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Mr. Byers: The proposals by Network Rail have been produced because it thinks that this is the right time for it to make this approach. It has nothing to do with any action or threat of action by Lovells on behalf of the shareholders of Railtrack.
Miss Julie Kirkbride (Bromsgrove): The Secretary of State has given an unclear and confused picture of who takes the decisions from hereon in. Can he clarify what he said? Who is going to take the decision to remove Railtrack from administration and go forward with the new company—is it the Secretary of State, the administrator or the shareholders, because he told the House that they, too, will take that decision?
Mr. Byers: There are two possible routes to get Railtrack plc out of administration. One is to use the Railways Act 1993, which allows the administrator to propose a transfer scheme to me as Secretary of State. Network Rail is pursuing a different approach, however. It involves a bid for Railtrack plc in which the shareholders decide the outcome. There are two separate routes, one under the 1993 Act and one that has been adopted by Network Rail, which is to make a straightforward bid for the shares of Railtrack plc.
Mr. Mark Francois (Rayleigh): Is not the simple fact of the whole matter that the Government and the Secretary of State in particular forced Railtrack into administration prior to Christmas and that the same Government are now proposing to spend £300 million of taxpayers' money to bring it out of administration? Some trains in my
constituency were delayed by up to four hours coming into Liverpool Street this morning. My constituents are utterly sick and tired of the shambles over which the Secretary of State presides. They dearly hope that he will soon depart and that the problems are put right.
Mr. Byers: The problems that Conservative Members are referring to have come about because of Railtrack's failure to invest in its assets—that is the truth of the situation. We need to get Railtrack out of administration and get the benefits that will come from that. The Network Rail proposals will do precisely that. We will get benefits and the hon. Gentleman's constituents will get benefits from having a railway network that is far more efficient and effective than it is at the moment.
Mr. David Cameron (Witney): Will the Minister confirm that if an offer is made that does not involve spending £300 million of taxpayers' money, it will be accepted? If not, will he confirm that he will have to issue an instruction to his permanent secretary to accept a deal that does not represent good value for money for the taxpayer?
Mr. Byers: If that were done under the Railways Act, an approach would be made to the administrator, and it would be for him to consider it. Today, Network Rail has adopted a different approach, which goes to the shareholders, and I hope that that has clarified matters for hon. Members.
Sir Robert Smith (West Aberdeenshire and Kincardine): Following his earlier answers about who will make the final decision, will the Secretary of State provide clarification? If Network Rail's bid is successful, will not it still need a licence to operate? Is not the licence decision for him to make, and therefore does not he make the final decision?
Mr. Byers: I will need to go to the court to apply for the administrator to be discharged from his responsibilities. I will then have the responsibility of allocating the network licence.
Points of Order
Angus Robertson (Moray): On a point of order, Madam Deputy Speaker. I am afraid that I must draw your attention to one more case of Parliament being bypassed on a very serious matter. A press conference was held at 3 o'clock this afternoon at the Ministry of Defence at which massive job losses at the Clyde naval base and others in England were announced as part of the warship maintenance review. Journalists were also informed that thousands of other naval workers will have their jobs privatised.
Members of the House received only limited official notice of that devastating news by letter from the MOD half an hour after the media were briefed on the subject. This is not the first time that I and other colleagues have had to bring such matters to your attention, Madam Deputy Speaker. Under the powers available to you, can you do anything to bring home to the Government their responsibilities to Parliament and to make a full statement to the House?
Mr. Mike Hancock (Portsmouth, South): Further to that point of order, Madam Deputy Speaker. May I point out that as a constituency MP, I still have not received any written confirmation from the Ministry of Defence of its action, but I have a copy of the planted question that was asked at 3.30 this afternoon? Although I can accept that the reason for us not having a statement is to shield the Minister from hostile Labour MPs, I find it deplorable that the House and I as a constituency MP have not been given the chance to question the Secretary of State about the 350 job losses in my constituency and the way in which the matter will be handled.
I would hope that, following the Speaker's pronouncement that he was against this sort of thing, you, Madam Deputy Speaker, would seek advice as to whether the Secretary of State could be asked to come to the House tonight to explain his actions and to answer the questions put to him by Members on behalf of their constituents.
Madam Deputy Speaker (Sylvia Heal): Mr. Speaker has made it clear on a number of occasions that he expects important announcements to be made in the House first. He has, however, also said that it is for Ministers to determine whether such announcements are made by oral statement or written answer. In view of the information that I have just received, I certainly think that this is a matter that the Speaker would want to look into.
Orders of the Day
State Pension Credit Bill [Lords]
[Relevant documents: The Minutes of Evidence taken before the Work and Pensions Committee on Wednesday 27th February relating to the Pension Credit, HC 638-i.]
Order for Second Reading read.
Madam Deputy Speaker (Sylvia Heal): I should inform the House that Mr. Speaker has selected the amendment in the name of the Leader of the Opposition.
5.28 pm
The Secretary of State for Work and Pensions (Mr. Alistair Darling): I beg to move, That the Bill be now read a Second time.
I want to set out the purpose of the Bill and how it fits with the wider pensions reforms that we have made. The pension credit marks the end of a fundamental unfairness in the social security system. Right from the early days of the modern welfare state, if people did what successive Governments asked them to do and made provision for themselves, the state could penalise them for their efforts. That was wrong.
Every one of us has met pensioners living on modest incomes who often struggled to put aside money for their retirement and who feel that they were let down. They have found that they are little or no better off than those who had saved nothing. To oppose the Bill is to perpetuate that unfairness and to deny extra help to around half of all pensioners. When we vote tonight, we should remember that through the Bill, 5 million pensioners stand to gain an average of £400 a year, with some gaining up to £1,000 a year.
