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Andrew Selous (South-West Bedfordshire): I welcome the Government's desire to tackle pensioner poverty, but, like many of my hon. Friends and, indeed, some Labour Members, I must put on record the fact that I do not believe that the Bill is the best way to do so. I reiterate the comments of my hon. Friend the Member for Havant (Mr. Willetts), who said that if the Bill is introduced, Conservative Members will ensure that there are no losers through any alternative proposals that we make.
The Bill introduces a significant increase in means-testing for our pensioner population, and we are entitled to fuller answers from the Government about why that is so. In 1993, the Chancellor of the Exchequer said:
Help the Aged estimates that 2.5 million people are entitled to the minimum income guarantee, but only about 1.7 million of those are receiving it. That is a take-up rate of only 68 per cent., which equates to about 800,000 pensioners. Due to the complexity of our benefits system, last year around 500,000 people did not receive the income support to which they were entitled; that has increased to 580,000. Similarly, 150,000 did not receive housing benefitthat has now increased to 210,000and 1.07 million did not receive council tax benefit; that has increased to more than 1.2 million. Help the Aged drew attention to the Department for Work and Pensions' own research showing that some of the most newly qualified pensioners are some of the most reluctant to take up the minimum income guarantee.
We have heard about the problem of what is to happen to the poor 67-year-old pensioner. That is a valid question, and Labour Members are entitled to ask it. However, surely the bigger picture is that if large numbers of pensionersperhaps hundreds of thousandsdo not take up benefits as a result of the proposals, more pensioners overall will be worse off than would be the case if the needs of that 67-year-old pensioner were precisely met by this massive extension of means-testing.
The current figures are all the more disappointing, given that the Government have recently spent £15 million on an advertising campaign. I do not begrudge spending that money, but it is depressing to note that the results appear to be going in the wrong direction. In respect of certain benefits, take-up is falling rather than rising.
The Prudential Assurance Company estimates that some 3 million pensioners fail to claim about £1.2 billion worth of benefits each yeara situation that the Bill will make even worse. In May 2000, the then Social Security CommitteeI am a member of its successor body, the Work and Pensions Committeesaid that urgent steps should be taken to address pensioner poverty through non-means-tested methods, and called for the Government to take that route.
The Bill will vastly extend means-testing up the income scale, which will blunt the incentive to save for certain sections of our community. It is not true that people will be better off saving in all cases. About one third of pensioners will indeed be better off, but for a further third, the anticipated results are ambiguous; the final third will have a slightly reduced incentive to save. The National Federation of Post Office and British Telecom Pensionersthe headquarters of which is in my own, South-West Bedfordshire constituencyhas pointed out that those who make less than a full contribution to the basic state pension will not benefit in any way from the savings credit. Women aged between 60 and 65 will not benefit, and because the self-employed are not eligible for the state second pension, they, too, will not benefit.
There is a savings crisis in this country. There is a £27 billion gap between what we as a country should be saving, and what we are saving at the moment. Indeed, it is a tragedy that, in many cases, today's generation of workers will retire on less than do current pensioners, who were lucky enough to enjoy a defined benefit contribution scheme. To fill that gap, today's generation will have to save significant extra sums.
We have heard today about younger people's attitudes to pensions. It is my personal belief that young people want a real sense of ownership of their pension assets. They want to feel that they own their pension in the same way that they own a house or a carif they are lucky enough to do soand that includes inheritability.
On pensions advisers, even Help the Aged has said that advice for the current generation of workers on saving for the future will be about as reliable as that given by horse racing tipsters, such is the complexity of the landscape at the moment. We salute the Government's intention to do something about pensioner poverty, but our proposals are simpler and clearer, would lead to far greater take-up and would be much more easily understood.
I believe that this legislation represents a promise kept to a very important group of peoplethose pensioners who have missed out because of modest pensions or savings. All of us should be aware of how aggrieved they feeland rightly sonot because of selfishness or greed, but as a simple matter of fairness. However, it was right, as my hon. Friend the Member for Aberdeen, South (Miss Begg) said, to tackle the needs of the poorest pensioners firstthe 2 million who were living on or below the poverty line in 1998. That was an absolute disgrace, with a major gap between the richest and the poorest pensioners.
It was essential first to ensure that pensioners did not have to choose between eating and heating. My parents, who worked in low-paid jobs all their lives, often had to make that choice when bringing up five children. My mother, who is now a widow, has benefited greatly under this Labour Government, and that is as I would have expected. I would have been extremely angry if she had not been able to have that security in her retirement in the time of a Labour Government. It is also right to tackle the problem of the large group of pensioners who are by no means well off, but who deserve a reward for their efforts in saving on what was often a very tight budget.
I intend to dwell on the issue of fairness, because I felt a sense of déjà vu when my hon. Friend the Member for Aberdeen, South was speaking. She talked about the doorstep test. I remember that test during the Ayr Scottish parliamentary by-election, when the pensioners of my constituency gave the Government a clear message about their feelings on the 75p increase. A simmering discontent boiled up into anger about the fact that that group of pensioners above the level of the minimum income guarantee felt that they had missed out on the benefits that they deserved under successive Governments.
Many hon. Members have mentioned take-up. I see advantages in the pension service, but I wonder how the link will be made between the national service and the local services. For example, the IPPR has referred to an "advice vacuum". What arrangements will be made to ensure that, for example, welfare rights advice will still be available at a local level?
I share the frustration of other hon. Members at the position of the large group of women who will miss out on the savings credit. A woman over 65 and one under may have exactly the same income but will end up with different benefits, even if they have the same savings. The same problem applies to those who have not acquired rights to a full basic pension but who have savings. There are 1.4 million people in that category, 1.1 million of whom are women.
The Government have introduced the state second pension for people with broken work records, and women will now have an entitlement to a pension in their own right. The important role of carers has also been recognised, as has the need for a work-life balance. That is a major breakthrough for women in this society. However, how does the Minister reconcile that recognition of a broken work record in relation to the state second pension, which is completely valid and most welcome, with the fact that so many women of this generation of pensioners who are in exactly that position will lose out under the savings credit?
I turn to the issue of public confidence in the market to provide an income in old age, because that confidence is rapidly being eroded. I have raised in Westminster Hall the plight of former United Engineering Forgings workers in my constituency who will not receive the returns from their final salary scheme because the company has gone into administration with an underfunded scheme. Those workers will now get nothing like the pension that they were expecting. They took the advice, as many others have done, of successive Governments and invested in provision for their old age. However, that has been ruined by the vagaries of the stock market. It has been said tonight that people do not feel that they can rely on the state for their benefits in the future, but many people are very worried about the ability of the private sector to deliver.
In the overall context of pension provision, the state pension credit is a big step forward. However, I worry about the overall context, especially in the private sector, and I hope that the Minister will be able to comment on that issue when she winds up.