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The Parliamentary Under-Secretary of State for Work and Pensions (Maria Eagle): The pension service will provide a dedicated, modern and customer-focused service designed to meet the individual needs of pensioners. The new service will be phased in from April 2002.
Mr. Stewart: Does my hon. Friend recognise that many pensioners across the country, from Thurso to Truro, want a local service with local staff who have local knowledge? Will she consider introducing interviews to give face-to-face advice to pensioners in the near future?
Maria Eagle: My hon. Friend is certainly correct to say that some people, pensioners included, prefer to see advisers face to face. That is why we shall have a local service to enable home visits and face-to-face interviews to take place, when requested. That does not take away from the fact that many services that need to be provided nationally can be provided by telephone and run administratively through the pension centres that we are establishing. Pensioners are increasingly contacting us by phone; more than half of all retirement pension claims are now made in that way. It is sensible to centralise the administration of that process to ensure that it can be provided efficiently and give a good service throughout the country.
Mr. John Wilkinson (Ruislip-Northwood): Does the hon. Lady agree that the individual counselling to be made available from April 2002 will be no substitute for effective public policy on pensions today? Have not the Government betrayed pensioners through the Chancellor's additional tax burdens on pension funds, and through their failure to relinquish the annuity requirement? Above all,
Maria Eagle: The hon. Gentleman has a cheek to talk about the Labour party betraying pensioners. His party betrayed them over 18 years. We are putting right the mess. He will see that, with our new pension credit policy, we shall close the income gap even more, so that every pensioner gets a decent income in retirement. When his party was in power, pensioners who were carers or disabled did not get any pension at all. We are putting that right, and trying to close the income and wealth gap between pensioners. We are putting right the mess that his Government made.
Mr. Paul Burstow (Sutton and Cheam): The Secretary of State told the House that the computer systems in his Department are ancient and do not talk to each other. Will the Government provide a new computer system to operate the pensioner credit system, and will it be able to talk to the other systems?
The Minister for Pensions (Mr. Ian McCartney): Our proposals for pension credit will ensure that all pensioners share fairly in the rising prosperity of the nation. Our plan is that the levels of pension credit will be reviewed routinely as part of the normal uprating process. As the pension credit consultation document makes clear, our intention is that the guaranteed income level of the pension credit will keep pace with the growth of earnings over this Parliament.
Colin Burgon: I thank the Minister for his reply, and I am delighted that we are now turning our attention to that large group of pensioners who have only modest savings and small occupational pensions. In my constituency, for instance, that includes people who have worked in tailoring and mining. They will be delighted when the pension credit comes into being. Will the Minister continue what I would class as a caring, committed and concerned approach by improving the quality of the financial advice and information that our pensioners receive? In my opinion, far too many pensioners invest their life savings in low-yield funds.
Will the Minister also consider the introduction of an effective equity release scheme, which would allow pensioners, with a great degree of confidence, to use their biggest capital assetusually their hometo raise an income without fear of losing it?
Mr. McCartney: The whole purpose of pension credit is to get away from the system in which pensioners with a small second-tier pension or savingssuch as those pensioners to whom my hon. Friend referredwere taxed effectively at 100 per cent. for every extra pound of income. Pension credit will give them a bonus or a reward for every pound of second pension or savings income up to a maximum level per week. That is the first time in pension provision since the creation of the welfare state that the state will make payment in recognition of the thriftiness of pensioners. The scheme will mean a guaranteed £100 a week for a single pensioner and £154 for a couple. Some 5.5 million pensioners50 per cent. of all pensionerswill gain as a result of the credit.
Mr. David Willetts (Havant): Will the Minister confirm two independent figures about pension credit? First, will he confirm that the House of Commons Library estimates that when pension credit is brought in, more than 57 per cent. of pensioners could find themselves on means tests? Secondly, will he confirm that independent experts calculate that the cost of pension credit could be more than £2 billion? For the first time, we will have a Government who have taken almost £5 billion from pension funds belonging to the pensioners, driven those pensioners into dependency, and then expected them to be grateful when they get the money back through a complicated new means test.
Mr. McCartney: When we publish the Bill, we will publish the costs. We are the first Government in decades to introduce a pensions policy that will increase income for pensioners, not decrease it as the Conservative party did in Government. Some 5.5 million pensioner households will benefit from the policy. Already, 2 million pensioners have benefited from the minimum income guarantee, and others are benefiting from the winter fuel allowance. One could go on, but the problem is that the hon. Gentleman would not like it because he would like to abolish all those measures.
Mr. Willetts: Let me ask the Minister another question. He is saying that 5.5 million pensioners will benefit, but he has been warned by Help the Aged that pension credit is far too complex. Why will not Ministers learn[Interruption.] It is no good the Secretary of State telling the Minister of State the answers; I am asking the Minister. It is not surprising that the pension credit Bill will be introduced in the House of Lords if the Secretary of State does not trust his Minister to answer questions about it.
