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26 Jul 2000 : Column 254WH

Pension Reforms

1.29 pm

Ms Sally Keeble (Northampton, North): I am very pleased to have secured this debate on pension reform and especially to have this opportunity to set out some of the views of pensioners in my constituency. We expect further changes in pensions policy during the coming months. When they come forward, I hope that the views of pensioners in Northampton, North, as set out in the survey that I have conducted, can be taken into account.

As every Member of Parliament knows, pensions policy is one of the most difficult and controversial areas with which we must deal, and the pensioners' lobby is one of the most determined and persistent. Like every other hon. Member, I have received many letters from pensioners about their difficulties and needs, and I have listened on the doorstep to what pensioners have to say. Most pensioners have thought long and hard about their personal circumstances and the changes introduced by the Government. They often want to talk at length about their experiences and views and explain the various financial pressures and family circumstances that, in some cases, have made their lives in retirement difficult.

Because of the depth of concern and the complexity of the issues raised, colleagues in Northampton, North and I organised a questionnaire survey, designed partly for pensioners but also for people of working age, who must prepare for their retirement, because we wanted to know what they thought the Government should be doing about pensions. The results give some insights into pensioners' views of the reforms that have been introduced to date, and I hope that they will have some input into the shape of future reforms. Above all, the results give a clear picture of the depth of concern among pensioners in my constituency.

On Monday and Tuesday, we sent out the questionnaires, and on Wednesday they started to come back. On Thursday, we received a deluge of them. I have never experienced such a fast response. People must have sent the completed questionnaires by return of post. In fact, one person was away on holiday and his children faxed him the questionnaire, which was returned within two weeks from Finland. There was obviously considerable interest in ensuring that people had their say. It was also striking that there was a strong consistency of views. People seem to feel strongly on the same issues, and it was difficult to find divisions according to income or gender.

I am sure that it will not surprise my right hon. Friend the Minister when I tell him that the biggest single change that pensioners said that they wanted was a substantial increase in the state pension, although not specifically linked to earnings. Some people did suggest that, but many said that they wanted their pensions to be linked with prices, as they already are, or the cost of living, which is a formulation that Liberal Democrats in Northampton have chosen to use and is, in effect, the same as a link with prices. Some said that they wanted the link to be with European pensions or, in one particularly ambitious case, MPs' salaries and allowances. For the most part, the need was simply for a substantial rise. That does not mean that all the pensioners were completely hard up. A third described themselves as being very or moderately comfortable.

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The anxieties about poverty in retirement were also apparent from the responses from people in work. Bearing it in mind that Northampton has historically high levels of employment and a thriving economy, the biggest single fear that people of working age have about their retirement is of not having enough money. Almost half said that they would have to make major changes in their life style and 17 per cent. said that they worried about being poor.

A link emerged from the survey between financial well-being in retirement and having a second pension. Most of the pensioners who said that they were very or moderately comfortable had some form of second pension. Occupational pensions in particular have provided extremely good value and are a success story of pension provision in the UK. It was also clear that women have more restricted access to second pensions. Many women in my constituency work and always have worked--that is not a new phenomenon in Northampton. The lack of access to second pensions is a measure of their low incomes and a glaring hole in current pension provisions, which have not provided properly for people with interrupted career patterns or who work part-time and therefore have very low incomes.

The figures on financial well-being also demonstrate the importance of the Government's drive to get more people to take out second pensions, either through the new stakeholder pension or the second state pension. Unfortunately, the restructuring of pensions comes too late to help the present generation of pensioners. I hope that the message will get over about the need for further self-provision by future generations of pensioners. It was interesting that, of the small group of people of working age who responded to the survey--most of the replies came from pensioners--the stakeholder pension ranked joint third with winter fuel payments as the most important measure that the Government had introduced. I was, frankly, surprised that people had even heard of the stakeholder pension as it is not yet in operation and there has not been much advertising of it by the financial services industry.

Once the stakeholder and second state pensions are in place, there will be a huge job to be done to ensure that people take advantage of the new measures and get proper provision for themselves. I hope that efforts will be made to ensure that women make proper independent provision for their retirement so that they are not left alone and struggling financially, especially not when they are older and more frail. I would not underestimate the needs of women pensioners. Many come to see me, often on their own, because they are widowed and do not have adequate provision for their future financial needs. Many also come with their husbands and are cross because, although they have worked all their lives, they have no independent pension arrangements. Having been financially independent, they suddenly find themselves completely dependent. Understandably, they do not like it.

