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Mr. Bercow: Will the Secretary of State give way?
Mr. Darling: Not just now; I want to make some progress. This is an Opposition day debate, and I assume that Opposition Members wish to speak in it.
Let me set out the proposals that will, I believe, enable people to do better than the minimum income guarantee. There is already a universal basic state pension, but we are introducing a new state second pension, which will help people on low incomes to save enough to retire above the level of the guarantee. It will also tackle one of the other weaknesses in the current system. Under the state earnings-related pension scheme, those who do not earn very much will not receive very much. We are providing significant new help for people earning less than £9,000 a year. For example, the contributions made by someone earning £6,000 a year would give that person £13 a week under SERPS; under the new state second pension, he or she would receive £46 a week, an increase of £33.
Opposition Members should look at table 5 on page 41 of the Green Paper. The hon. Member for Grantham and Stamford (Mr. Davies) has been consistently wrong about the state second pension, because he patently does not understand how it works. If he acquires a copy of the Green Paper from the Vote Office, he will see that the state second pension will be of huge benefit to people on low incomes. It also provides new help for carers and disabled people with broken work records, allowing them to build up a second pension as of right.
We need to do more than just reform the state system, however. We believe that most moderate and higher earners will be better off on funded pensions--occupational pensions, or private pensions. But we are determined to create the right framework: not everyone can secure an occupational pension and, for many people, private pensions are not appropriate. To plug that gap, we are introducing the new stakeholder pension schemes, providing minimum standards, flexibility and simplicity in order to ensure that those who do not have the option of an occupational pension, or for whom a personal private pension is inappropriate, have an extra savings option.
The hon. Member for Chingford and Woodford Green mentioned advice. It has always been our case--I have said this time and again, especially when we were in opposition--that people should obtain advice before signing a pensions contract. Taking out a pension is arguably far more important than buying a house. The repercussions could be substantial, and people need good advice, as is clearly demonstrated by the pensions mis-selling scandal that the Tories allowed to happen under their noses. We want to provide advice, but we want to ensure that costs are kept to a minimum for the benefit of future members of stakeholder pension schemes.
The Green Paper made it clear that, in addition to the trustee structure, we wanted to consider alternative forms of governance. The hon. Member for Chingford and
Woodford Green tried to make something of that, too. I have already suggested that he should read the Green Paper. He should also have a go at reading the relevant Bill.
The hon. Gentleman said that there was no mention of alternative forms of governance other than trustees. There is, at paragraph 38, on page 55 of the Green Paper. Furthermore, clause 1(2) refers to other forms of governance, in addition to the trustee structure. I am astonished that he did not know that. The hon. Member for Grantham and Stamford looks puzzled. Perhaps if he had talked less and read more in Committee, he might have seen that we had provided for it. We have always said--
Mr. Quentin Davies (Grantham and Stamford):
Will the Minister give way?
Mr. Darling:
I cannot resist it.
Mr. Davies:
I am grateful to the right hon. Gentleman. Once again he has completely misunderstood what I said. Of course the Bill is so drafted that the Government take powers by secondary legislation to do anything. It states one thing, and then gives a power to relax that provision if the Government wish to do so in secondary legislation. It is clear in the Bill that no other structure for stakeholder pensions is provided for or mentioned, apart from the trust structure. That remains the case.
Mr. Darling:
As the hon. Gentleman has mentioned it, let me read out the relevant provision in the Bill. With reference to the conditions for stakeholder schemes, it states:
The hon. Member for Chingford and Woodford Green referred to my interview in the Financial Times. I am glad that a number of my remarks there have been welcomed by people in the industry, as they can see that the Government are working constructively with them to ensure that the system operates successfully. I have made it clear that the Government are open to suggestions for alternative forms of governance. We have ideas that we are examining, and we have asked people in the industry whether they have specific measures in mind. I know that there has been some concern about group personal pensions.
I am happy to consider alternative forms of governance, so long as they provide the level of security that we believe trustees could give to stakeholder pensions. The Government's concern is to ensure that the interests of members of pensions schemes are properly protected. That is our main objective, and that is why I am willing to listen to whatever the industry has to say. I am happy to work constructively with the industry on this and any other subject.
Mr. Bercow:
The Minister said a few moments ago that he supported occupational pensions. Quite apart from the fact that the new stakeholder pension threatens to act as a disincentive to employers to offer occupational pensions, which is a serious problem associated with the
Mr. Darling:
The Government are not doing that. I did not read those particular remarks, but I recall that what the actuaries said in July 1997 was rather different from what they were saying 12 months later. One of the effects of the reform of corporation tax is that we now have the lowest rate of corporation tax that the country has ever had. [Interruption.] Opposition Members do not like that. After 18, years they did not manage to reduce corporation tax that far.
The hon. Member for Chingford and Woodford Green referred to pooled pension investments and suggested that the Treasury had magicked them up out of nowhere. We have discussed the matter before. The plans for pooled pension investments were being worked up when I was a Minister at the Treasury. I was aware of them, which is why the Green Paper--if Conservative Members would care to read it--made it abundantly clear at paragraph 39 on page 55 that pooled pension investments would be proposed in a consultation paper that would be announced shortly. I have made it clear that my view of compulsion, which is set out at paragraph 13 on page 81 the Green Paper, is that, at present, there is no justification for it, for the reasons that are clearly stated.
This pensions reform is designed to cover the next 50 years, but we are also anxious to ensure that we help today's pensioners. I have mentioned the minimum income guarantee; the Conservatives are no doubt pledged to get rid of it, which would cost many poor pensioners dear. We want to look at the capital and income rules to ensure that we do not penalise people who save. I should point out that, from April next year, the poorest pensioner couples could be getting £400 a year more than under the previous Government. It is a pity that the Conservatives are set on reversing that.
I make no apologies for the minimum income guarantee, because it is an effective way of reducing pensioner poverty as quickly as possible. Although pensioner incomes overall have increased since we came to office--thanks, in no small part, to occupational pensions--many pensioners are on low incomes and the minimum income guarantee is designed to ensure that they receive significant help. We are determined to extend that.
Mr. Rendel:
I am grateful to the right hon. Gentleman for giving way again. Will he accept what he has never accepted in the past and what I firmly believe to be true? The poorest pensioners are those who are not on income support; those who could be on income support, but are not receiving it for one reason or another; and those who cannot be on income support because of their savings. They will not benefit at all from the minimum income guarantee.
Mr. Darling:
The hon. Gentleman keeps raising that point and I keep giving the same answer--he might want
One thing that the Liberals really have to grasp is that people in government must face the fact that they have to fund the things that they want to do, and it is not always possible to do everything we want on day one. The hon. Gentleman has his policy for a penny on income tax; as we know from our debates on social security, let alone other subjects, he has spent it many times over; but he will have to face the fact that Governments cannot do that.
The House should bear in mind the fact that we have increased the winter fuel payment fivefold--to £100from this winter--which will help all pensioners, but particularly the poorest. Through the minimum tax guarantee, we have taken two thirds of pensioners out of tax altogether, something that the previous Government did not do at all.
"The first condition is that the scheme is established under a trust or in such other way as may be prescribed."
That is precisely what was stated in the Green Paper. It is astonishing that Opposition Members have not read it.
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