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Kali Mountford (Colne Valley): In recognising the number of declarations of expertise and interest that have been made in the debate, I feel forced to declare that my only interest is that of my constituents. When even my hon. Friend the Member for Hornchurch (Mr. Cryer) makes a declaration of interest, I find myself surprised and disadvantaged in that regard. I hope that my contribution is none the worst for that. After all, it is my pensioners' experiences that should be informing the debate.
The shadow Chancellor of the Exchequer pointed out that there are only two sources of income for any pension revenue: that of the individuals who make a contribution to their own pension plan and that of individuals who make a contribution in their working life to their state pension. I would not disagree with that. Nor would I disagree with the fact that we have a growing, aging population and that we face challenging demographic changes, but is that not why this is the right time to have a proper pension review and to examine everything that informs how we decide our security in retirement?
It does not seem logical that taking those two things on board--how we bring revenue together and how we stack that up so that we can afford to pay for a proper retirement for our aging population--should lead us to accept the basic pension plus scheme because, as we have to accept, pensioners are already struggling. For example, about a third of them are already on means-tested benefits and there was nothing in the scheme to help those pensioners. This is the right time to say to our poorest pensioners that we need to do something to help them and that we will talk to them about what it is exactly that they need.
It seems to have been suggested, certainly by the hon. Member for Bournemouth, West (Mr. Butterfill), that people have to be prudent and to save. Let us remember that many of our constituents are not in a position to do that. In setting up my pension arrangements, I was advised that I had to invest at least 10 per cent. of my salary to get a good return and to have a good basic pension. Many
of my constituents are not in a position to make a contribution of 10 per cent. of their salary, if they have one. Many of them are low-paid and make some provision for their old age.
I am concerned that, when those people draw that private pension, which they have prudently saved for, they will be disadvantaged by the anomalies in the means-testing system. I hear many complaints--I am sure that all hon. Members do--from constituents who have made investments and who find that they do not enjoy any advantage because they are precluded from means-tested benefits.
Would it not be more sensible to consider the whole package of arrangements for the elderly in our communities to ensure that a review takes account of those matters? Basic pension plus did not seem to provide for that. Indeed, it seemed to place an extra burden on my youngest constituents. During the election campaign, many 20-year-olds were concerned because they would rightly be required not only to pay for the pensions of the elderly who have already paid their national insurance contributions and rightly expect to receive a state pension--the most common complaint among pensioners in my constituency is that, in making their NI contributions all those years ago, they felt that they were making an investment and they now find that those contributions have been eroded--but to pay for their own pensions in private schemes, to the tune of perhaps 10 per cent. of their income.
That is a big burden for young people at a time in their lives when they might be buying a house on a mortgage or repaying a student loan. There is a heavy burden on them already. It does not seem fair that my constituents should bear that burden. For that reason, I was not impressed with basic pension plus, and nor were my constituents.
Mr. Duncan Smith:
I suggest that, if the hon. Lady is that interested in basic pension plus, she should read it properly. The whole process was bound around rebates over the lifetime of people's contributions to guard against just the problems to which she has referred. She also has to address the other point: that the Minister for Welfare Reform is bound to consider the issue and that he will then have to take into account the process of the national insurance fund never having been a fund for people in the future.
Kali Mountford:
It seems that the hon. Gentleman accepts the fact that this is the right time for a review. That is exactly what I am saying. We have to review the whole pension situation. To come up with a plan without proper consultation--certainly my constituents were not consulted--and to pre-empt the decision--
Mr. Duncan Smith:
There was to have been a Green Paper.
Mr. Kevin Hughes (Doncaster, North):
Keep going.
Kali Mountford:
I shall keep going. I thank my hon. Friend for that advice. This is the right time for a review, and my constituents will welcome it.
Pension misselling caused some of my young constituents to be concerned about whether private pension provision was a sound investment. For example,
the constituent I mentioned earlier lost nearly £7,000. He took his case to the ombudsman and is still waiting for a reply. He is dissatisfied with the way in which he has been treated. It will seem a little rich to him for Conservative Members to talk now about pension misselling. He will want to know--certainly I want to know--why they have waited until now to discuss pension misselling.
Why was it not dealt with a long time ago? Is this not the right time to have proper regulations? In fact, it is not the right time: it should have been done at the beginning. It is wrong to have a financial market that is not regulated properly, with the result that my constituents, who have small sums of money available to invest, lose a lot of money. If there was any robbery going on, it was of my constituent, as he would tell hon. Members.
Mrs. Eleanor Laing (Epping Forest):
The Chief Secretary to the Treasury said this afternoon that the Government's Budget plans are plans for the long term. In fact, they are the exact opposite; they are short-term plans designed to raise money to satisfy the appetite of the new Government for immediate public spending. It is a perfect example of that old adage:
The Government want the country to believe that the windfall tax is a tax that nobody has to pay. That could not be further from the truth. It hits the very people who should not be hit by any taxes. If the Government were really planning for the long term, they would be encouraging people of all ages and all financial capabilities to invest for their retirement.
In fact, the Budget discourages investment in pension schemes because it reduces people's confidence in them. My constituents have, quite rightly, been putting their money into pension schemes year after year, believing that at the end of their investment time they would receive a certain sum. The new Labour Government come along and simply take money out of the schemes, thereby reducing the amount of money that will be available for all our constituents when they need their pensions and reducing confidence in pensions as a safe form of investment. That is happening at the very time when we most need to encourage investment in pensions.
The hon. Member for Pontefract and Castleford (Yvette Cooper) who, sadly, is not in her place, said that Conservative Members have a new-found interest in pensions. That is simply not so--it could not be further from the truth. In fact, we recognised many years ago that, for various reasons, it was essential to encourage people to make investments in pension schemes to look after
themselves and their families when they no longer worked. We recognised that because we read the simple sign--what is sometimes referred to as the demographic time bomb.
Mr. Paul Flynn (Newport, West):
That is a myth.
Mr. Flynn:
I refer the hon. Gentleman--[Interruption.] I apologise. I refer the hon. Lady to a splendid volume by the hon. Member for Havant (Mr. Willetts) called "The Age of Entitlement". It contains a chapter on the myth of the demographic time bomb. It describes how previous Governments have exaggerated the effect of the baby boomers reaching retirement age in order to impose on the country a system of private pensions rather than national pensions.
Mrs. Laing:
I am afraid that the hon. Gentleman is wrong on two points. I thank him for apologising for his first mistake and recognising that I am an hon. Lady. However, I am afraid that the hon. Gentleman is wrong on his real point.
"You can fool all the people some of the time, and some of the people all the time, but you can not fool all the people all of the time."
I must tell the Chief Secretary that he has not fooled Conservative Members because we know what his plans for changes to ACT and the windfall tax really mean to the people of Britain.
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