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8.49 pm
Hywel Williams (Caernarfon): The right hon. Member for Birkenhead (Mr. Field) broke the duopoly that has existed so far in support of this reasoned amendment. I add the support of the Scottish National party and Plaid Cymru, and I note from the names on the reasoned amendment that there are supporters from Northern Ireland as well. There is broad support for this reasoned amendment.
Plaid Cymru and SNP Members will support the reasoned amendment because the Government's proposals will involve extensive means-testing of the incomes of older people. That means-testing will become a long-term feature of our pensions system, which will lead to complexity in an already complex pension system. If we
want more targeting on the basis of income, we must have a more complex testing system. After all, that was the argument in relation to the 1986 Act. The Secretary of State has referred to the noble Lord Fowler, and I seem to remember that when Lord Fowler introduced the 1986 Act one of the arguments that he deployed was that the means-testing system would be simplified by introducing premiums. I do not want to rehearse those arguments again, but that is the point—to be more sophisticated, we must be more complicated.Means-testing will continue to have severe disincentive effects on take-up. Pensioners will therefore miss out on their entitlement, as many hon. Members have argued. The Government claim that the means test will take place every five years or up to every five years, and that, in some way, that negates the disincentive effect. Pensioners know better, however. They know that the hurdle of the test is the demeaning effect of the means test at the start of the five years. The Secretary of State might disagree with that, but pensioners know that that is the case.
David Cairns: The hon. Gentleman said eloquently that he does not like means-testing. If he rules out means-testing, what is the impact on the mythical 67-year-old—who has reappeared time after time in this debate—who is poor, who will gain under this system, and who, as the hon. Member for Northavon (Mr. Webb) has said clearly, will not gain under the reasoned amendment? What is his answer to the 67-year-old in Greenock who will benefit under our system but lose out under his?
Hywel Williams: No one has said that means-testing will disappear. After all, the current system combines a pension that is a universal right and a certain amount of means-testing. There is no way out of that.
One of the effects that is claimed for these proposals is that they will help young people to realise that they should be saving. The hon. Member for Aberdeen, South (Miss Begg)—who is sadly no longer in her place—seemed to be confident that a large number of younger people were considering saving or were already saving. I have no confidence about that. Younger people will see that it is not clear what the value of saving will be to them decades down the line. All that they will see is that the system is changing, that it is complicated, and that means-testing is increasing.
There are better ways to target help where it is most needed, to which the hon. Member for Northavon and other hon. Members have referred—targeting money on older pensioners. The hon. Member for Hendon (Mr. Dismore) mentioned that he had no qualms about 100 per cent. means-testing. The Government contend that this extension of means-testing is the best way to target help on those most in need, and they appeal for support to their friends in the pension industry. I refer, however, to my constituent, Mr. W. H. Evans, of Clwt y Bont, who is a veteran of the D-day landings and a tireless campaigner for the rights of older people and for a recognition that older people need to have a proper income. He called to see me at my surgery last week, and was outraged yet again by the miserly 25p increase in his pension as an older person. As he says, it is not enough to buy the first-class stamp needed to send a complaint to the Government. He was outraged, and he knows what
many hon. Members recognise. It is possible to target help effectively at some of the poorest pensioners by targeting money at older pensioners, many of whom are poor.There will be more poorer pensioners in the future. In 2000, there were 584,200 people over retirement age in Wales—20 per cent. of the population. By 2016, the percentage is expected to rise to 23.5 per cent. and the most significant increase will be among the 80-plus age group who are often the poorest pensioners.
It is particularly apt that I should speak on this issue for Plaid Cymru and the Scottish National party given that I represent the constituency once held by David Lloyd George, the politician who introduced the retirement pension which has been hugely popular, successful and long lived. It is sad but hardly surprising that the recent Age Concern MORI poll shows that the majority of people have no confidence in the Government's strategy to tackle pensioner poverty. That contrasts with the opinion that they hold of the pension introduced by Lloyd George.
The Government say that their new system of means-testing does not involve means-testing as such. Perhaps it is soft testing or even third-way testing—I do not know what they would like to call it. At every turn these days, we are told that this is the age of the consumer. The customer is king, so what do the potential consumers of this new system say about it?
The Secretary of State told us a great deal about what the pension industry and Lord Fowler think, but I have a document launched for Welsh political parties at Plaid Cymru's spring conference in Swansea on 16 March. It is entitled "A Pensioners Manifesto for Wales" and it was produced by the Pensioners Forum Wales, which includes representatives of organisations such as the MSF retired members section, the Transport and General Workers Union retired members section, Unison retired members Wales and many other trade unions.
What do those consumers say of the Government's plans? In point 5 of the manifesto, they call on the National Assembly for Wales—not this august institution—to
- "recognise the financial plight of many pensioners and press the Westminster government to address the provision of adequate guaranteed non-means tested basic income as a matter of urgency".
The Government's proposals take us further and further from a system intended to provide a universal basic pension and a safety net for those not covered to one in which means-testing is to become the norm. The gap between the minimum income guarantee and the basic pension is widening and it will widen further. The Secretary of State's answer to that is even more means-testing, but Plaid Cymru and SNP Members agree with Age Concern and the Pensioners Forum Wales.
