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Andrew Selous (South-West Bedfordshire): I am fascinated by the hon. Gentleman's highly enjoyable speech. Does he agree that it was regrettable that when the issue of age discrimination was raised in the House, in the form of a Labour Back Bencher's proposal for an age discrimination commission, the Government passed up the opportunity to do something positive, saying that Europe would provide the answer in a couple of years' time?
Mr. Webb: It was regrettable that that opportunity was not grasped. The Government are doing everything they can to slow down the introduction of legislation. People are suffering from age discrimination now, yet the Government are dragging their heels and making matters worse.
A third group of pensioners who have not been mentioned so far—a group who are losing out because of the Government's mean spiritedness—are those who are entitled not to widows' pensions, but to widowers' pensions. The Government have been found out: only this week, a court case resulted in a ruling that a woman who was bereaved would get a widow's pension, a widow's benefits and tax allowances, whereas a man in the same position would not. The Government have legislated for the future, but what about the people who have been discriminated against for years? The Government settled the case out of court to avoid setting a precedent, but I have constituents who are widowers and who ought to be entitled to benefits and pensions.
I will give the Minister for Pensions the benefit of the doubt and hope that he will respond to the debate, and specifically to that point. I live in hope—but he is smiling knowingly at me, so perhaps I should not. Will the Government evade their responsibilities or will they recognise that there is an injustice that must be remedied? Will they do something about widowers, especially those with children, who have missed out?
Previously, I alluded to that fine magazine, Pensions Management. It reports the result of a survey on political parties' records on pensions policy, and it is worth summing up for the House what those who know about pensions are saying. Those who responded to the survey are those who run pensions. They have—is it £600 billion or £700 billion? Who knows? It is certainly plenty of money, and the figures have lots of noughts. Such people are the linchpin of the Government's pensions strategy, because if 60 per cent. of people's income in old age is to come from the private sector, the vast bulk will be derived from the occupational pensions sector. The people who answered the survey know what they are talking about it—and if they do not, the Government are in trouble.
Those people were asked which party has the most appealing and effective pensions policies, not pensions spokesman—and at this point I have to disappoint and part company slightly with the Conservatives. In February 2002, the survey indicated that 7 per cent. of respondents thought that the Conservative party had the most appealing and effective pensions policies—which is not bad for a party that has none at all—and 9 per cent. chose the Labour party. With all due modesty, I should say that the figure for the Liberal Democrat party was not large; however, at 14 per cent., it was double that for the Conservatives. Let us remember that the people who were asked that question know what they are talking about—and if they do not, we are all in trouble. It is a salutary lesson for us all that "None of the above" was the runaway winner.
Perhaps we should reflect on the fact that if we all continue to change our policies—the Government seem to change theirs with the wind—if none of us settle, and if we do not achieve an all-party consensus, no one will have the security they need to plan for their old age. In the past, we tried to talk to the Government about pensions, but they have their rigid strategy of means-testing, and that is the approach that they will take. That is regrettable, but it is not too late for them to repent of that strategy. If we work together, perhaps in future those who run pensions and those who receive them will think better of all of us.
8.16 pm
Mr. Frank Field (Birkenhead): I, like many Labour Members, am grateful to the Opposition for the spirit in which they framed tonight's motion. On many aspects of that motion, a fair number of us agree with the official Opposition, but the lack of generosity in its drafting shows how far the Conservative party has to go before the electorate will once again start to listen to it.
The big divide between the Government and the Opposition is that, despite criticism of the Government's strategy, most of the electorate believe that the
Government's heart is in the right place. The Government's effort to help the poorest pensioners the most is one with which most voters agree. The Opposition still stand charged at the bar of public opinion with being a party that, when in government, was successful in ensuring that richer workers gained more adequate pension provision on retirement, whereas those who had fewer assets were less fairly dealt with. Had the motion taken notice of the marked change in the temper of the debate that the Government have brought about, some Labour Members might have gone into the Lobby to support it this evening.There is real concern among Labour Members—I am not the only one who feels it—about the direction of Government policy in significantly increasing the number of people on some form of means-tested assistance. I do not believe that that is a sustainable policy in the long run. That will be the single focus of my contribution to the debate. The difficulties that the Government are getting into because of their adoption of means-testing become all too apparent when we read their consultation document on the pension credit.
