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The Secretary of State for Social Security (Mr. Alistair Darling): When we previously debated this matter, I knew that the hon. Gentleman had not read the Green Paper, but I thought that he would have done so by now. If he reads paragraph 38, he will see that the Government have always made it clear that stakeholder pensions would have trustees or, alternatively, would have alternative forms of governance, on which we were consulting. The point that he has just made is wrong, as his earlier point on compulsion was wrong. The Government have never believed that compulsion was the right option, because, for many people, there is nowhere
to go. What the hon. Gentleman was reading, on page 105, was a reference to the present scheme; that scheme is compulsory, if one is employed. I am surprised that he did not know that.
Mr. Duncan Smith: It is wonderful. The Secretary of State now seems to want to wobble at the Dispatch Box as well as in the newspapers. On page 55 of his Green Paper, it states:
- "The legislation for stakeholder pension schemes will provide for schemes to be set up under trust law."
Mr. Darling: Will the hon. Gentleman give way?
Mr. Duncan Smith: No, I shall press on. The Secretary of State has stated his position. The Government are trying to do several things at the same time. They issue little briefs to the newspapers saying, "We might do this." In the Chamber or in Committee, they say, "No, we won't." The Secretary of State tells us that they might or they might not. He is clearly aware that the Government are in difficulty.
Mr. Darling: The hon. Gentleman is quite right to say that the Bill makes provision for trustees, just as we promised. However, if he reads to the end of paragraph 38, he will see stated--in bold writing, so as to help people like him--that the Government
- "would welcome views from the pensions industry on alternative structures which could provide comparable benefits for stakeholder pension schemes members."
Mr. Duncan Smith: It is marvellous--the Secretary of State has produced a Bill before the consultation process has even finished. He now claims that he is clear because he invited others to tell him what to do, but he acted before they told him, and the result is the mess in which he now finds himself.
Mr. John Bercow (Buckingham): I would not want my hon. Friend to understate his powerful case in respect of consultation. Does he recall that a former junior Social Security Minister, the hon. Member for Southampton, Itchen (Mr. Denham), told the House on 15 December 1997 that the Government's proposals would be issued for further consultation in the first half of 1998? However, those proposals were eventually forthcoming only six months later. Does my hon. Friend believe that there is any causal link between the breaking of that promise and the removal of the hon. Member for Itchen from the Department of Social Security?
Mr. Duncan Smith: It is highly likely that there is such a link--knowing the way in which the Government work, they will come up with almost any excuse.
We are on the third process of consultation, but, in written answers, Ministers offer us only further consultation. There is no end to how little they are prepared to know, but how much over which they are prepared to argue and wobble.
That brings me to the third issue: group personal pensions. The Government demanded that stakeholder pension schemes should be pension products that are different from occupational pensions, personal pensions and group personal pensions. They were adamant that there was to be a clear distinction between stakeholder pensions and other schemes, and said that people would not be allowed to have a stakeholder pension and a personal or occupational pension.
Throughout the Committee stage, my hon. Friends made it absolutely clear that that would create serious problems, only to be met with blank stares and shaking heads. However, it appears that the Secretary of State has wobbled again, for, in the Financial Times of 28 April, he said:
There we have it--stakeholder: the great new idea of the millennium; a new Rolls-Royce scheme that turns out, on inspection, to be a three-wheeled Robin Reliant from Arthur Daley. The Chancellor was so impressed with the scheme that he launched his own pension scheme, the LISA, which independent advisers believe will cut across the Department of Social Security and create confusion. The Institute for Fiscal Studies comments:
All of that is underscored and made worse by the minimum income guarantee, which creates an unstable platform for future saving for pensions. Of course, the minimum income guarantee, like everything else thatthe Government have announced, is no such thing. The Government's one consistent feature is that, whenever they announce a new policy, one need only examine their words to realise that they intend to achieve the opposite of what they have announced. Someone on low earnings will now seriously question whether there is any point in saving, because the income delivered under the minimum income guarantee will be as much for those who have saved over their working lives as for those who have not. As the financial section of the Sunday Telegraph put it:
When we add that to the Government's attack on widows pensions, their real agenda becomes clear. When it set out to gain Government, Labour talked a lot about changing from a handout to a hand up. It is now clear that the Government intend to give a slap down. It is no wonder that the savings ratio is falling when it should be rising. That is an indictment of the Government's policy.
There is also a problem regarding the incompetent handling of issues within the Department. That is illustrated by the problems with the national insurance recording system, the new computer system that runs the Contributions Agency. Those difficulties were already apparent in the early part of last year. Yet, when pressed about the matter, the Secretary of State seemed rather complacent. He said that the system would be available for new claimants in
There it is: in the words of Winston Churchill, the Government are
Labour came to office with big talk and smart phrases. A Government who were going to reform pensions, reduce dependency and improve savings have done exactly the opposite. It cannot be stressed enough that Labour set out to do those things and failed. This is an "Alice in Wonderland" Government: they say one thing and do another. They are all over the place, as Ministers have agreed. It is an "Alice in Wonderland" Government--that is worth repeating, because most people will realise that the description fits exactly. It would be laughable were it not for the arrogant and complacent failure that will cost pensioners dear in the future.
