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9.30 pm
Finally, I turn to the minimum income guarantee, which is generally quoted in relation to individual citizens. I accept that not everyone is part of a couple, even at retirement, but that is the norm for most of the population. However, the key point is that the MIG is not an individual benefit. The means test is applied to the couple, not the single person. Therefore, although the relevant figures, assessments and advice for single people are necessary, it is right and proper to consider the circumstances as they apply to couples.
The minimum income guarantee for a couple is not twice the rate for a single person, but about one and a half times that rate. I shall give one example of that. In 2025, a husband has had a full working life, and his wife has had 20 years of caring for children, 10 of those years being devoted to children under six years of age. The man has earned £180 a week, at today's value, throughout his working life, and his wife, when she has worked, has earned £120, again in today's terms.
Under SERPS, the couple's pension would be £121.40 a week, nearly £5 more than the MIG. Under the state second pension, the couple's pension would be £150--15 years before they fall back on the MIG. Such factors must be taken into account. I have recently complained to the financial experts on The Guardian and The Observer, and will do so again to the experts on
The Sunday Telegraph, who have all advised that it is better not to be involved and to let the state have a ride on the MIG. That advice can give people the false impression that they do not need to provide for themselves.
What is the price of being on the MIG? First, people are limited with regard to the amount of savings that they can have. Those capital limits are being raised, and it is important to ask how many times they will change in the future, because otherwise people might take a risk that is not worth the candle. If a couple can be in SERPS or the second state pension, or a combination of the second state pension and a stakeholder pension, their income, generally speaking, will be way over the MIG. There will be no pressure on their savings, or any of the other factors that go with the MIG.
When journalists write on this subject and give examples about MIG, I wish that they would give the relevant figures for couples as well as for individuals. We shall do that when we compile the leaflets for stakeholder pensions, and the picture that is painted as a result will be entirely different simply because the MIG for a couple is nowhere near twice the rate for a single person.
Mr. Webb:
I thank the Minister for responding seriously to the points raised in this section of the debate. It is extraordinary that the Conservative amendment outspends the Liberal Democrat one--it would cost the Government £8 billion, as opposed to our amendment's £3 billion. That must make the hon. Member for Havant (Mr. Willetts) feel a bit uncomfortable.
The Minister ended on an important point. It is true that a couple in which both partners are on full state second pension and basic pension, for example, will be clear of the MIG. In terms of pension planning, however, individuals cannot assume that they will be part of a couple when the time comes. Far too many women's pensions in the past have been built on the assumption that their husbands would provide, only for that relationship to break up. A lot of people are single at pension age, many of them never having thought that that would happen. That has to be taken into account.
The Minister said that new clause 10 contains an element of retrospection, and that the computers were not up to the task. When the decision is made about how much someone will get on retirement, the computers will have to know, in each year of SERPS, how much SERPS that person would be entitled to. We suggest that they disregard one of those historic pieces of information and use a current piece of information. A current year's entitlement should be substituted for an old year's entitlement. As, presumably, the data and the computers are better now, and given that the figures will have to be worked out anyway, I do not understand why the computers should be a barrier.
In the scheme of 50 years of pension reform, the scale of the improvement to the state second pension that we propose is reasonable and modest. We have sought to divide the House on a number of occasions, but we believe that the state second pension is a key aspect of the Bill. We believe that the state second pension is flawed because it will take so long to come in, and new clause 10 would address that in a measured and reasonable way.
Question put, That the clause be read a Second time:--
The House divided: Ayes 36, Noes 282.
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