Another of the Government's big reforms is the introduction of the minimum income guarantee designed to boost the incomes of the poorest pensioners. I did not ask people if they received the guarantee: it is new and the picture that I got might not have been

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relevant. In addition, I wanted to keep detailed questions about finances to a minimum because I found that people tended to respond more readily to surveys if they were not asked for a lot of personal details. The public have clearly latched on to the recent national publicity about the minimum income guarantee. I congratulate the Department on that. The concept is hard to convey, but the publicity seems to have worked.

In the survey, 82.9 per cent. of pensioners said that the guarantee was very important; 11 per cent. said that it was important; and only 6 per cent. were indifferent or said that it was unimportant. Interestingly, those attitudes were virtually the same among more comfortably off pensioners as among those who were struggling. Across the income range, pensioners saw that the policy was relevant to their needs as a group. It was also interesting to see that attitudes were virtually the same among people in work. Whatever the Conservative Opposition's criticisms, the scheme has clearly struck a chord with the public, who see it as meeting the pressing need to provide extra money for the poorest pensioners in society.

I hope that the pensioners tax credit will meet with similar approval. Certainly, it should address the biggest need of so many pensioners in my constituency--the need for more money--and people's biggest fear when they think about retirement: being hard up. The credit should help especially the many pensioners in my constituency who have incomes above the minimum income guarantee level, because they have made personal provision during their working lives, but who do not earn enough to pay tax, and who are struggling and falling into the gaps between the Government's reforms.

The survey also asked about how pensioners wanted to receive their pensions and their attitudes on claiming other benefits. Perhaps not surprisingly, the vast majority said that they still wanted to get their pensions through the post office. That applied both to people on higher incomes and to those who were struggling. However, an increasing number were interested in getting their pensions through the bank. They were also interested in some of the newer ways of claiming benefits, including electronic methods, because those allow greater access and flexibility for people who have difficulty in getting out. I hope that, if the new universal bank proposals are developed, they will meet some of pensioners' needs for dealing with benefits and pensions claims.

The survey asked about the pressures on pensioners, which resulted in quite a big surprise. I had assumed that, since what they wanted most was extra money, the biggest pressure point in their lives would be lack of money. That was not the case; the biggest overall concern was health care, which ranked higher than money pressures. The survey posed separate questions about continuing care and home care. I understood the pensioners' concern about health care to relate to the basic NHS primary and acute services.

Two points arise in relation to that part of the survey. First, pensioners who said that they were financially comfortable were more concerned about health care. That perhaps suggests a future increase in demand for health services for pensioners, as the pensioner community becomes more affluent. I am sure that that will happen, in the light of the reforms and new pension

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structures that are being established. Secondly, the kind of services that pensioners use could become an issue. One area of health care that is especially important to pensioners is orthopaedics. I understand that there is a national shortage of skilled medical staff in orthopaedics, with consequent problems with waiting lists. My constituents consistently face delays of more than 50 weeks for orthopaedic appointments--even initial consultations. That is far too long, especially with the extra resources that are being ploughed into the NHS. Recent incidents have also raised questions about the quality of care for two particular constituents.

If we are genuinely to provide for the needs of people in retirement, health care is a key priority. That is especially true for the services that are particularly important to older people, such as orthopaedics and podiatry--an area that is quite often raided. I realise that that is not within my right hon. Friend the Minister's sphere of responsibility, but if there is to be joined-up government, pensioners' health care needs will have to be considered while their financial needs are being met.

The Conservative Opposition have repeatedly criticised Government initiatives to help pensioners, especially the winter fuel allowance, which they derided as a gimmick, and which they said they would roll into a basic increase. However, my survey showed strong support for the key initiatives for pensioners, especially the winter fuel allowance. That allowance, the minimum income guarantee, the free television licences for pensioners over 85 and free eye tests were all seen as important, or very important, by upwards of 75 per cent. of pensioners. That applied both to pensioners who were more comfortably off and to those who were struggling.

There were some marked difference in attitudes towards the measures, but they occurred more between retired people and those still in work. People who were still in work paid lower regard to the measures. For example, 63 per cent. of pensioners thought that free television licences, which have been much derided, were important and 30 per cent. thought them very important. In contrast, only 37 per cent. of people of working age thought that they were very important; 32 per cent. thought that they were important; 19 per cent. were indifferent to them; and 12 per cent. thought them unimportant.

In the survey, 98 per cent. of pensioners thought winter fuel allowances very important or important. Only 0.5 per cent. of pensioners said that they were unimportant. In fact, a substantial number of pensioners said that they wanted more help with winter fuel costs, and placed that high on their list of policy priorities. I was surprised by some of the results, because I had thought that pensioners would say that the measures are not nearly as important as having the basic state pension. The revelation that that is not so proved to be one of the advantages of conducting the survey.

