Mr. Corbyn:
I am sure you have met him and I hope you learned something from it, or I hope the Minister learned something from it--I exclude you from that, Madam Speaker.
May I quote from figures produced by the Department of Social Security on pensioner poverty? In 1979, after housing costs, 21 per cent. of pensioner couples and 12 per cent. of single pensioner households had incomes that were less than half the UK average. In 1993, the comparable figures were 25 per cent. of pensioner couples and 33 per cent. of single pensioner households. Those figures are from the households below average income statistical analysis produced by the Minister's Department. They demonstrate what has happened in past years because of Government strategy.
In 1975, Labour Government legislation linked the state pension with earnings or prices, whichever rose the higher during each year, and every April an increase came through. The same legislation also brought in SERPS, which meant that everyone either was in an occupational pension scheme in work or had access to SERPS, which credited people who were in part-time work or whatever else. It meant that pensioners could look forward to some security in retirement and a share in any rising national prosperity, to the extent that, by 1980, the state pension was around 24 per cent. of average earnings. The SERPS formula meant that many others coming into retirement, then and later, would get some decency in retirement.
In 1980, the then Chancellor of the Exchequer broke the link with earnings and substituted instead the retail prices index. In his autobiography, he called that measure his greatest single achievement. I do not know how he measures his own achievements, but to call breaking the link with earnings an achievement is wrong. Had the link been kept, the current state pension would be £82.25 per week, or £21 per week more than at present.
The Government claim that their legislation has ensured that pensioners are better off. I sat through the miserable experience of the 1986 legislation, which was promoted by the right hon. Member for Sutton Coldfield(Sir N. Fowler), by the Prime Minister and the hon. Member for Selkirk and lots of other places.
Mr. Corbyn:
Sorry--Roxburgh and lots of other places.
Mr. Corbyn:
Indeed, and many more besides, I am sure.
The hon. Gentleman was also on that Committee, and he will remember two features about it. One was the highly questionable actuarial evidence that was put forward for reducing the value of SERPS. My hon. Friend the Member for Oldham, West (Mr. Meacher), who was leading for the Labour party, pointed out that that nonsense was being put forward to promote the private
pension industry and that it would cost us all dear in the end. Many people have suffered from missold pensions as a result of that legislation. I would like them to hear the warnings that were given by my hon. Friend the Member for Oldham, West and my right hon. Friend the Member for Derby, South (Mrs. Beckett) during consideration of that legislation.
By reducing the value of SERPS, the Government have created a market for the private pension scheme and their policies have led to the misselling of pensions. We come therefore to the legislation that is being proposed--it is not legislation but a policy, because there is no opportunity for such legislation to be introduced. Indeed, come 1 May, I sincerely hope that the proposal from the Secretary of State for Social Security will be consigned to the dustbin of history. Someone doing a PhD in the next century might dredge up this debate and discover that someone actually proposed privatising the entire pension industry.
That concept has its origin in Jose Pinera, who was a Minister in the fascist Government in Chile, which privatised the national insurance system, and who now goes around the world making a great deal of money for himself addressing seminars on the promotion of the private pension industry. As my hon. Friend the Member for Peckham has said, private pension schemes, oversold and heavily sold, increasingly rely on heavy management costs, huge commissions for those that sell them and, above all, huge advertising budgets to compete with other pension schemes. Call that efficiency? Call that an effective use of resources? Call that a guarantee for the future? It is the opposite of that and Conservative Members know it.
Mr. Heald:
Is the hon. Gentleman aware of the Alexander Clay report that showed that 99 per cent. of those people are better off than in SERPS?
Mr. Corbyn:
Some of those people may temporarily be better off in those schemes than in SERPS. The reason is that the Government devalued SERPS to create the market for such schemes in the first place. The Minister knows that and he knows that that actuarial evidence, put forward in 1986, was deeply flawed.
May I quote from an interesting letter that appeared in The Guardian on 7 March from Professor Peter Townsend of the university of Bristol? It said:
"According to a report on privatisation by the United Nations Conference on Trade and Development, there is little evidence that promises have been delivered"--
this is in relation to privatising pensions as proposed by the Adam Smith Institute.
"In Chile the privatisation of pensions has resulted in only 52 per cent. of the workforce being covered for benefits. And many of these 'will end up with acquired benefits less than the guaranteed minimum'."
There is heavy selling of the idea of privatising pensions throughout the world by the International Monetary Fund and the World bank. Many people will rue the day that they agreed to go down that road.
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