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Stakeholder Pensions
7. Mr. John Wilkinson (Ruislip-Northwood): Which income group will benefit the most from stakeholder pensions. [145964]
The Minister of State, Department of Social Security (
Mr. Jeff Rooker): Stakeholder pensions will particularly benefit people who earn, on today's figures, between £10,000 and £20,000 a year--£200 to £400 a week--and who do not have access to an occupational scheme. They will also be of benefit more generally, including to some non-earners. The largest single income group that will benefit comprises up to 5 million people whose income is between the figures that I have given.
Mr. Wilkinson: Why did the Secretary of State say on 6 May last year in The Times:
- "They"--
- "have always been intended for moderate earners and higher- income earners"?
Mr. Rooker: Irrespective of what was reported in The Times, we have never deviated from the stakeholder target group. Those who earn in the income ranges set out in the Green Paper have been mentioned in this House, outside and in Committee. That target group does not comprise the market for stakeholders. The market and the target group, as I have repeatedly said, are different. To confuse the two is disingenuous, and the hon. Gentleman knows that.
Mr. Paul Flynn (Newport, West): Did my right hon. Friend see the example of a personal pension introduced under the Conservative party by Skandia Life? A man discovered that, of the £25 premium that he was paying, £17.50 was taken in commission. When he stopped the premiums, the company continued to rob his fund of the £17.50 and told him that if he wanted to close the fund and take his money, it would deduct 22 per cent. of its value. That is the truth of personal pensions introduced by the Conservative party. The man was also told that if he had had a stakeholder pension, the charge would have been not £17.50 but 20p.
Mr. Rooker: The last part of my hon. Friend's question destroyed my answer. I was about to say that we have learned the lessons provided by the pension robbers who operated under the Conservative party. That is one reason why companies are queueing up to provide stakeholder pensions--almost 30 are now regulated to do so--under which costs to individuals are controlled and capped.
Some say that the public prints are confusing. Stakeholder pensions are so "confusing" that Tesco is planning to take contributions at its 650 supermarket checkouts, and the Trades Union Congress is to provide them. They will take off because they are safe and secure, and the pension robbers will not be able to get a look in.
Mr. Peter Lilley (Hitchin and Harpenden): Surely a Minister who is a member of a Government who extract£5 billion a year from pensions should not talk about pension robbery. Will he explain why, if stakeholder
pensions are good for those earning more than £10,000 a year, those earning less than that will be entitled to the same rebate and not allowed to opt out for a stakeholder pension?
Mr. Rooker: That is incredibly confusing, and shows that the former pensions Minister has not followed the debate. Stakeholder pensions will be simple. Even the Pru says:
- "The new stakeholder pension is simpler than any pension yet."
We have repeatedly said that it is up to those who earn below £10,000 a year to decide what to do, but that, all things being equal, they will be better off remaining in the earnings-related pension scheme, which is to be modified next year to become the state second pension, than they would be in a funded scheme. Those without earnings, be they children, non-working spouses or others, are entitled to join a stakeholder scheme.
Mrs. Jacqui Lait (Beckenham): Many people across income groups who have stakeholder pensions will be required to buy an annuity. Given the poor current returns on annuities, what is stopping the Government ending the compulsory requirement to purchase an annuity?
Mr. Rooker: As the hon. Lady knows--we have debated these matters before--the Government are considering the report of the retirement group's income working party, chaired by my former colleague Dr. Oonagh McDonald. In due course, we shall announce our decisions.
Child Poverty
11. Mr. Chris Pond (Gravesham): If he will make a statement on progress towards the Government target of eliminating child poverty. [145969]
The Secretary of State for Social Security (Mr. Alistair Darling): We are making progress towards our target of eradicating child poverty within a generation, and halving it within the next 10 years. As a result of measures introduced so far, 1 million children will be taken out of poverty. There are now 250,000 fewer children living in households where there is no one in work than there were in 1997.
Mr. Pond: I welcome my right hon. Friend's reply and the progress that has been made. Does he fully understand the extent of the challenge that he is facing in trying to reach the targets to which he referred? There have been references to the trebling of child poverty between 1979 and 1997. A quarter of poor children throughout the European Union were here in the United Kingdom by the mid-1990s. If we had a Government who were committed to abolishing the working families tax credit, the child tax
credit and the new deal for lone parents, how long does my right hon. Friend think it would be before we were back to 4 million of our children living in poverty?
Mr. Darling: Many of us remember that for the 18 years the Conservatives were in government, they paid scant attention to child poverty. Many of their policies contributed actively towards children living in poverty. My hon Friend is right to refer to the fact that between 1979 and 1997 child poverty trebled. At thesame time, social security spending doubled, as the Conservatives spent more and more on social security because of high unemployment.
