State Pension Credit Bill [Lords]

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Mr. Boswell: Will the Minister give way?

Mr. McCartney: Just a minute. I want to make sure that I put the letter in context, and not misquote. As the letter continues, it gets better—or worse for pensioners. It says:

    ''Any advice you have about the best way forward on this would be very helpful. The vision of moving to a funded alternative to the basic state pension is a powerful and compelling one which you and I share.''

The shadow Secretary of State believes, with a passion in his heart as well as his brain, that we should get rid of the basic state pension. He has two brains, but they do not often connect with the facts of life. The letter continues:

    ''there are a series of practical questions that . . . have to be addressed so that our policy conveys credibility and seriousness'',

the first of which is public opposition. There is an interesting final paragraph:

    ''I was wondering if you would like to prepare a short note on some of these issues then perhaps lead a discussion of the matter at one of our teams meetings which . . . take place on Tuesdays at 10.30 am.''

Perhaps we could have the Room number so that we could all participate in the discussion.

How can the Opposition have private discussions about getting rid of the basic state pension, and then, in debating the first amendment to the Bill, lambast a Government who are not only enhancing the basic state pension for the first time since its creation, but providing an absolute standard to ensure that people have a basic minimum and will benefit from their thrift as part of a credit. The letter pours scorn on the proposals.

The Opposition seek to suggest that the Government do not have a credible policy or strategy, and paraphrased comments from colleagues in the lobby representing pensioners' advocacy groups. I have good relations with those groups, which hold views on pension credit, but they are not opposed to pension credit. Far from it, they have worked with us and, through the consultation process, have informed decision making about the Bill's structure. We do not expect them to agree with or not comment on every dot and comma of a Bill, but we want to work with advocacy groups just as they want to work with us.

Advocacy groups recognise that large numbers of people are left out of the current structure of the basic state pension and may end up living in poverty unless something is done. Increasingly, those represented by advocacy groups see that they are penalised for having small savings or second pensions. This is the first time that that problem has been examined. After decades of complaints about penalisation because of a small income or small second pension, we are the first Government to listen to advocacy groups and do something about the problem.

Advocacy groups are not banging on our doors saying, ''Don't do this, Minister—don't create the

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pension service.'' Rightly, they are banging on our doors to work with us and give us their views. The Committee should recognise that we worked well with them to implement the proposals, which, by their submissions, have been able to greatly influence the structure of the Bill.

Mr. Webb: I have a feeling that the claim that this is the first time that a Government have rewarded savings may be repeated throughout sittings of the Committee. I challenge the Minister to agree that, when the pensions and means test were almost at the same level, someone with savings got the full benefit of their saving and were better off than the neighbour who had not. The Government created a chasm between pensions and the means test, and someone with a small amount of savings is no better off than a neighbour with none. Therefore, the Government have created the problem that the Minister is now trying to solve.

Mr. McCartney: To be frank, that is turning history on its head. When we debate the amendments tabled by the hon. Gentleman, we will not only show that our action is unique, but deal with the alternatives that he proposes. Despite his argument against it, those alternatives will drag people back into means-testing. People who will benefit from pension credit will not benefit under his proposals, but we shall discuss that later in our proceedings. The hon. Gentleman does not have a good record in such matters, nor does his party.

The second allegation was that the Bill would not meet its aims in respect of pension credit. I refer to the summary of the Select Committee on Work and Pensions, which concluded in its second paragraph that the pension credit

    ''has the potential to go some considerable way toward achieving the aims set down for it by the Government'',

and that means the Bill. We will respond positively to the report in due course. The all-party Committee reached the unanimous view that the Bill is going in the right direction.

Mr. Boswell: For the sake of completeness, I refer to the third sentence of the Select Committee's third paragraph of its summary. It states:

    ''However, in our Report we raise a number of specific concerns about both the operation and the role of the Pension Credit.''

Mr. McCartney: I said that we shall need to respond to the Select Committee, but the hon. Gentleman has hinted that it was not happy. That is not the case. In general, the Select Committee sees the Bill as achieving its aim. That is important. We want a basic minimum guarantee. We want to reward thrift, and it will be the first time that such aims will become law. I repeat—I know that the hon. Gentleman does not like to hear it—that it will be the first time that such matters will be covered by legislation.

