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Mrs. Laing: I understand what the hon. Gentleman is saying about the book, but even if there has been an exaggeration, there is still a demographic time bomb. There is no doubt about that. Currently, the ratio of people in work to those drawing a state pension is about 3.3:1. When I and other people who have recently become Members of the House reach retirement age, that ratio will be about 2.4:1. Even if some of the stories about the demographic time bomb are slightly exaggerated, there is still an issue that must be addressed. The previous Government were addressing it and the new Government are doing the exact opposite.
My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) gave us some salient figures on this. I will not attempt to repeat them, but they can be read in tomorrow's Hansard. My hon. Friend's analysis was right. Because we have recognised the extent of the burden that would fall upon public expenditure in 20 or 30 years in providing for pay-as-you-go pensions, we have taken steps over many years to encourage investment in private pensions. That has been done by providing incentives, and it has worked. Although the hon. Member for Newport, West (Mr. Flynn) does not recognise this point, the Minister for Welfare Reform does recognise it and he has taken up the recommendations of the Anson report, which was also referred to in detail by my hon. Friend the Member for Bournemouth, West.
The Anson report, backed by the Minister, recommends that it is necessary to impose a second pension on most of the earning population of this country. The attitude of the previous Government, which I thoroughly supported, was that imposition of that sort was unnecessary and that there should be encouragement rather than imposition. Therefore, incentives were put in place and the encouragement worked. As a result, the United Kingdom has more than £600 billion invested in funded pension schemes, which is more than the rest of the European Union put together.
I was most amused when the hon. Member for Hornchurch (Mr. Cryer), who is also not in his place, spoke about the fact that in recent years we have seen strikes in France and Spain because their Governments were cutting state pensions. That is not surprising.
Mr. Bercow:
We will see them in Britain now.
Mrs. Laing:
I would not be at all surprised.
Matters were dealt with differently in France, Spain and other European countries because those countries failed to take the necessary steps early enough to create funded pension schemes which would produce a real level of income for their populations on retirement. It is not at all surprising that there were riots in France and Spain, and we would not be surprised if the Government's lack of financial planning brought about such a result in this country, although none of us would want that. Because of the incentives to invest in pensions, in 20 or 30 years' time, when many of us will be in need of pension provision, the state pension fund will not have to support so many people, so the burden on public expenditure will be very much less.
If the Labour Government were really interested in planning for the long term rather than for the short term, they would not have been so critical of the basic pension plus plan proposed by my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) when he was Secretary of State for Social Security. That plan was the right answer to the problem.
The hon. Member for Colne Valley (Kali Mountford) misunderstood what the plan was all about. I can forgive her for that--indeed, I have every sympathy with her--because she probably listened to the misinformation put out by the Labour party last April. It is not surprising that she misunderstood it--so did millions of others who were made afraid of what would happen in their old age, when exactly the opposite was the truth.
It does not matter what the Labour Government say now: the basic pension plus plan will have to come in at some time. Demographic developments over the next few decades will prevent the pay-as-you-go scheme from continuing. It will not be sustainable, so basic pension plus, or something similar, will be introduced. My hon. Friends and I will not be surprised if, in a few years' time, the Government publish a Green Paper which they will call by some other name, but which in fact will be basic pension plus. It will have to happen.
The difference in attitude between the Opposition and the Government is that we believe in encouraging saving and investment and in changing the culture of state dependency by giving people the opportunity and the incentive to save and provide for themselves and their families. We want to help people to look after themselves and to encourage families and family life. The Government simply produce policies that do the opposite.
There is great disappointment in my constituency with what the Government are doing. Those who have worked hard and put their money into pension schemes or some other form of savings, or who are small shareholders in the privatised utilities, are very disappointed that, having tried to provide for themselves, the first thing the new Labour Government do is take their money away from them and diminish their savings. Of course, it comes as no surprise to Conservative Members.
Mr. Paul Flynn (Newport, West):
During the dying days of the Conservative Government, they introduced three wheezes designed to win the election. One was basic pension plus; another was the plan to privatise residential homes so that elderly people would have no choice other than to go into private homes; and the third was to buy a new royal yacht with public money.
That prompted me, at the time, to ask a Government spokesman whether there was truth in the old saying that those whom the Gods wish to destroy they first make mad. Those three proposals did a great deal of damage to the Conservative party, and resulted in it being wiped out in my country of Wales, in Scotland and in Cornwall, leaving only a small number of Members on the Conservative Benches.
Those of us who are old lags in these debates will remember that, on 12 March, we discussed basic pension plus, when the Secretary of State announced, in all its glory, that, when it matured, a man on average earnings retiring in 2040 would get a total pension of 18.1 per cent. of earnings. That is a disgracefully poor level--something to which we have not descended over the past 50 years. It was a very poor scheme.
I am not trying to be wise after the event on the question of the misselling of personal pensions. I will not quote the question I asked Baroness Thatcher in 1989 and 1990 on that issue.
I took Barclays bank to the Advertising Standards Authority for what I thought was a wickedly deceptive advertisement. To sell its personal pensions, Barclays gave away two free tickets to the cinema. I also complained to the relevant authority about the advertising by Midland bank. If one wants to destroy something, one gives it a bad name. A serp was an oleaginous creature that looked thoroughly repulsive--not something anyone would want around his home. The advertisement said, "Don't be a serp, when you could get yourself the sum of £5,000."
The Conservative party has no sense of guilt about what it did at that time. It was not offering a gift, just a refund of the contributions people had paid. It was an unjustifiable incentive--popularly known as a bribe--through the national insurance scheme, and was entirely inequitable for those who did not take out personal pensions.
I commend to hon. Members not only "The Age of Entitlement", but "Ruling Britannia" by Andrew Marr, which examined two laws passed which demeaned the House. One set up the Child Support Agency, and the
other brought in personal pensions. If we want to modernise our procedures, it is important to look at those failures.
Only one Member who served on the Standing Committee foresaw the dangers of personal pensions. All through the mad years of misselling, the Conservative party was made aware of what was happening, but did nothing about it. Many Conservative Members would cheerfully declare an interest before speaking in debates, because they were profiting either directly or indirectly from the bonanza of misselling. About 2 million people were involved. We know the derisory number of people who have since been compensated. I am very happy that Ministers are taking on pension companies, as the previous Government should have done but never did.
Beveridge has already been mentioned in this debate. It is worth remembering the point behind the Beveridge reforms, and the words of Beveridge himself. He talked about the "gross inefficiency" of contemporary pension schemes--particularly industrial pension schemes, in which a man from the Pru or the Wesleyan and General came round houses to collect 1s 7d a week.
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