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Mr. Michael Howard (Folkestone and Hythe): For the avoidance of doubt, I draw attention to my declaration in the Register of Members' Interests. I express my gratitude to the Financial Secretary for giving me advance sight of her statement.

I welcome the Financial Secretary to the Dispatch Box. It was very brave of her to volunteer to make the statement—if, indeed, she did volunteer. It was rather less brave of the Chancellor not to volunteer himself. After all, it was the Chancellor of the Exchequer who once made this issue his own. Was it not the Chancellor who promised in opposition in 1995 to find new ways of making saving more long term, to widen savings to more people and to link the need for savings for investment to the need for people to save for their retirement? Was it not the Chancellor who promised in government five years ago that the measures he was introducing would encourage more people to save? Was it not the Chancellor who twice set a performance objective to promote a fair and efficient tax and benefit system with incentives to save?

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Why has the Chancellor not come to the Dispatch Box to explain his progress—or lack of it—in fulfilling those promises? Why is he not at the Dispatch Box to defend the stakeholder pensions that he pioneered, and to explain why they have reached just 100,000, which is all of 2 per cent. of the target market of 5 million people? Why is not the Chancellor at the Dispatch Box to defend his pensions tax, which yields £5 billion a year and costs pension funds a total of £100 billion—equivalent to £400 being taken in tax from every single contributing member of a pension scheme every single year? Was it not the Chancellor who advised the Prime Minister just three weeks ago to justify that tax on the basis that there had been a massive increase in the stock market over the last five years, a statement that was not true then and is not true now?

Is it not the case that five years into this Chancellor's stewardship of the economy, we have a crisis in pensions and a collapse in savings? Is it not the case that the savings ratio is predicted this year to reach an all-time low—

Dr. Nick Palmer (Broxtowe): On a point of order, Mr. Speaker.

Mr. Speaker: I take points of order after the statement.

Mr. Howard: Is it not the case that the savings gap for retirement has been put at at least £27 billion this year? Is this crisis in savings and pensions not a crisis over which this Chancellor has presided, a crisis that he has promoted, a crisis that he has, in large part, caused and a crisis that, it seems, he has now asked his Financial Secretary to explain? The Chancellor, in large measure, created this crisis, but he is not man enough to come to the Dispatch Box to apologise for it.

The criteria against which the Sandler proposals should be judged are whether they, unlike Government policies to date, will help to reinvigorate the savings and pensions markets and whether they put the consumer interest first. We welcome many of the proposals, including those that would increase the amount of consumer education, those that would increase the transparency of with-profits polices and those that would simplify the sales process. Simplicity and cheapness are, of course, desirable objectives. But have not we seen with stakeholder pensions that simplicity and cheapness do not always, by themselves, succeed?

How will the Financial Secretary ensure that, unlike stakeholder pensions, these measures will indeed cater for people on low or moderate incomes? How will she ensure that the limitation on returns will not adversely affect the provision of capital for the industry in this country, thus narrowing the range of choices available to consumers? How will she ensure that the call for tax simplification, which is welcome, is not used as a back door to increase taxes yet again? What effect does she think the new model for independent advice would have on the number of advisers? Is there not a danger that many of them will be encouraged to become multi-tied agents, with a loss to consumers of access to independent financial advice?

Is not the most fundamental question that the Financial Secretary needs to address the collapse in confidence in the ability of this Government to get anything right in this area? Was it not this Government who needlessly abolished PEPs and TESSAs? Is this not the Government

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who introduced pension credits, described by the right hon. Member for Birkenhead (Mr. Field) as creating a form of permanent serfdom and sending out to potential savers the message, "The more you save, the less you get"?

Is this not the Government who cook the books time after time? Only last week the Secretary of State for Work and Pensions was obliged to come to the House to apologise for the fact that the Government had overestimated by no less than £35 billion last year alone the amount being saved by the people of this country for pensions? Having acknowledged that error, instead of giving us the correct amount, the Government's response is to recalculate the figures on a different basis so that no direct comparisons can be made.

Today, the Financial Secretary has been like the man who follows the horses at the Lord Mayor's show. But she has not been following the horses; she has been following the Chancellor, who sits there brooding in silence, afraid to come to the Dispatch Box, content for her to face the music. Five years after his fine words on savings, the finger of blame would not point to savings providers or to pensions advisers, but fairly and squarely to the Chancellor himself.

Ruth Kelly: Let me begin by saying that the right hon. and learned Gentleman has vast experience in this House—much greater than mine. I am surprised to hear him make such petty and insubstantial points about what is a very serious report. On process, he knows better than most that it is the tradition among financial services Ministers to make statements about financial services. Indeed, I believe that he himself spoke to the House on such matters as a financial services Minister. I would have thought that he might welcome my coming to the House at the earliest opportunity to speak about these serious issues.

It was this Government who volunteered the statement; the right hon. and learned Gentleman did not ask for it. The truth is that he wants to concentrate on process because he has nothing to say about substance—at least, nothing that he wants people to know about. He does not want to mention his policies to privatise the basic state pension, to scrap the minimum income guarantee, or to abolish the pension credit. He certainly does not want to talk about his record in government: pensions mis-selling, the halving of the state earnings-related pension scheme, and increased pensioner poverty.

I shall deal with each of the points that the right hon. and learned Gentleman made. He referred, as is usual on these occasions, to the abolition of tax credits for pension funds. He knows that the abolition of such credits was part of wider corporation tax reforms, which injected an extra £3.5 billion into the system through cuts in corporation tax and removed a major distortion in the tax system, and which will provide a positive climate for long-term investment. He certainly does not propose to reinstate those tax credits; if he does, let him say so today.

The right hon. and learned Gentleman pointed to the fall in the savings ratio, but perhaps he should understand that gross household savings have remained robust over the past five years. Indeed, according to the Association of British Insurers—the figures were used by Ron Sandler in his report—in respect of total household spending on life and pension products, total long-term savings

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increased by 15 per cent. in real terms between 1997 and 2000, compared with the previous period, when his party was last in government. The problem is that, as the Sandler report correctly indicates, savings behaviour has increasingly become skewed towards higher-income households. Today's report is a serious attempt by Ron Sandler to identify the reasons why low and middle- income households have been disenfranchised from the savings process.

The right hon. and learned Gentleman made one or two serious points about the report, and I welcome his approval of some of the serious measures contained in it. He asked about the future of financial advice. The report provides an opportunity for the industry to think seriously and radically about how it can provide real financial advice that meets the needs of ordinary low and middle-income earners, and about how it can turn advice into a commodity that is valued and trusted by consumers. I welcome the fact that the FSA has offered to fund research into how that might be made possible.

The proposals that we set out in the report deal with the savings gap for tomorrow's pensioners, just as this Government are tackling pensioner poverty for today's pensioners. Is not the truth that the only alternative that the right hon. and learned Gentleman can offer is a record of failure in government and a set of extreme proposals in opposition?

Mr. John McFall (Dumbarton): I thank the Minister for her statement. Does she agree that this is a wake-up call for the industry in the light of past financial scandals? We need to restore people's faith in saving, so that they can close the £27 billion gap. Does she also agree that, if the recommendations are pursued constructively, we could open up a mass market in which ordinary people can buy simple, transparent and less sales-regulated products? At the moment, the lack of such products is hindering the development of that market.

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