When the Government introduced the minimum income guarantee, many hon. Members on both sides of the House pointed out that a considerable number of our constituents who were doing everything that previous Governments and the current Government had asked them to do—that is, save for their retirement—would probably make themselves worse off. Initially, the Government denied that. Then, thank goodness, there was a Pauline conversion—[Interruption.] The Secretary of State is mumbling, but I can give him evidence; perhaps this can be followed up by letter.
After a Pauline conversion, the Government decided to introduce a further means test—on the pension credit—to overcome the disadvantages that some pensioners, perhaps a significant number, faced and would face in future because of the minimum income guarantee. The pension credit became urgent when the Government linked their strategy to the sale of stakeholder pensions. It is clear that at least half the members of the target group could make themselves worse off by buying a stakeholder pension instead of not doing so, spending all their money and relying on the minimum income guarantee on retirement.
To overcome that difficulty and reward people for saving, the Government intend to introduce a pension credit scheme. I merely wish to point to where that policy is going and to draw attention to how unsustainable it is. The sooner we admit that, the sooner we shall acquit ourselves of any charge in future that we were a party to pension mis-selling.
I do not believe that the State Pension Credit Bill is sustainable. We shall go into the next general election with the working families tax credit and the beginnings of the pension credit, forgoing a reduction of 5p in the standard rate of tax to foot the bill for the tax credits up to the next election. There has been no debate about whether that is the best strategy or the right strategy, and such a debate is overdue. There are many who might feel that the objectives of the minimum income guarantee could be better met by a mixture of pension increases and tax cuts than by the model that the Government have adopted.
I wish to take us forward to 2050. I direct attention, as the Government rightly argue in their consultation document, taking into account current prices, to what the
bill will be for taxpayers if the link with earnings is maintained. If it is not to be maintained, we should tell people quickly that stakeholder pensions will become more attractive because the pension credit will become less attractive.If we take the Government's figures and move to 2050, the end of the period covered by their consultation document, the cost of paying the pension credit, if it is linked to earnings in the meantime, will be the equivalent of 11p on the standard rate of tax, at today's prices. Does anyone think that we shall fight elections to maintain that sort of tax increase? I do not. For that reason, I do not believe that the link will be maintained. If it is not to be maintained, we should say that quickly. People will be deciding whether to save or not, and their decisions will be based on whether they think that the Government's proposals are viable in the longer run.
An alternative to the spending of the sum that will be committed to pension credits over the time span that we are contemplating would be to increase by more than half the amount that we spend on the national health service. Are we seriously thinking about going into elections with a commitment that will so restrict our ability to spend money? Do we wish to tie ourselves into pension credits when those sums could be spent in alternative ways?
We might wish to see that money spent on the standard retirement pension. At the end of the period outlined by the Government, we would have enough money to raise every pensioner above the minimum income guarantee in that year. Would not that be a better strategy than one that is reinforcing the means-testing strategy? In the longer run, that strategy will defeat the Government. People will adapt their behaviour to make the best of whatever framework the Government lay down. They are sensible and it is proper for them to take that approach. They should not be condemned for taking it.
Whether it is desirable in the longer run that people decide that they should save less because they cannot make themselves better off by saving, and that they should in future depend more on the minimum income guarantee and pension credit, is a question that will increase in urgency as the years pass by.
I thank the Opposition this evening for being so mean-spirited that they could not recognise both the efforts that the Government have made to look after the poorest pensioners and their commitment to do so, even if some of my right hon. and hon. Friends and I are increasingly wary about the strategy that they have adopted. This is not the place to exchange views about who is right and who is wrong. Events will show us who is right. Given the sums that will be involved in maintaining the minimum income guarantee in line with earnings—equally important is the pension credit being in line with earnings—these will be unsustainable objectives in the long run.
As we come to the end of this Parliament, it will not be the Opposition who are asked about their position. We shall be asked by our electorate whether in the next Parliament we shall increase these two means-tested benefits in line with earnings. If we give in because we are worried about losing votes, we shall undermine still further the chance that many decent working people have who are urged to look after themselves and save for the future. We shall make the pensions problem that has been illustrated in the debate even worse than it is now.
The timing will be of the Government's own choosing, but the sooner we say that while we have introduced these two important initiatives, the minimum income guarantee and the pension credit, and given them a boost by the link with earnings, they will not be sustainable in the longer run, the better. People will then know where they are. They will have a certainty that they do not have now. In the long term, we will have more rather than fewer people saving for their retirement.
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