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Mr. James Clappison (Hertsmere): The right hon. Gentleman should be ashamed.
Mr. Darling: The hon. Gentleman talks about shame, but he should reflect on what we had to clear up. There was the mis-selling of pensions, which cost the industry millions of pounds. Hundreds of thousands of people lost out as a result of what the Conservative Government did.
They halved the value of the state earnings related pension scheme and presided over a growing gap between the poorest pensioners and those who were better off. They left 2 million pensioners in poverty and did nothing to help the low paid or those in part-time work. They did nothing for disabled people and nothing for women to enable them to save for their pension. They failed to plan for the future. Moreover, critical to the subject we are debating tonight, they left a system riddled with disincentives so that those who did save for their retirement saw no advantage from their thrift and effort. That is what we inherited and what we had to clear up.
Mr. Gregory Barker (Bexhill and Battle): Is it not the case that the right hon. Gentleman inherited a substantially larger savings ratio than the one that prevails now, that savings under this Government have utterly collapsed, and that the Government have no credible policy to return to anything like the savings ratio that they inherited?
Mr. Darling: The savings ratio was at its lowest level ever in 1991, when the hon. Gentleman's party was in government.
I should like now to set out for the House the changes that we have made to pension policy for those on low incomes and also for those on moderate and high incomes. Our reforms are based on the clear principle that those who can save have a clear responsibility to do so. Yes, we want to get more people into funded pensions. In return, we need to ensure that the Government support those who cannot afford to save. Here we part company with the Conservative party, because we do not think that low-paid people should be put into funded pensions, because they are not good value for them. We also want to ensure that when people save for their retirement, they are rewarded for their thrift, and that the pension system is properly regulated and supervised so that we avoid the mis-selling problems that arose under the previous Government.
For today's pensioners, our first priority is to tackle the pensioner poverty that we inherited. More than 2 million pensioners live in poverty. In that respect, I want to deal with the first point made by the hon. Member for Havant, which he has also made on other occasions. When he speaks about means-testing, he makes clear over and over again his distaste for it, but he does not say what he would introduce in its place. The fact is that the only way of tackling poverty and getting more money to the people who need it most is to identify pensioners on low incomes. It is impossible to do that without an assessment of income, unless one takes the view that a universal increase should be given to everyone to take care of those on the lowest incomes. I do not believe that that is Conservative party policy today or that it will be at any time in future.
Mr. George Osborne (Tatton): The Secretary of State speaks about targeting help. When Lord Rooker, a former social security Minister, was a Member of this House, he clearly identified the target group for stakeholder pensions, to which my hon. Friend the Member for Havant (Mr. Willetts) referred. How many of the 416,000 stakeholder pensions have gone to people in the target group? Will he answer the question?
Mr. Darling: I shall deal further with stakeholder pensions in a moment. I thought that the hon. Gentleman
might have been able to tell us the answer as to what exactly the Conservatives' policy is towards those poorer pensioners. Of course, Opposition Members do not like talking about poor pensioners, because they did nothing to help them tackle poverty in all the time they were in office. Indeed, when they were in government, they expected a single pensioner to live on £68 a week. Today, the same pensioners, under our policy, get £92 a week, which is £18 more than the Conservatives gave them.
Mr. Paul Goodman (Wycombe): Will the right hon. Gentleman give way?
Mr. Darling: No, not just now.
When the Conservative party says that it is against means-testing, it really means that it is against a policy that resulted in Britain's poorest pensioners getting, in some cases, £18 a week more than they would have received under a Conservative Government. That is what the Tories oppose.
Mr. Goodman: Will the right hon. Gentleman give way?
Mr. Darling: No, I shall not do so just now. If the hon. Gentleman is patient, I might just give way to him at some stage later. However, if he stands up again in the immediate future, I shall not do so.
If the Conservative party is going to maintain its line that it is against means-testing, which presumably means that it would get rid of it, the inevitable conclusion must be that it would end up taking away money from some of the poorest pensioners in this country—pensioners who, for one reason or another, did not or could not save enough for their retirement. The difference between us and the Tories is clear. When they were in power, a pensioner aged between 60 and 74 was expected to live on £68.80 a week. Today, that same pensioner gets £18 more. I am more than happy to defend that policy on any occasion, because I cannot see how pensioner poverty can be tackled other than by ensuring that money goes to those pensioners who need it most.
In the past few months—and, indeed, over the past couple of years—we have heard time and again criticisms from the Conservatives about our policy, but they have never once referred to their alternative. Given all the criticism that they make, we can only assume that they would remove the minimum income guarantee, which would mean that a large number of pensioners would be substantially worse off if the Conservatives were ever returned to office. This is not the first occasion when the Government have talked about pensioners on low incomes, but there has been absolute silence on the Conservative Benches, because they have nothing to say.
I now turn to the policies that we have put in place and to the long-term reforms that are designed to ensure that we encourage additional saving by people who can afford it—people on moderate and higher earnings, who, as I have said before, should be encouraged to save for their retirement. We have a twin-track approach. We believe that those on lower incomes are better off in state provision. [Interruption.] It is said that that is all right, then—a comment that was made rather smugly, if I may say so.
As I said, there is a big difference between the two parties. I believe that it is wrong for people on low incomes to go into funded pensions and I do not believe that any political party should encourage them to do so. Such pensions are not good value for people on low incomes. That is why we reformed the state earnings- related pension scheme and replaced it with the state second pension. After the changes that we have made, some 18 million people on low earnings, including those who are disabled or have taken career breaks, can get an increased pension. Again, the Conservatives did nothing about that during the 18 years they were in government.
Our policy for people on low earnings is first to deal with pensioner poverty today through the minimum income guarantee. For people of working age who are likely to be on low earnings or who are on career breaks, the state second pension will mean that far more help is given than they would ever before have received. We do not believe that people in that position should be encouraged to opt for funded pensions, because they would lose much of their contribution through administrative costs. I cannot believe that it is a sensible policy to force people on low earnings into funded pensions, although it is a policy that the Conservatives, at least, adopted at the election.
As I said, we believe that those on moderate and higher earnings should be in funded pensions, so we have sought to expand the choices that are available in the funded sector. That is why we launched the stakeholder pension: to give a choice to people who could not access occupational pensions or who were on personal private pensions, but for whom such pensions were inappropriate. That is why stakeholder pensions were introduced.
Reference has been made to the target, but it is clearly set out in the pensions Green Paper that was published in December 1998. It contains numerous references to the targets, and the target group is people on moderate and higher earnings. That is printed in the document in black and white for anybody who cares to see it. The target has not changed one jot since the pensions were launched.
Mr. Darling: I shall certainly give way to the Conservatives who are now desperate to intervene, but I want first to put something to them. I see that the right hon. Member for Hitchin and Harpenden (Mr. Lilley) is in his place. I remain confused about the Conservative attitude to stakeholder pensions. The hon. Member for Havant, who now speaks for the Opposition on these matters, was vague, but in February this year, the right hon. Member for Hitchin and Harpenden gave an informative interview in the Financial Adviser, a splendid publication with which I am sure all hon. Members who are present are familiar. He said:
- "I would be more than surprised if a future Tory government even contemplated abolishing stakeholder pensions".
- "Stakeholder pensions should give savers more bang for their buck. Savers should see less of their contributions absorbed by costs and more being invested in assets which, other things being equal, will mean higher pensions when they retire."
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