State Pension Credit Bill [Lords]

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Mr. Clappison: The debate has been useful and interesting. As we had to, we touched on subjects that we will come to later but that were relevant for the purposes of the amendments, such as take-up, savings and so on. I am grateful for the support and interest that the amendments have attracted across the Floor and in other quarters. They certainly stimulated a lively debate at times. The hon. Member for Northavon fielded several interventions with good grace, in a non-partisan way. Clearly, the interventions were evidence of the Committee's interest in the amendments.

I am grateful to my hon. Friends the Members for Daventry and for Canterbury for their contributions. I was not hitherto aware of the pamphlet of my hon. Friend the Member for Canterbury. I will take it away and study it in detail. I am also grateful for the excellent contributions of my hon. Friend the Member for Newark (Patrick Mercer) and my hon. Friend the Member for South-West Bedfordshire (Andrew Selous), who spoke with the authority of someone who was a member of the Select Committee, who had witnesses appear before him and who was able to ask them questions.

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The Minister made a lengthy reply to the debate. He will understand that I shall want to consider in more detail many of his comments about the measures that his Department is already taking and about forecasts for the future. However, two points remain in my mind.

First, if the Minister and the Under-Secretary are so confident about take-up, why are they so reluctant to countenance a report that would highlight it and set it out? The argument is not about whether there will be high take-up but about whether there should be a report. Surely, with the degree of confidence that they have ventured this afternoon, Ministers would welcome a report that gives so much detail. The Minister said that, in any case, the information would come out in other places; I have heard that reply before. It may well be the case—it is something else that I want to consider in detail—but why not have a report that specifically highlights the issue and brings to public attention a matter that we all, apparently, regard as important? I am not convinced by the arguments against such a report that I have heard so far.

The second point is about savings. The Minister did not deal in as much detail with amendment No. 20 on savings as he did with amendment No. 19, but I heard him say that it was worth saving with a pension credit. I believe that he put forward that proposition in the sense that it was more worth while to have saved than to have no savings at all. That may be the case, but he did not address the question that was raised by the Association of British Insurers: is it sufficiently worth while to save, given the rewards that will come after the withdrawals? Is that sufficient to encourage people to save earlier on? That is a separate subject, on which expert opinion is divided.

The Minister may want to reflect upon the ABI's conclusions. He spoke about what it had said in broad terms. I invite him to look at the conclusion of the most recent memorandum that it submitted in evidence to the Select Committee, which is the final conclusion that it reached on this question and, indeed, on the whole subject. It says:

    ''In order for it pay to save in all circumstances, these issues must be addressed before the State Pension Bill passes on to the Statute Book. Failure to do so would leave a proportion of the population vulnerable to not getting value for money for their hard earned savings, and potentially more damaging discouraging many people to save when it is in their best interests to do so.''

We think that it is in people's interests to save. We want to do everything that we can to promote that and will look very carefully at anything that expert bodies think might possibly discourage saving. The Minister will be aware of the separate line of analysis pursued by the Institute for Fiscal Studies, which comes to a similar conclusion.

If the Minister wishes to respond to that, perhaps it will be convenient for him to do so at this stage, before I come to my concluding remarks.

6.30 pm

Mr. McCartney: I have a very good working relationship with the ABI. It says very little about pension policy, in terms of the strategic approach towards pensions in both the public and private

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sectors, that I disagree with. What the ABI says on this matter is, quite rightly, that it always pays to save. Until the pension credit came in, that was not the case. We had the absolute opposite—a major disincentive to save. There was a proposal, as part of the strategic approach, for a £10 disregard of the savings above the basic state pension. However, for many people, the first £10 of income above the basic state pension is made up of other national insurance benefits such as the state earnings-related pension scheme. The disregard does not generally affect additional savings above the national insurance contribution. Therefore, although that was a reasonable idea, it is already taken account of because of the structure and changes that have been made.

There are resources to be utilised. The Government have made major improvements, some £0.5 billion worth, in terms of access to council tax benefit and housing benefit. Those changes are quite significant. As well as looking after those who can qualify for a credit, the legislation must be balanced to go that extra mile, and help those outside the credit system by providing additional resources through housing benefit and council tax benefit.

We are expanding the opportunities for people to have an incentive to save, rather than there being a disincentive to have small savings. I accept that there are choices for people to make. That is the choice that we made. However, we support the overall principle that the ABI states, that it pays to save. As I said earlier, when Mr. Atkinson was in the Chair, some time in the autumn we shall have significant discussions on the outcome of the Sandler and Pickering reviews. They will get to the nub of the long-term strategy that the hon. Member for Hertsmere is talking about—the strategic approach to savings and a regime in which people will save for their retirement, both as individuals and as employees with their employers. The pension credit resolves that issue in one sense and one sense only—for the first time, it takes account of, and gives rewards for, people making the commitment to save. No doubt we shall come back to some of the figures and discussions later, but that explains the point about the ABI.

I repeat something that I said to the hon. Gentleman. I went to great lengths to show what measures are in place to make Ministers accountable and what improvements we want to make to ensure that the information for which we are accountable is more reliable and more transparent. I give another commitment: there will be a research programme to evaluate pension credit. That is also important. We are putting in place evaluation programmes. We are putting in place measures to ensure that Parliament, the Department and the agencies involved have a strategic approach to putting information in the public domain.

In their first term, the Government instituted the third pillar of the policy, which I set out in my response to the Committee. We set down targets properly to evaluate in each Department whether we were achieving the objective set out, in terms of the

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Government's strategic approach to the implementation of particular policies—in this case pension credit. Those pillars are all in place and will be effective.

The fourth pillar is the accountability of the House. Ministers can be brought to account, whether that is in Select Committees, the Chamber of the House, Westminster Hall, or during Question Time. Ministers will remain accountable in all circumstances. If I want to ensure that all those pillars are in place for effective communication and the placing of information in the public domain, I operate in an effective and transparent way. That is why I told the hon. Member for Daventry that I was taking on board what he said. I was not trying to tell him, ''We will do it your way''—it is far broader than that. I am linking pension credit to the Department's broader strategy, and I want to report it through that strategy.

Mr. Tynan: Does my right hon. Friend agree that amendment No. 20 demonstrates a lack of confidence in and understanding of working people? Opposition Members seem to believe that if a benefit exists, it will deter someone from saving for old age. My view of working people, from a perspective of knowing them, is that they are more interested in saving for retirement than adopting a position where they will not save for old age if there is a benefit. That is not a practical situation as regards working-class people.

Mr. McCartney: I thank my hon. Friend. I would ask him to be less of the old friend and more of a middle-aged friend. He made two points and they were both correct. It is important that people have incentives to save, whether they save with a personal pension or an employer. There is a certain security about that, which is why it is important to have a regulatory regime that is not a disincentive for employers to invest, and that has products worth investing in. The security of those investments is vital. There is a play-off between the tax and benefit regime and public sector pension policy, and its relationship to private sector pension policy. The United Kingdom, along with our colleagues in the Netherlands, has probably a more sophisticated public-private partnership in pensions than any other country in Europe. That is a long-standing mature relationship, but it needs modernising.

The other point that my hon. Friend made is absolutely true. The overwhelming majority of working people do subscribe to working hard, and they have an opportunity to save. The problem in the system that we inherited is that there was a 100 per cent. disincentive. People lost every pound that they put away, when trying to access additional income. We are resolving that through pension credit in a very effective way.

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