Pensioners clearly value the measures. They did not make derogatory remarks in the space for comments. Whoever the Conservatives think that they are speaking for in dismissing them as gimmicks, it is not pensioners. The derision with which the Conservatives treat the extra help provided by the Government does not square with the reality of the difference that the initiatives have made to pensioners' lives.

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My right hon. Friend the Minister has a copy of the survey, and I hope that he will take those points on board when he considers plans for future pensions policy and reform. I have not explained the whole methodology of the survey, but it was conducted with a reasonable amount of care and gives an accurate picture of the concerns, needs and priorities of pensioners and non-pensioners in my constituency. Pensions policy is vital for the future well-being of my constituents and is a matter that many people overlook until it is too late. In the past, it has served some groups of pensioners well, but it has left many--especially women--in real financial difficulty.

The Government are addressing many of the shortcomings through their reforms. As they do so, I ask them to take note of the needs and concerns of my constituents. The survey provides a snapshot of one community, but I suspect that, if it were repeated elsewhere, the results would be very similar, and that the voices of pensioners in Northampton, North speak for retired people across the country.

1.46 pm

The Minister of State, Department of Social Security (Mr. Jeff Rooker) : I congratulate my hon. Friend the Member for Northampton, North (Ms Keeble)--first, on securing the debate, secondly, on her speech, and thirdly, and most importantly, on the survey that she has produced. I have had a chance to look at my copy, and I will obviously give it serious consideration.

Ministers are on the receiving end of many pieces of correspondence, some of which say thank you and some of which do not. We see no end of petitions. It is the easiest thing in the world to put a heading on a piece of paper, collect names and addresses and go off to put one's views to the Government. I have done it myself. However, in terms of usefulness, what can a Minister do with a statement with a few hundred or even a few thousand names appended? There is a message, in that people have taken the time to do it, but its impact will be infinitesimal in comparison with a document such as that given to me by my hon. Friend.

My hon. Friend said that she had not gone into the details of the survey's methodology, but she clearly explained the range of issues that she covered and people's perceptions of them. She did not try to elicit detailed financial information, because people are reluctant to give it--but they do want to explain how they feel about how things are going. On the basis of my brief look at the survey, it is evident that it is excellent in that respect. It addresses not only the policies of the Department of Social Security but other related matters.

We have made many statements and announcements and have put several new policies into operation. Others remain at the planning stage--for example, the pension credit, which was announced in the Budget and on which we will produce proposals before the autumn statement. We will probably not be able to implement it fully before the next Parliament, because it will require substantial legislation. However, early signals of our intended approach will be given this autumn.

My hon. Friend referred to people's perceptions, especially those of people who are just above the minimum income guarantee limit, have saved for a pension--money that they have put aside with their

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employer through deferred earnings and tax relief--and can feel quite bitter about being left out of what they see as extra Government assistance. It is important to acknowledge that that perception exists. My hon. Friend said that, on one of the questions, health rated higher than income, because of people's fears about the future.

I cannot pre-empt any Government statement, and I am always reluctant to say that we expect a statement today or tomorrow. I have learnt over the past three years that one has a statement only when one gets it, because its date of issue can sometimes change the night before it is due. However, I am reliably informed that the Government will respond tomorrow to both the royal commission on long-term care and the proposals for NHS reform. Their response should address some of the points raised by my hon. Friend's constituents regarding health care.

My hon. Friend also raised the issue of the minimum income guarantee, which has been welcomed across the board. We have only just started the take-up campaign--it is by no means finished. The Government's target is to write personally to 2.2 million pensioners--the figure has risen slightly since our original plans were drawn up. We have already contacted just over 400,000, and in the next few weeks we shall contact a second tranche of 800,000, of whom 30,000 a day will be contacted by letter. The television advertisement, featuring Thora Hird and Peter Sallis, is planned to coincide with that.

It is too early to give any indication of feedback, but several thousand pensioners have claimed the minimum income guarantee since the take-up campaign started in earnest on 30 May. The average amount of extra money that they are receiving is well over £10 a week--probably nearer £20 than £10. We hope to produce figures as soon as we have some viable results, but it is too early to do so at present. The campaign will continue until October, and we shall obtain an evaluation of it at that time.

My hon. Friend also mentioned that one of the points in her survey was the issue of perceptions and people at work. I was surprised, as I think she was, at the reference to stakeholder pensions, as there are none on the market. No pension company has yet been regulated to sell stakeholder pensions. They will not be able to register to be a regulated stakeholder pension provider until October. Stakeholder pensions will be marketable and available from April 2001. In the meantime, we have a programme to contact companies employing five or more people, because they will have a legal duty to give their employees access to stakeholder pensions, unless they have provisions that exempt them from so doing, such as occupational pension schemes.

