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David Cairns: I appreciate that the hon. Gentleman is making a narrow argument about new clause 5 merely adding the requirement to submit a report. However, he has made several comments about the need to encourage prudence. Can he outline exactly what his party's policy is on encouraging prudence and getting people to save for their old age?
Bob Spink: I should be delighted to do as the hon. Gentleman suggests, but I am sure that if I did so, you would immediately call me to order, Madam Deputy Speaker, because we are debating new clause 5. What do the Government have to be afraid of if more light is shed on the matter, which is all that new clause 5 seeks to do?
We should all be concerned about today's pensioners, because they have had a raw deal from the Government—[Hon. Members: "Oh!"] They certainly have. The proportion of national income taken by pensioners today is lower than it was under John Major's Government
in 1997, and that is disgraceful. We should also be concerned for the well-being of tomorrow's pensioners. Only around half of people below state retirement age are currently saving for their retirement. That is a chilling and frightening statistic that we should do something to correct. We should increase the number of people who save for their pensions, but the Bill will not do that. The new clause would illuminate that point and I therefore commend my Opposition colleagues for tabling it. I urge the House to accept it because it would enable us to monitor what is happening to savings and to change the operation of benefits to encourage greater prudence.3.45 pm
Mr. Paul Goodman (Wycombe): I, too, wish to speak in support of new clause 5. It is important to lay out clearly exactly what the new clause says. It falls into two parts. The first would invite the Secretary of State to lay before Parliament annually
- "an assessment of the effect of the savings credit on the propensity of individuals of working age to save for their retirement".
- "make recommendations for any change to structures or benefits which seem to them to be appropriate."
- "impossible to provide savings advice to those on low to medium incomes".
- "a highly opaque means of generating the right incentives: it is extremely difficult for individuals to know what to expect from it".
- "on a much more difficult wicket."
Kali Mountford (Colne Valley): I applaud the hon. Gentleman for returning the attention of the House to the work of the Work and Pensions Committee, but is he not ably demonstrating that the Committee had no trouble at all in taking evidence from the Social Security Advisory Committee? From his work on the Work and Pensions Committee, is he not aware of the annual report of the Department to the House that already exists? Would not the new clause simply duplicate matters?
Mr. Goodman: In a sense the hon. Lady is making my case for me, although I am sure that she will not agree. I see no reason why the Committee would not be able to supplement its work with a report of the kind envisaged by my Front-Bench colleagues. I shall cap the evidence
to the Committee that I have quoted with what Age Concern has said about the pension credit, which has already been mentioned this afternoon. It said, baldly and clearly, that it believes
- "that the pension credit will fail to provide sufficient incentive to younger people to save for their retirement."
Mr. Goodman: I am glad that the hon. Gentleman mentioned the comments of Lord Fowler, because if there was an annual report of the type to which my hon. Friends have referred, we should be able to see whether all those who gave evidence to the Select Committee—and indeed Lord Fowler—were right or wrong. The hon. Gentleman, too, is helping my case.
Finally, I quote from the conclusion of the Select Committee itself. The Committee is made up of many more Labour than Conservative Members, but it is a fair-minded Committee. On incentives to save, the Committee stated:
- "We have concluded that, whilst the Pension Credit will enable today's pensioners to see a reward for saving"—
- "there is no clear evidence that it will actually increase younger individuals' savings."
All the expert advice of which I am aware is that the pension credit will decrease the incentive to save. The Government believe the opposite. If they believe that my hon. Friends on the Front Bench and I are wrong, they need only produce a report, as the new clause proposes, and let a fair-minded and independent body comment and arbitrate on it. I urge the House to accept the new clause.
Annabelle Ewing: I rise to support the basic premise of new clause 5. I do not understand why the Government are afraid of having to produce a report. They maintain that, inter alia, the Bill will act as an incentive to save. If that is their objective and if they are keen to ensure that the Bill is indeed an incentive to save, they should be willing to do everything that they can to achieve that objective. The preparation of a report—supplementary to other reports produced by the Department for Work and Pensions—would be a reasonable way of assisting the Government in securing their stated objective.
As we have already heard, various third-party bodies have expressed concern as to whether the measure will really act as an incentive to save. I do not want to go over the same ground by repeating those concerns. The key question is: how will the Bill act as an incentive to save when individuals do not have sufficient financial information early in their life to assess, or predict,
the likely value of their savings many decades down the line? That is an important issue that could be discussed in a report. It should certainly be given further consideration.
Maria Eagle: The hon. Lady has made a good point. One of the best ways to ensure that people save more for their retirement is to give them information about what their retirement income would look like in the light of their current provision. In that respect, the Government are promoting joint pension forecasts, so that individuals receive a document annually that shows what they would be likely to receive from their private and state pensions. Does the hon. Lady not agree that such information would be much more useful than a general report to Parliament?
Annabelle Ewing: The two are not mutually exclusive. It is helpful to learn that there will be some Government-assisted prediction of the likely pension.
Mr. Clappison: May I interject a bipartisan, consensual note? Does the hon. Lady agree that it would be useful if those pension forecasts included details of how much the Government will take from people's pensions through the pensions tax that the Chancellor introduced in 1997?
Annabelle Ewing: The hon. Gentleman has made his point and I do not want to go down that road today; to do so might be to detain the House much longer than anticipated.
Let me return to the Minister's point. The prediction would be very general because the financial information would not be accurate enough; for example, we would not know the value of the guaranteed income 20 years down the line. It would thus be difficult to make a meaningful prediction of the value of someone's savings. In any event, the two elements are not mutually exclusive and I do not understand what it is the Government are so afraid of.
The hon. Member for Northavon (Mr. Webb) felt that the amendment was too restrictive and that we should consider the overall effect of the Government's policy on savings. I agree with him. I share many of his concerns about the situation faced by pensioners at present. I wonder whether the Bill will really make much difference as regards lifting pensioners out of poverty.
In Scotland, we face a disgraceful situation: one in four pensioners live in poverty. That is unacceptable and I am not convinced that the Bill would do much more than tinker at the edges. If it helped even one pensioner, I would certainly support it, but it represents a missed opportunity to deal with pensioner poverty.
I turn briefly to the amendments. I confess that I was a bit puzzled about amendments Nos. 6 to 12, especially Nos. 4 and 5. Could we have some further elucidation of them?
I support the position of the hon. Member for Northavon on amendments Nos. 1 and 2. As he said earlier, there is discrimination against women and the Government are doing nothing to end it. The amendments are a reasonable way of tackling that unacceptable discrimination. The point that there is a contradiction in the Bill was well made: although the Government accept
that the problem can be dealt with vis-à-vis the income guarantee element, they seem to take a different view on the savings credit element. Perhaps that will be clarified. I look forward to the Minister's comments.
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