Why is the Minister assuming that 5.5 million pensioners will get pension credit, when we know from all the Government's schemes that one of the big problems is catastrophically low take-up, with fewer pensioners collecting benefits to which they are already entitled because the Government's schemes are too complicated by far?
Mr. McCartney: The problem is that the hon. Gentleman does not like this Government paying out resources to get pensioners out of poverty. He fought the last election on the basis of taking away benefits from pensioners. I made the position clear to the hon. Gentlemanwhen we publish the Bill, we will publish the costs. We made it clear during the consultation that
Miss Julie Kirkbride (Bromsgrove): Does the Minister agree that the minimum income guarantee, however well intentioned, has been a disaster for the Government's policy on stakeholder pensions? Stakeholder pensions have flopped, with very few people taking them up. The Minister offers people a guaranteed income in old age, and yet expects them to save their own money to achieve the same standard of living as they would achieve by saving nothing at all. In those circumstances, the scheme is bound to be a flop.
Mr. McCartney: The last Conservative Government drove almost 2 million pensioners into poverty. The minimum income guarantee has produced an average increase of £15 per week, and the very poorest pensionersover 100,000 of themhave received an average increase of £20 a week this year alone. The hon. Lady must learn from history. When the Conservatives were in power they drove pensioners into poverty; it is the job of this Government to get them out of poverty.
The Minister for Pensions (Mr. Ian McCartney): We are committed to encouraging private saving to meet the long-term demographic challenge of an ageing population. We will achieve this through a package of measures, rewarding saving through pension credit, with better information for current and future pensioners, through combined pension forecasting and a pensions marketing campaign. There will be better regulation of the pensions industry, notably reforms of the minimum funding requirement, adoption of the Myners report and a recently announced certification review. We are providing suitable vehicles for saving such as the stakeholder pension and the state second pension.
Mr. Viggers: Does the Minister agree that extravagant claims have been made for the stakeholder pension system, which is a bad deal for many investors, especially in the light of the guaranteed minimum pension? This is an important and detailed subject, so will the Secretary of State, unlike most of his Cabinet colleagues, be present during the whole of tomorrow's important debate?
Mr. McCartney: I will be present for the whole debate, and I am looking forward to it. We will punch a hole in all the misinformation that the hon. Gentleman's party is issuing about stakeholder pensions. The Association of British Insurers estimates that as many as two thirds of employers required to do so will have designated a scheme by 8 October. From a standing start, we have established in the marketplace a pensions vehicle for many people who
Mr. Andrew Miller (Ellesmere Port and Neston): I am delighted that my right hon. Friend has talked about the review of minimum funding requirements. He is fully aware of some of the details behind the disgraceful situation that affected some of my constituents employed by H. H. Robertson. I do not expect him to answer in detail, because some matters are still sub judice and covered by industrial tribunal proceedings, but when they are completed, will he undertake to examine the conduct of the case carefully and determine what lessons can be learned to protect other people in similar situations?
Mr. McCartney: I am aware of that case. Indeed, in opposition, and as a constituency Member in the north-west, I was part of the combination of Members of Parliament who sought the truth of what happened in that scandalous situation. My hon. Friend can rest assured that with all such scandals the Government review issues relating to pension protection. The whole point of Myners was to ensure that we had a transparent pensions system and a regulatory regime that fits the needs of not only the industry but its customers. We will have to await the outcome of the case before I can say anything specific, but I will be happy to meet him about it when it has been determined.
Mr. Peter Lilley (Hitchin and Harpenden): What proportion of the £5 billion a year taken out of pension funds by the worst of all the Government's stealth taxes is handed back to pensioners in the benefits that the Minister has been claiming are so generous?
Mr. McCartney: My right hon. Friend the Chancellor reduced corporation tax and introduced many other measures, including, over some years, reducing taxation on pensioners' income. We have a comprehensive strategy on the stability of the economy, of pension funds and of the tax regime, to ensure that employers and employees alike will benefit.
Mr. David Willetts (Havant): I just want to check what the Minister has said. He claimed as one of the Government's achievements the fact that two thirds of companies obliged to designate a stakeholder pension have done so, but will he confirm that the law obliges them to have designated a stakeholder pension by 5 October? He has claimed as a great Government achievement the fact that one third of employers have still not even complied with something obligatory. If a third have not complied, is not that evidence of how much the stakeholder pension scheme is failing?
If, from a standing start, we have got on board two thirds of employers who before the introduction of the stakeholder pension had no form of saving for their employees, that is a very good start indeed. Under the Tories, we had a 100 per cent. nil return, because they never provided an opportunity for a large proportion of people who will now benefit from stakeholder pensions to have any kind of pension. Instead, all we had was a mis-selling scandal.