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Pensions

11. Mr. Sayeed: To ask the Secretary of State for Social Security what assessment she has made of the impact on the state earnings-related pension scheme of the abolition of the advance corporation tax credit.[9038]

Mr. Denham: The Budget measures will encourage stable economic policies, sustainable economic growth and the long-term performance of investment and of British companies. Companies providing occupational pension schemes will benefit from the reduction in corporation tax and other measures announced in the Budget to encourage investment. The advance corporation tax credit change will have no direct impact on SERPS, which is not a pre-funded scheme.

Mr. Sayeed: Now that the Labour Government have increased the cost of pensions by more than 15 per cent., do they intend to encourage or compel people to save for second-tier pensions? If so, why should people do that when they do not know whether a Labour Chancellor will rob them yet again in the future?

Mr. Denham: Opposition Members are not in a good position to talk about the value for money that people

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receive from their pension schemes, given the large number of people who lost out through the mis-selling of personal pensions--which the last Government encouraged--and the high fees and charges that have been visited on many people with low incomes and intermittent earnings through personal pensions. When we carry out our pensions review--in which we shall consider ways of extending the coverage of value-for-money funded second-tier pensions--we shall set out to ensure that savers get real value for money for their hard-earned savings, and can benefit from that when they retire.

Mr. Flynn: Has not the Budget removed the unfair circumstances in which people in SERPS did not have the advantage of a handout from the taxpayer, unlike those with personal pensions? When examining new pension schemes, however, would it not be better for us to build on the advantages of SERPS? At worst, 2 per cent. of its charges are spent on administration. Could not that advantage be built on with a new, funded SERPS, since in the case of present private pensions at least 25 per cent. of charges are spent on administration? Would it not be better to build on SERPS, as a funded scheme, rather than go into private pensions?

Can my hon. Friend also explain one puzzle? Why do we hear that one of the people who was responsible for mis-selling personal pension schemes on a large scale is to advise the Government? Will experts on national insurance schemes be included to advise the Government on their pensions review?

Mr. Denham: My hon. Friend asked a lot of questions, which I doubt whether Madam Speaker will allow me to answer in full. In our manifesto, we are committed to retaining SERPS for those who want to remain in it. Clearly, it is for individuals to decide which is the best form of provision for them. My hon. Friend is right to focus on a central issue, which is whether people will get value for the money that they put aside as savings. How will that be reflected in their final pension and will they feel that they have had a good deal at the end of the day? It is clear that many people who have set out to save for their pensions in recent years do not feel that they have had a good deal for the money that they have put aside.

Mr. Duncan Smith: The hon. Gentleman knows from previous statements that the changes in the Budget affect the rebate, which will affect SERPS and is likely to leave people in SERPS rather than wanting to come out. On that basis, will he say once and for all whether the pensions review will consider SERPS in total and whether, if it concludes that SERPS should be phased out, the Labour Government will do so? Or, will they stand by their manifesto commitment to do no such thing?

Mr. Denham: Our pensions review will study the future of all second-tier pension provision, but the statement made in our manifesto is clear. The hon. Gentleman mentioned the rebate. I must point out to him that his Administration spent about £17 billion more--largely from the national insurance fund--to encourage people to opt out into personal pensions, than will ever be saved in the future on SERPS expenditure. I can assure him that we will aim to protect the integrity of the national insurance fund as we take our review forward.

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Incapacity Benefit

12. Mr. Dismore: To ask the Secretary of State for Social Security what plans she has to improve services to those claiming incapacity benefit.[9039]

Mr. Denham: In our terms of reference for our comprehensive spending review, we announced that we would review the purpose and nature of all the major components of the social security system, including sickness and disability benefits. A key priority will be to simplify the complex system of provision for sick and disabled people, which includes incapacity benefit, with particular emphasis on removing the barriers in the system that currently prevent people who are able and wish to work from doing so.

Mr. Dismore: Does my hon. Friend agree that the previous Government's approach to disabled people and those with long-term ill health was simply to write them off as unemployable, when many of them would value the opportunity of a job? Does he agree that the country really needs a Government who are committed to looking at people as individuals and not as statistics, and who are looking to give everyone who is able to work the encouragement and opportunity to do so, to provide a better life for themselves and their families?

Mr. Denham: My hon. Friend is right. Through no desire of their own, many sick and disabled people are trapped in a benefits system that encourages sickness and encourages people to stay out of work. We aim to remove the barriers inherent in the system, which prevent people from maximising their ability to work and will, therefore, be developing similar welfare-to-work proposals for the sick and disabled to those already announced for lone mothers.

Mr. Flight: Will it not be more difficult for people to claim incapacity benefits as a result of the stricter medical tests proposed in the Social Security Bill?

Mr. Denham: We all agree that the procedures that we use should be fair and that there should be a proper assessment of an individual's capacity for work. The focus should be on assessing that capacity, rather than having a benefit system that simply says to so many people, "All the incentives are to make yourself unavailable for work."

Mr. Swinney: Following the Minister's point about fairness in the system of allocating incapacity benefit, will he give me some advice that I can pass on to those of my constituents who previously received incapacity benefit and whose health has not materially improved, but who have lost incapacity benefit and now find that they have to wait nine months for independent tribunals to examine their case?

Mr. Denham: The hon. Gentleman raises an important point and I hope that we will enjoy his support during the passage of the Social Security Bill, one of whose aims is to simplify and streamline the system of appeals and appeal determination, while retaining the essential elements of independence and fairness.

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Fraud Hotline

13. Mr. Evans: To ask the Secretary of State for Social Security what representations she has received concerning the social security fraud hotline.[9040]

The Minister for Welfare Reform (Mr. Frank Field): Of all the representations the Government have received, only one letter has been critical of the fraud hotline.

Mr. Evans: I welcome the Minister to the Dispatch Box. Does he agree that the social security fraud hotline was a successful initiative by the previous Government? To enhance its success in future, will he ensure that British Telecommunications plc and other telephone book operators allow prominent display of the hotline in their pages? Will he also have discussions with BT and other public phone box operators? I cannot go past those boxes without failing to notice that they seem to be packed full of cards advertising all sorts of interesting and unusual services--I hasten to add that I am not interested in using them myself. Will the right hon. Gentleman encourage the companies to clean up their act and ensure that the social security fraud hotline number is given a prominent position in all public phone boxes in the country?

Mr. Field: During the Attlee Government, a Minister was asked a whole series of questions to which he replied: yes, yes, no, yes, but not necessarily in that order. The answers to the hon. Gentleman's questions are: yes, yes and yes.

Mr. Winnick: Is the Minister aware that when the hotline was established during the previous Parliament, I rang and complained about the fraud committed by Ministers--the then Prime Minister, the then Secretary of State for Social Security and a number of others--who in so many ways undermined pensions and social security provision? When I gave the names of the Ministers concerned, including that of the former Prime Minister, I was told that those complaints could not be taken up. My views on the subject remain the same, as, no doubt, do my right hon. Friend's.

Mr. Field: I presume that the Department got my hon. Friend's letter muddled and included it as the one complaint against the hotline, so the answer to the hon. Member for Ribble Valley (Mr. Evans) is that the Government have received no complaints about the fraud hotline.

Mr. Ian Bruce: Will the right hon. Gentleman consider the feedback to people who have made a complaint? They see neighbours apparently defrauding the system and then have no way of knowing that action has been taken. I recognise the problems of sub judice and confidentiality, but will he look carefully at ways of ensuring that there is proper feedback, or at least that everybody is told that every case is looked at? If prosecution follows or someone is found to be at fault, surely the public should be told what action has been taken.

Mr. Field: Yes.

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