My hon. Friend knows that the Government are committed to the eradication of child poverty. We will halve it in the next 10 years. Measures have been announced already, such as increases in child benefit, an increase in the money that is given to children whose parents are on income support, the working families tax credit and the new deal for lone parents. Many lone parents have children living on unacceptably low income levels. Those are examples of measures that are helping to ensure that children have more money coming into the household. We are making sure that we tackle child poverty.
All the evidence so far suggests that the Conservative party, far from having discovered a new concern about child poverty, is committed to policies that would be likely to lead to an increase in child poverty. I am sure that most decent people would not want that.
Mr. John Bercow (Buckingham): The Secretary of State is abominably complacent. Given the evidence that 500,000 more people are living in poverty than when the Government took office, that 2 million families have missed out on the child tax credit on account of what a Treasury official told the Daily Mail was a "bureaucratic bungle", and that no fewer than 85 changes to the regulations affecting the administration of housing benefit have had the effect of limiting take-up and thereby damaging the living standards of children, why does the right hon. Gentleman not abandon his smug complacency and admit that, far from being the saviour of children,the Government have betrayed poor children on a monumental scale?
Mr. Darling: I sometimes wonder whether the hon. Gentleman, when he rehearses his questions in front of the mirror before he comes into the Chamber, thinks about what he is going to say.
Mr. Bercow: I never look at the mirror.
Mr. Darling: The hon. Gentleman should try doing so. It might be a revelation to him.
We are the first Government to have set ourselves the objective of eradicating child poverty within a generation. The hon. Gentleman accuses us of complacency,and criticises us, but he should examine the measures that the Government have introduced to combat child poverty and ask himself where the Conservative party stands. If he adopts that approach, he will understand the difference between us. A major contributor to reducing poverty is
an increase in child benefit, which was opposed by the Conservative party, which froze the benefit when in office.We have introduced the working families tax credit, which makes work pay, but the Conservative party opposes it. The child care tax credit, which will be introduced in April, will mean a £10 gain for parents who can claim the credit. Again, the Conservative party oppose it. Indeed, each and every measure that we have introduced, which are designed to make sure that children are lifted out of poverty, that their parents can get into work--or, when work is not possible, that we can put more money into people's pockets though other means of support--is opposed by the Conservative party. Because the Conservatives are committed to £16 billion worth of spending reductions, it is inconceivable that the axe would not fall on the very children about whom the hon. Gentleman pretends to be concerned.
Mr. Terry Rooney (Bradford, North): Does my right hon. Friend accept that workless households are a major contribution to child poverty, and that we need to look at all possible work incentives? In that vein, will he look at reintroducing free school meals with the working families tax credit, as that would be a major contribution to eliminating child poverty and a massive work incentive?
Mr. Darling: My hon. Friend is right. One reason why many children were living in poverty is that their parents did not work. That is why we introduced the new deal for lone parents, which 200,000 lone parents have already joined. Almost half of them have gone into work or are in the process of working towards work through training and other enterprise. The best way to tackle poverty is to make sure that as many children as possible have parents who are in work. That is why we are making work pay and making work possible.
Of course, we shall continue to look at other measures to make sure that children are looked after and brought up properly in an environment where they are likely to learn. The difference between us and the Conservative party is that all the measures that were introduced to combat child poverty, especially the new deal for lone parents, would be scrapped by the Conservatives, were they to get in. There is one particularly cruel measure: the Conservatives plan to remove all forms of state help from lone parents, once their children are over the age of 11. That is the only way they could save £0.5 billion in their first year of office.
Mr. David Willetts (Havant): Has not the real problem with all the Government's anti-poverty programmes been identified by none other than the right hon. Member for Hartlepool (Mr. Mandelson)? According to him,
- "There is a proliferation of programmes with insufficient collaboration between the different agencies involved . . . As a result we are spending vast sums of money . . . on the same people through different programmes, without improving their ability to participate in the economy and society."
Mr. Darling: I am surprised that the hon. Gentleman did not take the opportunity to explain how removing
benefit from lone parents when their youngest child reaches the age of 11 can help in the drive to get rid of poverty. As for the measures that the Government have introduced to make work pay and make work possible, we have introduced a variety of them, and they are beginning to bear fruit. As a result of what we are doing, there will be a million fewer children in poverty than there were when the hon. Gentleman left office. The hon. Gentleman would have done better to come to the House with measures that would help to reduce poverty, rather than make silly points that do not add up to much at all.
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