Select Committee on Social Security Seventh Report


PROCEEDINGS OF THE COMMITTEE RELATING TO THE REPORT

WEDNESDAY 26 JULY 2000

Members present:

Mr Archy Kirkwood, in the Chair
Ms Karen Buck
Mr David Crausby
Mr Andrew Dismore
Mrs Joan Humble
Mr Edward Leigh
Dr Doug Naysmith
Mr Laurence Robertson
Mr Desmond Swayne
Mr Gareth Thomas
 

The Committee deliberated.

Draft Report, [Pensioner Poverty], proposed by the Chairman, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraph 1 read and agreed to.

Paragraphs 2 and 3 read, amended and agreed to.

Paragraphs 4 to 6 read and agreed to.

Paragraph 7 read, amended and agreed to.

Paragraphs 8 to 10 read and agreed to.

Paragraph 11 read, amended and agreed to.

Paragraphs 12 to 16 read and agreed to.

Paragraphs 17 to 23 read, amended and agreed to.

Paragraphs 24 and 25 read and agreed to.

Paragraph 26 read, amended and agreed to.

Paragraphs 27 to 37 read and agreed to.

Paragraphs 38 to 40 read, amended and agreed to.

Paragraph 41 read and agreed to.

Paragraph 42 read, amended and agreed to.

A paragraph-(Mr Andrew Dismore)-brought up, read the first and second time, amended and inserted (now paragraph 43).

Paragraphs 43 and 44 (now paragraphs 44 and 45) read, amended and agreed to.

Paragraphs 45 to 50 (now paragraphs 46 to 51) read and agreed to.

Paragraphs 51 to 53 (now paragraphs 52 to 54) read, amended and agreed to.

A paragraph-(Mr Gareth Thomas)-brought up, read the first and second time, amended and inserted (now paragraph 55).

Paragraph 54 (now paragraph 56) read, amended and agreed to.

Paragraphs 55 to 64 (now paragraphs 57 to 66) read and agreed to.

Paragraph 65 (now paragraph 66) read, amended and agreed to.

Paragraph 66 (now paragraph 68) read and agreed to.

Paragraph 67 (now paragraph 69) read, amended and agreed to.

Paragraphs 68 to 74 (now paragraphs 70 to 76) read and agreed to.

Paragraph 75 (now paragraph 77) read, amended and agreed to.

Paragraph 76 (now paragraph 78) read and agreed to.

Paragraph 77 (now paragraph 79) read, as follows:

The National Pensioners Convention argued that, "whatever advantages may accrue in the distant future from the development of occupational and stakeholder schemes, only the state scheme can deliver short-term improvements." We agree that only the state is in a position to respond to the current problem of pensioner poverty. The question we have grappled with is, until the Government's wider pension reforms take effect, how best can the state ensure that present day poverty among pensioners is overcome? The arguments put to us can be distilled into two distinct approaches. The first is the case for raising the basic state retirement pension. The second is the case for a means-tested approach to target the poorest pensioners. The arguments for and against these different approaches are discussed below.

Amendment proposed in line 3, to leave out from the word 'improvements' to the second 'The' in line 4.-(Mr Desmond Swayne).

Question put, That the Amendment be made.

The Committee divided.

Ayes, 3

Mr Edward Leigh
Mr Laurence Robertson
Mr Desmond Swayne
Noes, 6

Ms Karen Buck
Mr David Crausby
Mr Andrew Dismore
Mrs Joan Humble
Dr Doug Naysmith
Mr Gareth Thomas

Paragraph agreed to.

Paragraphs 78 to 81 (now paragraphs 80 to 83) read and agreed to.

Paragraph 82 (now paragraph 84) read, amended and agreed to.

Paragraph 83 (now paragraph 85) read and agreed to.

Paragraphs 84 and 85 (now paragraphs 86 and 87) read, amended and agreed to.

Paragraphs 86 and 87 (now paragraphs 88 and 89) read and agreed to.

Paragraph 88 (now paragraph 90) read, amended and agreed to.

Paragraphs 89 to 92 (now paragraphs 91 to 94) read and agreed to.

Paragraph 93 (now paragraph 95) read, amended and agreed to.

Paragraphs 94 to 99 (now paragraphs 96 to 101) read and agreed to.

Paragraph 100 (now paragraph 102) read, amended and agreed to.

Paragraphs 101 and 102 (now paragraphs 103 and 104) read and agreed to.

Paragraph 103 (now paragraph 105) read, amended and agreed to.

Paragraphs 104 and 105 (now paragraphs 106 and 107) read and agreed to.

Paragraph 106 (now paragraph 108) read, amended and agreed to.

Paragraphs 107 to 116 (now paragraphs 109 to 118) read and agreed to.

Paragraph 117 (now paragraph 119) read, amended and agreed to.

Paragraphs 118 to 124 (now paragraphs 120 to 126) read and agreed to.

Paragraphs 125 to 129 (now paragraphs 127 to 131) read, amended and agreed to.

Paragraph 130 (now paragraph 132) read and agreed to.

Paragraph 131 (now paragraph 133) read, amended and agreed to.

Paragraphs 132 to 134 (now paragraphs 134 to 136) read and agreed to.

Paragraphs 135 and 136 (now paragraphs 137 and 138) read, amended and agreed to.