It is good that people are already getting the message that they need the comfort of a second pension. Throughout my hon. Friend's survey, the number of people with occupational pensions, with private pensions and in the state earnings-related pension scheme probably represented the generality of the population. Without those extra pensions, those people would be on the means test and would have a poorer quality of life. That is why we want to move more people into funded second pensions.

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To assist with that aim, the Government are planning a large-scale pensions education programme over the winter months, into which my hon. Friend's survey will provide an input. I am not sure of the exact start date, but it will probably be January or February, rather than December. It will be a general pension education programme, and stakeholder pensions will form a small part of it. Companies themselves will market their particular products.

We are in the early stages of planning the pension education programme, in terms of advertisements, key phrases, filming and so on. I shall certainly make sure that my hon. Friend's survey is brought to the attention of our officials and the outside experts who are assisting them. It is crucial to get across to working people in their 20s and 30s the idea that it is important to think about a pension. My hon. Friend has highlighted that point. In that respect, her survey is all the more valuable because it did not concentrate exclusively on today's pensioners. She also thought about tomorrow's pensioners--people of working age--which is excellent, because it gives a more rounded survey.

My hon. Friend also mentioned the position of women. I understand her point. The previous debate in which I took part in Westminster Hall related particularly to women. There is no question but that they have been badly served in the past in terms of pensions. They were badly served by the way in which the national insurance scheme was constructed in 1948, when many women did not go out to work, and by the married women's opt-out. We still hear of women who did not know that paying a shilling meant that they would not receive a pension. I dealt with that during the 1950s and 1960s, when I was a junior manager in industry, and now see the difficulties. I was in the House when the previous Labour Government recognised the problem and decided that everyone in work must pay the full stamp so that they will receive a full pension. That was in the late 1970s, when women who had already opted out could remain opted out and many chose to do so.

Women also suffered with the changes in the state earnings-related pension scheme during the 1980s. It was based initially on the best 20 years of working life, but was later changed to an average throughout working life. Women suffered from the change and we have been unable to right that in our modifications. However, I hope that the legislation on the state second pension will complete its progress through both Houses in about three hours so that it can receive Royal Assent before the end of the week. Benefits will start to accrue in 2002, and it will make a major strike for women, because 2 million carers will start to accrue a pension for the first time. It will take some time, but carers, most of whom are women, will be locked into a system whereby they can accrue a pension in their own right.

My hon. Friend referred to television licences. The provision has been greatly welcomed, by and large, and there will be 100 per cent. take-up by the over-75s. Procedures are in place to ensure that it is as flexible as possible so that all over-75s receive the benefit. The BBC is doing a first-class job in reaching the very people to whom we intend to give the benefit.

My hon. Friend referred to the winter fuel payment. It has been described as a gimmick, but this year it will amount to £150 cash per household, which is a

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substantial sum compared with what it was when she entered Parliament--it was zero. It cannot be derided, because it is tax free and not means-tested, so there is a massive take-up. It is a useful sum for pensioners, and this year it will be paid to men over 60 as well as to men of pensionable age. It has been attacked as a gimmick, but not too many people have sent it back, and the letters that I have read suggest that it is extremely welcome, as my hon. Friend's survey showed.

My hon. Friend referred to the method of payment. She can reassure her constituents on that. The Prime Minister pledged at the Dispatch Box that people will be able to collect their pension in cash at post offices. That is the Government's policy intention and that is what we shall deliver. The Prime Minister said that we want to give people a choice, and 51 per cent. of those who are becoming pensioners this week have chosen to have their pensions paid through a bank instead of a post office. A lot of planning is required for electronic money transfer, but being able to obtain money in cash through the post office network is taken seriously and we shall

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deliver on that with programmes for a universal bank and modernisation of post offices. We take second place to no one in wanting to protect the rural post office network.

Perceptions are important, and different figures can be bandied about. The basic pension is not enough to live on and the minimum income guarantee is only a safety net. We must do better than the present level of the minimum income guarantee and we intend to do so as quickly as possible. When we have signalled our proposals for the pension credit later this year, people will see that we are serious about delivering it.

I again congratulate my hon. Friend and I shall ensure that her report is distributed widely throughout the Department of Social Security so that it can be taken fully on board in planning for the issues that we are about to announce. It is a solid contribution to the delivery of a better quality of life for pensioners in this country and I am grateful to her.

Question put and agreed to.

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