8.58 pm
Kevin Brennan (Cardiff, West): One likes to support the institutions to which one belongs—whether it is one's team, one's alma mater or one's political party. Unfortunately, in my case, over the past weekend, the first two have taken a bit of a knocking, first with what happened at Twickenham and then with the revelation that
my old college and that of the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Liverpool, Garston (Maria Eagle), had sold places for £300,000. I assure the House that neither of us read law at that institution.I am pleased that my party is honouring its manifesto pledge. On this, I part company with my right hon. Friend the Member for Birkenhead (Mr. Field), because we pledged at the last election that we would introduce this measure, which is intended to meet the twin objectives of continuing to help the poorest pensioners while properly rewarding thrift. Tomorrow when I meet the healthy, wealthy and wise project—the grey power project—in Ely in Cardiff, West, I shall be delighted to stand before its members and outline the Government's record on helping pensioners, including the state pension credit proposed in the Bill. I shall also inform them—I am sure that they will be interested—of the new Opposition coalition against the introduction of the pension credit.
The Bill addresses an issue that all of us will have encountered on the doorstep, as I did while canvassing at the general election: the complaint that it is simply not worth having a modest occupational pension, because it leaves one no better off than someone who has not contributed to a pension at all, and that there is no incentive to save because of the limits on capital. As a candidate for Parliament for the first time, I was pleased to be able to say that we would be doing something about that if re-elected and that I would do all that I could to support that. I gave that pledge on the doorstep and it is in fulfilment of that personal pledge to voters in Cardiff, West that I stand here in support of the Bill on Second Reading, despite the traumatic blows at the weekend that I described earlier.
I support this Bill, even though I have traditionally taken the view that the best way to deal with the state pension is to link it to earnings and to eradicate the stigma of the means test, because all pensioners should automatically share in economic prosperity. After all, most of today's generation of pensioners believed that the state pension would provide adequate support without recourse to the indignity of the old-fashioned means test. They were, after all, a generation that sacrificed so much so that we could benefit from peace and democracy today.
I am thinking here of people such as my father—I know some hon. Members have similar backgrounds—an Irish immigrant to this country, who worked as a navvy and helped to build the physical infrastructure on which our current prosperity is based. Elsewhere, that generation has been called "the greatest generation", appropriately. But they are also the generation that remembers the dreaded means test. I think, too of my mother, a miner's daughter from Nantyglo in south Wales, and her stories of the harshness of the means test at the depth of the great depression of the 1930s. I am still attached, emotionally and philosophically, to the earnings-related argument.
One must give credit to the Government for the ingenious way in which they are approaching this problem and the ingenious mechanism that the Bill represents. In a way, it echoes many of the reforms that the Government are bringing in, which aim to reward work and thrift. The Government have gone some way to meeting an accusation levelled by the Opposition today by ensuring that once a pensioner's position has been established at retirement, there is not the need for a weekly means test, as with income support. Instead, there is a five-yearly
review of circumstances, with the minimum circumstances for pensioners in keeping with what is necessary for the protection of public finance.Any comparison of that with the means test of the 1930s—or even with the post-war National Assistance Board, which poked its nose daily into every detail of a pensioner's personal circumstances—is an insult to those people who had to suffer the heartless indignity of that era. I hope—it may be a forlorn hope—that those who, properly, wish to oppose the Bill will not engage in scaremongering of that kind to try to sabotage the working of the pension credit. There is a case for considering whether, in practice, the name "pension credit" is the best way to describe the change. Pensioners' groups have expressed concern about this, as the word "credit" is associated by many pensioners with debt. That matter should be considered in Committee. I can understand the Government's desire to retain the term as it now applies to several flagship initiatives, but there may be a case for providing another term for use in publicity; perhaps "enhanced pension" to make it clear that it is not a loan that has to be paid back. That would help to change the culture of fear that some people are trying to build up about the credit being a new means test.
The Bill will bring real and direct benefits to people. An elderly widow with a monthly £100 pension—perhaps half the pension of her deceased husband—currently receives no benefit from that occupational pension. Under the Bill, she will be able to keep 60 per cent. of it. That is in addition to the other benefits that she will already have gained since Labour came to power, including the free television licence for the over-75s and the £200 winter fuel allowance—the Tories wanted to take that away—which is the equivalent of £15 a month tax free. If she lives in Wales, from next week she will have free local bus travel as a result of the policies of the Labour-led National Assembly for Wales.
Let us contrast all that with the approach of the last Tory Government. They halved the value of SERPS, abandoned the earnings link with the state pension and deliberately forced pensioners on to real means-tested benefits as a result of that decline in value of the state pension. To top it all, they generated the pensions mis-selling scandals of the 1980s. I was teaching at the time and can remember salesmen—they were no better than con men, really—coming into school staff rooms and telling young teachers that it was in their best interests to pull out of teachers' occupational schemes and take out a private pension.
Instead of responsibility and social conscience, which the Tories are trying to convince us they now have, they ushered in the era of the pensions spiv. For Beveridge, Jim Griffiths and Barbara Castle, they substituted Flash Harry. It is to the Government's continuing credit that they have tried to restore some fairness and sustainability to pension provision. This measure is a major step forward in that mission.
I look forward to telling the people at tomorrow's grey power meeting in Cardiff, West about today's debate. Some say the pensions credit is complicated, but I do not think that they will find the concept of 5 million pensioners benefiting by, on average, £400 a year a difficult concept to appreciate. The measure will be widely welcomed by pensioners, and I commend it to the House.
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