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5.16 pm
Ms Sally Keeble (Northampton, North): I am grateful for the opportunity to speak in the debate. It is a shame that few hon. Members are present, because pensions are one of the most important issues facing us. It is a particular shame that, having called a useful debate, the Opposition have not turned up in any great number.
Mr. Tim Collins (Westmorland and Lonsdale): Will the hon. Lady give way on that point?
Ms Keeble: No, I shall not. I did say that I regretted that there were few hon. Members in total present, but noted that, although the Conservatives called this important debate, they have not turned up.
Mr. Bercow: On a point of order, Mr. Deputy Speaker. I seek your guidance: is it in order for the hon. Lady to castigate Conservative Members for poor attendance when there are only three Labour Back Benchers in the Chamber?
Mr. Deputy Speaker (Mr. Michael J. Martin): The hon. Gentleman has been a Member of Parliament long enough to know that that is not a point of order.
Ms Keeble: Thank you, Mr. Deputy Speaker.
I held two interesting consultations on the Government's proposals in my constituency, one with pensioner groups and the other with people who are in work. I should like to express my gratitude to Nationwide for having provided the facilities to allow us to discuss with its employees the financial arrangements and the life style that they wanted in their retirement, and how they envisaged achieving them. Some of the major issues that arose were very much in line with the thinking that underlies the Government's proposals.
The employees, who were of all ages, realised that self-provision was the way of the future: they did not expect all their financial needs to be met by the state, but expected by and large to provide for themselves. They did not think of that as punitive, but preferred it because it meant that they could arrange their financial affairs for their retirement as they wanted to and in a way that suited their personal circumstances. However, they made it clear that they wanted the Government to provide a safety net, not only in terms of financial support when their circumstances became pressing, as so often happens when people attain great age, but in terms of services. When considering the package that they wanted for their retirement and pension, they thought as seriously about service provision and service arrangements as about financial arrangements.
The three-tier system proposed by the Government is in line with the sort of issues raised by my constituents. I believe that it will help to keep pensioners out of poverty and do so without causing undue cost to the state. I cannot remember the exact costings of the Government's proposed scheme--I am sure that my hon. Friend the Minister will remind me of them in his winding-up speech.
My constituents--like those of all other hon. Members--want quite a high level of disposable income and do not want to be burdened with unnecessary taxation. Therefore, any pension arrangements that place an undue financial burden on those who are in work--and we have an ageing population--will not be generally accepted or welcomed.
Mr. Rendel:
Of course people do not want to pay pension contributions out of their disposable incomes when they are young. However, we must accept that, as a society, we are not putting away enough for our old age.
Ms Keeble:
I will deal with the hon. Gentleman's point in the course of my speech. In discussing how much money the nation puts aside, we must ask whose money it is and where it goes. Money must be spent to provide for the destitute and for those in the greatest need. We do not want to see our pensioners living in conditions such as those endured by pensioners in countries where there is no welfare state. When I worked as a journalist abroad, I wrote a story about pensioners living in a country with no welfare state. The photographs accompanying that story depicted the appalling circumstances in which pensioners lived and were censored from the article. We never want to see similar conditions in this country.
Many people are capable of making their own pension arrangements, and they say--I have heard them--that they want to be able to do so in order to choose how to spend their money. Future pensions arrangements will be about making personal choices, with a good safety net provided by the state. That is not a particularly remarkable or controversial statement. However, such arrangements are difficult to organise, and I believe that the Government's proposals will produce that outcome.
The stakeholder pension will affect most of my constituents, as average earnings in my area are £15,000 to £16,000. That funded scheme has particular merits. The hon. Member for Gainsborough (Mr. Leigh) described it as "chaotic", but the people to whom I have spoken have used the word "flexible". The hon. Gentleman might claim that people today lead chaotic lives, but I would say that their lives are perhaps less sedate and organised than in the past. People will change jobs several times, are likely to move house several times and may have several families. Their circumstances will change, and they need a pension scheme that keeps pace with their lives.
We should not talk only about the private sector as it has operated. Pension schemes must not have high administration costs. While people may not like to contribute to their own pension schemes out of their pay packets, they certainly do not want to see large sums siphoned off to pay for administration costs. People want to be able to link their savings--whatever they can afford at particular stages in their lives--with their pension arrangements later on. The Government should look closely at that issue. People clearly consider a home to be a major financial asset that should be counted as a resource in retirement.
Mr. Bercow:
I am most grateful to the hon. Lady for giving way. She said a few moments ago that she wanted to minimise the burden on the taxpayer. Is the hon. Lady aware that the higher national insurance rebates designed to encourage people to take the stakeholder pension are calculated to cost the taxpayer an extra £500 million a year in the first instance, rising to £700 million a year for every additional 1 million people who opt out of the compulsory second pension? Is the hon. Lady aware of the conflict between her ambition and reality?