A paragraph-(Mr Andrew Dismore)-brought up, read the first and second time, amended and inserted (now paragraph 139).

Another paragraph-(Mr Andrew Dismore)-brought up, read the first and second time, amended and inserted (now paragraph 140).

Another paragraph-(Mr Desmond Swayne)-brought up and read as follows:

One way in which the basic state pension might be enhanced at little cost would be to incorporate winter fuel payments, Christmas bonuses and free television licenses for the over 75s, into the pension and to adjust tax allowances to take account of these changes. These changes would afford greater dignity to pensioners by acknowledging that they are capable of managing their own budgets and determining their own priorities.

Question put, That the paragraph be read a second time.

The Committee divided.

Ayes, 3

Mr Edward Leigh
Mr Laurence Robertson
Mr Desmond Swayne
Noes, 6

Ms Karen Buck
Mr David Crausby
Mr Andrew Dismore
Mrs Joan Humble
Dr Doug Naysmith
Mr Gareth Thomas

Paragraph 137 (now paragraph 141) read as follows:

If the Government is to realise its long-term aim of giving pensioners solid state pension provision on which they can build, without their own pensions and savings being eroded in old age by means-tests, and if we are to make a start in bridging the gap towards our proposed target as proposed by the National Pensioners Convention, we have concluded that an increase in the state non-means-tested pension is inevitable and that it should be done sooner rather than later. In the long-term, the proposed state second pension will not succeed in its purpose unless it is earnings-linked; otherwise the present unsatisfactory situation, where the basic state pension is worth less than the means-tested safety net, will repeat itself. In the shorter term, pensioners retiring in the next 50 years, will see the basic first pillar of pension provision, the universal state retirement pension, reduced significantly. The reduction in value of the basic state pension, which currently provides a third of all pensioner income, will reduce the overall retirement incomes of people who have made savings and will inevitably increase the numbers brought within the means-tested safety net. We would like to see fewer pensioners in the future being required to claim means-tested protection to avoid poverty, not more. We await the details of the proposed pensioner's credit, but unless it can achieve this objective, and meet our concerns for the mid-term future, we believe that the earnings link for uprating the basic state pension will need to be restored to provide a firm financial platform for retirement on which people can build for the future.

Amendment proposed, in line 1, to leave out from the beginning of the paragraph to the word 'In' in line 6.-(Mr Desmond Swayne).

Question put, That the Amendment be made.

The Committee divided.

Ayes, 2

Mr Laurence Robertson
Mr Desmond Swayne
Noes, 7

Ms Karen Buck
Mr David Crausby
Mr Andrew Dismore
Mrs Joan Humble
Mr Edward Leigh
Dr Doug Naysmith
Mr Gareth Thomas

Question put, That the paragraph stand part of the Report.

Ayes, 7

Ms Karen Buck
Mr David Crausby
Mr Andrew Dismore
Mrs Joan Humble
Mr Edward Leigh
Dr Doug Naysmith
Mr Gareth Thomas
Noes, 2

Mr Laurence Robertson
Mr Desmond Swayne

A paragraph-(Mr Desmond Swayne)-brought up and read as follows:

There is a quite proper and desirable relationship between pensions and the average level of earnings. Growth in the level of earnings affords greater opportunity to save for retirement. Unfortunately, recent growth in average earnings has, on the contrary, been accompanied by a collapse in the savings ratio. We view this development with alarm.

Question put, That the paragraph be read a second time.

The Committee divided.

Ayes, 3

Mr Edward Leigh
Mr Laurence Robertson
Mr Desmond Swayne
Noes, 6

Ms Karen Buck
Mr David Crausby
Mr Andrew Dismore
Mrs Joan Humble
Dr Doug Naysmith
Mr Gareth Thomas

Paragraph 138 (now paragraph 142) read as follows:

This recommendation arises from our perception of the inherent structural weakness in the Government's pension reforms where, unless the value of basic non-means-tested state provision is maintained, the underlying safety net, intended to provide a minimum income, instead becomes the major form of state provision for pensioners. The recommendation is made against the widespread acknowledgement on all sides of the pensions debate that a greater share of the national income needs to be devoted to pensions. We consider that part of the extra income which must be devoted to pensions in the future should come from raising national insurance contributions to pay for the various improvements we recommend in this Report. It is a simple and effective way of ensuring that everyone benefits from higher pensions and everyone, who can afford to do so, pays for it.

Question put, That the paragraph stand part of the Report.

The Committee divided.

Ayes, 7

Ms Karen Buck
Mr David Crausby
Mr Andrew Dismore
Mrs Joan Humble
Mr Edward Leigh
Dr Doug Naysmith
Mr Gareth Thomas
Noes, 2

Mr Laurence Robertson
Mr Desmond Swayne

Paragraph 139 (now paragraph 143) read, amended and agreed to.

Resolved, That the Report, as amended, be the Seventh Report of the Committee to the House.

Ordered, That the Chairman do make the Report to the House.

Several papers were ordered to be appended to the Minutes of Evidence.

Ordered, That the Appendices to the Minutes of Evidence taken before the Committee be reported to the House.

Several papers were ordered to be reported to the House.

[Adjourned till Wednesday 1 November at half-past Ten o'clock.


 
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