The Bill will benefit millions of pensioners, which is why the hon. Gentleman wants to whinge, but not to hurt—as does the hon. Member for Northavon. They do not want to return to their constituents when the Bill becomes law and say, ''We want to take this off you. We don't want you to have £400, £500 or £600 extra income each year. We do not think that it is fair.

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It is the wrong way in which to deal with such matters.'' No, the hon. Gentleman will not do that.

Mr. Clappison: As for the extent to which the name reflects the aim of the Labour Government, the Minister mentioned two aims, but he did not refer to those relating to means-testing. Is it still an aim of the Labour party to end means-testing for elderly people, as the Chancellor of the Exchequer said it was in 1993?

Mr. McCartney: I was about to come to means-testing, so will the hon. Gentleman calm down for a moment? I assume that later in our proceedings we will have more wide-ranging discussions about income assessment and means-testing. Means-testing in the context of what the hon. Gentleman is trying to peddle—as is his friend in such matters, the hon. Member for Northavon—is the means-testing of the Conservative party, which in the annals of history has gone from generation to generation spreading fear about means-testing, saying how it is demeaning and disempowering, and how it attacks individuals, undermines them and blames them for their poverty. The Conservative party put communities and individuals under the cosh and wanted to exercise power against the poor. It wanted a divided society. That is the truth. That was the means-testing that the Conservative party introduced throughout its period in power.

In addition, in the 1980s and 1990s, the Conservative party introduced means-testing not to target poverty and eradicate it, but to target the poor who were in poverty. We want to target poverty, not the poor. As well as helping the poor out of poverty and breaking the cycles of poverty, we want the state—for the first time—to recognise those who have had the capacity to have small savings or small savings and a second pension, not to create a system that drags people into poverty by undermining their additional income.

Annabelle Ewing (Perth): How does the Minister think that his means-testing differs from what he said that the Tories conducted?

Mr. McCartney: Of all the people in the Room, the hon. Lady should have understood my accent. I said that we are targeting poverty, not targeting the poor. We should look across the whole piece—the measure cannot be taken in isolation—and look at the response to what the Government have been doing.

Patrick Mercer (Newark): Will the Minister give way?

11.15 am

Mr. McCartney: May I just say something first? I have no problem giving way to the hon. Gentleman.

From day one, the Government set their face to tackling poverty. In-work poverty has been tackled through the national minimum wage, and that has been linked to the working family tax credit. We have increased child benefit and given assistance to people through the new deal. We have made working affordable and given people in the workplace dignity and a living wage.

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Secondly, we have targeted young children, and we use specific policies to ensure increasingly that we meet our ambitious target to end poverty among young people. Thirdly, politicians, churches, community groups, local authorities and Labour and other political parties have campaigned for the past 25 years—mainly under Conservative Governments—on behalf of the 2 million poor in Britain. We had the opportunity to do something about that, and we did.

The minimum income guarantee is rough and ready. I make no excuses about that but, during the past four years, I would rather have had a rough and ready system operating from a standing start that identified and, at last, met the needs of generations of pensioners who were left outside the system and living in poverty and that ensured that they got the dignity and income that they would never otherwise have received. We have sat gazing at our navel for the past four years working out what to do in the long term. The minimum income guarantee was always meant to be an anti-poverty measure to be developed and linked with what we are doing in our second term for pension credit. The Government have a good record on targeting poverty, on empowering people to get out of poverty, on giving them self-esteem and on involving them in decision-making. I make no apologies to the hon. Lady.

I make a vital point on means-testing. Opposition Members want to continue the historical argument about ways of introducing means-testing. That undermines the concept and principle of the Bill and the Government's intellectual analysis of a broad and integrated approach to tackle the causes at the heart of poverty and to address those who suffer from poverty. We are getting rid of the causes and giving income to such people—in this case, pensioners.

Opposition Members are also undermining pensioners' confidence in the new system. How mean can they get? It is one thing to oppose the Bill, but another thing to perpetrate language throughout the country that undermines people's self-awareness and their understanding of what is their essential right. For the first time in Britain, we are creating two forms of income from the state that make up the basic income of the state pension.

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