Ms Keeble:
The reality of the Government's proposals will be a good level of state provision, giving people choice in the organisation of their finances. Different
I agree with what Conservative Members have said about compulsion. Actually, I have been here only for the speech of the hon. Member for Gainsborough, but I agree with him and with the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) that it would be wrong to make contributions to a stakeholder pension compulsory. People's circumstances change and insisting on a fixed level of deduction throughout someone's working life would be wrong and would be resented. There is also a problem of practicality and the sanctions that would be applied. Positive incentives to join the stakeholder scheme, as the Government have proposed, are a better way forward than compulsion, which would make a good scheme bitterly resented and would not be remotely workable.
Mr. David Heath (Somerton and Frome):
Is the hon. Lady aware that we have compulsory pension schemes in the public service--in the police force and the fire brigade? Proper criticisms may be made about the use to which the money is put in not providing a funded scheme, but the schemes are compulsory for the employee. They are not resented for that because they are part of the terms and conditions that provide the eventual pension.
Ms Keeble:
Yes, but for new pension arrangements, we can draw up a scheme that presents the best possible options. In a scheme that is supposed to encourage people to make extra provision for their retirement, there is no practicable way in which the Government can force everybody earning within a certain salary range--not just those working for big employers--to pay a certain amount.
Many people who make provision for their retirement greatly resent the fact that others will not do so and will rely on the state. That grievance is where some of the feeling about compulsion comes from, but the Government are right to resist it in drawing up their plans for the stakeholder pension.
The next level of pension is a second state pension. The hon. Member for Newbury (Mr. Rendel) seemed to be proposing that. It is a pay-as-you-go scheme, which means that, if people cannot pay in, it will be topped up by the Government. The revolutionary aspect is that it will be topped up specifically for people who are looking after young children at home or those who are looking after disabled relatives and are in receipt of certain benefits. That answers the frequent complaints of Conservative Members that the Labour party does not appreciate the enormous contribution made to society by women who stay at home to look after families and that we discourage caring because we encourage people to rely on state benefits.
With our carers pension, we are telling carers that the Labour Government value their contribution and are prepared to make up their pension contributions while they are doing that important work. I shall return to that point, which is particularly important for women. That measure will influence many women in deciding whether to take a career break to look after children or ageing parents. In the past, many felt that, if they did that
extremely important work, they would be clobbered in their old age because they would be unable to keep up their pension contributions.
The minimum income guarantee will not affect very many people in my constituency because most, like others in affluent parts of the country, are fortunate enough to have work most of the time and to be paid at a rate that puts their income above the very low level that would entitle them to the minimum income guarantee. The policy is an important safety net because it gives people the assurance that, if they do not earn enough to make their own pension arrangements, they will get a pension that will ensure that they can live their lives with greater dignity than present pensioners can.
Pensioners throughout the country are in uproar about the impoverished state of many old people, but when one presses them, they are often talking not about themselves but about friends or acquaintances. The need to ensure that old people can look forward to security and a decent standard of living in their retirement is extremely important. I am particularly pleased that the minimum income guarantee takes into account the extra costs that people face when they live longer, as people now do. It guarantees an enhanced income rate for pensioners aged over 75, rather than the 25p increase that has, until now, been given to them.
The Government will not force people to live off benefits, as the Opposition's motion says; that is complete nonsense. The Government will encourage people to make provision for themselves and provide the safety nets that people want. Above all, I am pleased that, in their first couple of years in power, the Government have dealt with the major, pressing issues that have affected pensioners. They have tackled the grievance that many pensioners felt about having to pay so much in taxation. Lifting the tax threshold for each pensioner to £5,900 means that two thirds of pensioners will not now have to pay any income tax at all. Many pensioners had felt aggrieved because they had paid income tax all their lives and were still being clobbered for tax when they were having to rely on the arrangements that they had made for their old age.
The Government have also dealt with fuel poverty. Many Labour Members joined pensioner groups to campaign about that issue in the many years during which our party was in opposition. The Government have tackled that problem through the winter allowance, which was £20 when it was first introduced and is now £100, by reducing VAT and by making other arrangements for fuel charges. That deals with one of the main problems that affected many of our older people.
The Government have also taken action on the savings limit and dealt with issues relating to the health service. In my consultations, I have found that people generally expect to provide for themselves but recognise that they cannot possibly meet the extra costs caused by declining health in old age. The Government have cut eye test charges for pensioners and--this is not always recognised as a pensioners' issue--provided a huge amount of extra money to deal with the winter crisis. In most health authorities, that money has gone towards looking after pensioners during the winter, trying to ensure that they do not go into hospital but are looked after, much more appropriately, at home and, in some instances, ensuring
that special beds are opened up. The Government are trying to ensure that pensioners get the level of care that their often frailer health requires in winter. They are also dealing with the problems of long-term care, and the real issues raised by the level of nursing-homes charges.
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