Mr. Steve Webb (Northavon): Will the Secretary of State confirm that the minimum income guarantee was introduced and the rates announced without the benefit of the State Pension Credit Bill, that the rates of the minimum income guarantee are therefore independent of the Bill, and that the only thing that the Bill introduces is a savings credit that will benefit nothing like the number of people he has just mentioned?
Mr. Darling: The minimum income guarantee and, as I shall show later, the guarantee element of the pension credit are essential parts of the policy. The hon. Gentleman is right that we introduced the minimum income guarantee first; we did so because in 1997 we had to tackle the fact that the Conservatives had left a whole generation of vulnerable people and vulnerable pensioners living in poverty. However, the pension credit has two elements: the guarantee element and the reward for saving.
The hon. Gentleman appears to have been seduced by the hon. Member for Havant (Mr. Willetts), and they have climbed into the same political bed—at least in terms of pensions. Just so that the hon. Member for Northavon (Mr. Webb) is clear, let me repeat: if he gets his way when he votes against the Bill tonight, he will deny half the pensioners in this country an average of about £400 a year. That is the position that the professor has got the Liberal Democrats into, and good luck to him—and to the rest of us if that is what they want.
During tonight's debate, we will hear arguments that rather than individually assess people's income and ensure that we get help to those individuals who need the help most, it might be better to focus on groups. On that point, the Opposition should pay attention to what the Bill would achieve. Of those who will gain from the Bill, about two-thirds are women, half are over 75, and more than a quarter are over 80. Those who want to help older pensioners in general, as well as those who are less well off and those who have modest savings in particular, should realise that the Bill achieves both those objectives. The Bill will ensure that for the first time pensioners who have saved for their retirement are rewarded for their thrift and effort, which does not happen under the system that we inherited.
We need to put the pension credit in the context of our wider policies on pensions. I will explain how it builds on the partnership between the state and the funded sector, and how it builds on the reforms that we have already made. I will then show why the Bill is necessary and why the reasoned amendment tabled by the Conservatives—and, it appears, their new friends—is wrong and unfair.
With the pension credit, the poorest third of pensioners will gain on average an extra £8.20 a week. By contrast, the same money spent on increasing the basic state pension across the board, as proposed in the amendment, would result in a gain of only £3.20 a week—£5 a week less. That is the difference between our proposals, which will help those who need that help most, and the misconceived approach adopted by the new alliance of the Conservatives and the Liberal Democrats. With the pension credit, the least well-off pensioners will gain more than two and a half times more than if the money were spread thinly by raising pensions across the piece.
Critical to the long-term success of pensions in this country is the partnership between the public and private sectors—partnership between what the state will do for a person and what a person should do for himself. I do not believe, as some have suggested and may well repeat this evening, that relying wholly or mainly on the state would be right. Apart from anything else, the demographics are against us. Such a strategy would impose on our children and grandchildren a burden that they would not be able to pay. Furthermore, I believe that people must have the right to choose funded provision in addition to their state pension, if that is right for them. The fact that more people are retiring with good second pensions explains why over the past few years pensioner incomes have risen faster than incomes of those in work.
On the other hand, it would be wrong to adopt the approach favoured by the Conservatives of moving to a private system in which one's entire pension depends on the uncertainty of the stock market.
The problem with that plan is that, by the Conservatives' own admission, it creates an immediate funding gap of £5 billion, with a cumulative debt of £600 billion in 35 years' time. It places on one generation the burden of providing entirely for themselves and of supporting current pensioners.
I expect that we will hear a great deal from the hon. Member for Havant about increasing the basic state pension. That argument will be advanced—and by the Conservatives of all people. We saw through that ruse when the hon. Gentleman made a similar proposal two years ago. He believed that the winter fuel payment was
an unnecessary complication and wanted to get rid of it, but he now wants to pay it to people in hot countries as well. Whatever he says, we should bear it in mind that, in effect, he still wants to privatise the basic state pension, as we saw from last week's newspapers. Strangely, the reasoned amendment is silent on that aspect of Government policy—perhaps to keep his new friends on board tonight.The pension credit builds on the partnership between what the state does and what the funded sector does; that partnership is absolutely right. The system that we inherited in 1997 had too many gaps in that partnership, and too many people were missing out. The necessary incentives in the Bill were not in existence. The first problem, as I have just explained to the Liberal Democrat spokesman, was that more than 2 million pensioners in the fourth largest economy in the world relied on inadequate levels of income support. The minimum income guarantee has increased the incomes of 2 million of the poorest pensioners by at least £15 a week over and above inflation. Clause 2 sets out the way in which the pension credit will build on that approach and lift pensioners out of poverty.
The second problem that we had to tackle was that too many people were heading for poverty in retirement, either because they could not afford to save or because they did not have access to a good second pension. We therefore introduced the necessary long-term reforms to make saving possible, helping more people to build up a good second pension on top of their basic state pension. The Bill ensures that such additional saving pays. People on moderate and higher incomes tend to do better in the longer term in funded pensions. For those without access to company schemes—about half the work force—we wanted to increase choice in the funded sector, which is why we set up stakeholder pensions, nearly 700,000 of which have been sold.
Clause 3 makes it clear that the pension credit will complement stakeholder pensions by rewarding people who save even modest amounts, which has been warmly welcomed by the pensions industry. People on lower incomes are generally better off in state provision. From 6 April this year, the new state second pension will enable 18 million people on low incomes to build up far better pensions than under the state earnings-related pension scheme. That figure includes 2 million carers and 2 million disabled people who will benefit for the first time.
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