The Secretary of State for Social Security (Mr. Alistair Darling):
I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
We have listened to the hon. Gentleman speak about pensions policy and it is noteworthy that he did not mention his own policy once. Indeed, it is not at all clear whether the Conservative party, after 18 years in Government and two years in opposition, has a policy. [Interruption.] I assure Opposition Members that I intend to speak about our policies at some length. I am happy to do so because at least we have a pensions policy.
I should very much like to know whether basic pension plus--the £150 billion plan to privatise the pension system--is still Conservative party policy, or whether it was junked by the deputy leader when he threw out the Thatcherite baggage that the Conservative party was saddled with. I note from the press that the hon. Member for Chingford and Woodford Green is apparently at daggers drawn with the deputy leader of the Tory party. Perhaps because of that quarrel, he cannot tell us whether basic pension plus--even the mention of those words seems to upset Conservative Members--is still party policy.
We inherited a mess. The problem was not just the absence of a pensions policy from the previous Government. We also inherited the problems caused by the mis-selling of pensions to 2.5 million people. The Conservative Government were active participants in that, through their television advertisements, persuading people wrongly to transfer to personal pensions. We inherited an environment with poor regulation and had to set up the new Financial Services Authority.
The Conservatives imposed VAT on fuel, which we reduced to 5 per cent. They abolished free eye tests for pensioners. We reinstated them. The Conservatives decimated concessionary travel and had a good go at decimating all bus travel. We had to restore it. They neglected the health service--indeed, some of them still want to privatise it. We have invested £19 billion more in it. Even on that, the Conservatives are divided. The shadow Chancellor told us that that investment in the health service was too much. The deputy leader of the Tory party now tells us that it is just about right. We have had to sort out the economic mess that we inherited, with high inflation damaging to pensioners. We now have the lowest ever rate of corporation tax, which helps pension funds, and economic stability, which helps pensioners.
"Some group personal pensions may be allowed to label themselves as stakeholder pensions".
In a written question, I asked the Minister of State for clarification; his answer, published yesterday, states that the matter
"will be developed in secondary legislation following further consultation."--[Official Report, 10 May 1999; Vol. 331, c. 53.]
I must admit, the more one hears the Minister of State, the more one is reminded of Lewis Carroll when he wrote:
"Why, sometimes I've believed as many as six impossible things before breakfast."
That appears to be the Minister of State's state of mind.
"the same end results could have been achieved by simple reforms to the current system"--
simple reforms, not the complex nonsense that the Government have produced.
"don't save go to the pub".
All this is a huge attack on savings. Even worse, it is a huge attack on future taxpayers, who will have to pick up the bill for this ill-conceived nonsense. According to the Library's figures, under the new scheme, the number of pensioners in receipt of income support will increase from one in five to one in three. In money terms--this is the most staggering statistic--by 2050, spending will have
risen from approximately £13 billion to £20 billion in today's prices. The Government's policy will result in that massive increase.
"the next couple of weeks."
However, after seven months of drift and indecision, the Government paid interim compensation payments to those who had not received the right money only under pressure from Conservatives in the other place. That is another example of the Government's complacency and incompetence. Many pensioners have experienced real worries and real fears because of the Government's failure to tell them what is going on.
"decided only to be undecided, resolved to be irresolute, adamant for drift, solid for fluidity, all powerful to be impotent."--[Official Report, 12 November 1936; Vol. 317, c. 1107.]
'commends the Government's approach to pensions reform, set out in its Green Paper "Partnership in Pensions"; congratulates the Government on its determination to tackle 18 years of abject failure on the part of the Conservative government to put pensions provision on a proper footing and rejects the Conservative plans to privatise pension provision; commends the Government's commitment to end the scandal of pensions mis-selling and its plans to strengthen the financial regulatory system; commends the Government on its commitment to economic stability and low inflation which helps pensioners; believes that its reforms to the corporate tax system, which will result in the lowest ever rate of
11 May 1999 : Column 125Corporation Tax, will be in the long-term interests of companies, shareholders and pensioners; and approves of the Government's introduction of the Minimum Income Guarantee, Winter Fuel Payments, the re-introduction of free eye tests and commitment to concessionary travel for the elderly as part of its strategy to provide security in retirement.'.
At least "Alice in Wonderland" had a good ending--unlike the speech by the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith). Before I continue, I thank the hon. Gentleman for his very kind tribute to Derek Fatchett, which is much appreciated by all those who knew and worked with him. He was a valued colleague and a decent and a kind man. Our thoughts are with his wife and two children and with his family. I thank the hon. Gentleman for his courtesy.
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