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House of Commons

Monday 25 November 2002

The House met at half-past Two o'clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—

Final Salary Pension Scheme

1. Angela Watkinson (Upminster): How many employees pay into a final salary pension scheme. [81269]

The Minister for Pensions (Mr. Ian McCartney): It is estimated that 9.6 million employees pay into final salary schemes. They will, therefore, continue to play a significant role in people's pensions savings. A Green Paper on pensions, to be published shortly, will set out our proposals, which are designed to increase the flexibility and security of final salary schemes and other types of pension provision.

Angela Watkinson: What protection can the Minister offer to my constituents who are so close to retirement that it is too late for them to make alternative pension arrangements? They have contributed to final salary pension schemes all their working lives and now find

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that those schemes are in severe financial difficulties or are heading for wind-up. Those constituents are suffering severe stress at the prospect of a pension that falls way short of what they formerly expected.

Mr. McCartney: If the hon. Lady could be a bit more specific, I could deal with her point, because there is no point in giving a general answer about the Department's line. If there is a genuine problem, the hon. Lady should write to me and I will offer her a meeting

Mr. David Willetts (Havant): That is a change of approach.

Mr. McCartney: No, it is not a change of approach—I am just that kind of a Minister.

Mr. David Cameron (Witney): Does the Minister think that there is any connection between the £25 billion that the Chancellor took out of pension funds and the decision of four out of 10 final salary schemes to close to new members? If he does—and presumably he does because he lives on the same planet as the rest of us—what will he tell the hundreds of thousands of people up and down the country, many of whom are in my constituency, whose final salary schemes have been cut and whose income in retirement will be reduced?

Mr. McCartney: I think that I live on the planet more than most Conservative Members of Parliament. It is interesting to note that when the same question was put to the hon. Member for Havant (Mr. Willetts) about the removal of the then tax credit on pension funds, the hon. Gentleman said:

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Mr. David Crausby (Bolton, North-East): Does my right hon. Friend agree that the major and recent reason for the decline in final salary schemes—although they have been declining since the 1960s—has been employers' inability to take advantage of pensions contributions holidays, which they enjoyed for so many years? Does he also agree that the only way to reverse the decline permanently is to introduce an element of compulsion for employers and pensioners?

Mr. McCartney: I accept what my hon. Friend says about the very inappropriate pensions holidays that have sometimes been taken. The purpose of the Green Paper is to address that and other issues. I hope that my hon. Friend will wait to see its contents, as it will deal with all issues connected with fairness and security in retirement.

Mr. Frank Field (Birkenhead): Does my right hon. Friend accept that although some employers use the current circumstances to close their final salary schemes, others wish to keep such schemes open? However, under the existing law and the power of trustees, they know that to do so might at some stage bankrupt their company. They would keep those schemes open, with some relation to salary, if there were greater flexibility in the law. Will the Minister look at this issue in this Green Paper or, as we heard at the weekend, in another one six months later?

Mr. McCartney: My right hon. Friend will be pleased to know that those are among the issues that will be examined in the Green Paper.

Mr. Steve Webb (Northavon): Does the Minister accept that one of the big problems associated with the closure of final salary schemes is that employers use the opportunity to reduce the amount of their contribution into those schemes? Does he accept that the Government have no power to stop that process and that if they merely produce a Green Paper and more consultation follows, we will have to watch the process continue? Why, then, has the right hon. Gentleman rejected the idea of putting a mandatory floor below employer contributions?

Mr. McCartney: The hon. Gentleman makes that comment before he has even read the Green Paper. The purpose of the Green Paper is to have a long-term agreement to provide security in retirement. That includes responsibilities on the part of the state, the employer and the employee and an effort to refashion, remodel and modernise the pension promise. I hope that at the end of the Green Paper process not only will we have a national debate but there will be a national consensus on where we need to go.

David Cairns (Greenock and Inverclyde): One of the additional benefits of these schemes is the generous provision of widows' and survivors' benefits. Does my right hon. Friend share my concern at the proposal in the Pickering review to end compulsory provision of

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such benefits? Does he agree that in this area of pensions, as in so many others, where there is no compulsion there is no provision?

Mr. McCartney: That was among several issues in the report, and we indicated that at this stage it was not a route that we wanted to take. All those issues will have to be considered in the Green Paper. One thing is certain, however: survivors' benefits are extremely important, overwhelmingly for women. It is no intention of this Government, when reviewing the pensions system, to undermine its capacity properly to look after women in retirement.

Mr. Willetts: Can the Minister confirm that the Government are still committed to the promise in their last pensions Green Paper that the proportion of pensioners' income from private savings should rise from 40 per cent. to 60 per cent.?

Mr. McCartney: That is all part of the Green Paper—[Interruption.] The hon. Gentleman has asked me a question so he might like to listen to what I have to say. Since the last Green Paper, we have taken steps in respect of the basic state pension and in relation to poverty. The third step—in this Green Paper—is about how we modernise the arrangements so that the basic state pension and the second-tier pension meet people's needs. That, of course, includes a mixed economy, as was set out in the previous Green Paper. The current Green Paper follows that, and at the end of the debate on it I hope that the hon. Gentleman will agree with the Government's proposals.

Mr. Willetts: I have in my hand the previous Green Paper. It contains a personal foreword by the Prime Minister, which states that the Government are committed to increasing the percentage of pensioners' income that comes from private savings from 40 per cent. to 60 per cent. All I am asking is whether the Minister of State is still committed to that objective of the last Green Paper. It is very simple.

Mr. McCartney: Of course that remains our objective. That is why the Green Paper that will be published soon examines arrangements to secure the continuation of funding by employers and deals with inadequate relationships as regards the costs to employers that run counter to their retaining pensions schemes. We want to give real choice to people who are saving for retirement so that there are secure pension schemes both in the public and private sectors.

Social Security (Complaints)

2. Dr. Evan Harris (Oxford, West and Abingdon): What steps he is taking to improve the service of the telephone complaint lines for social securityclients. [81270]

The Parliamentary Under-Secretary of State for Work and Pensions (Malcolm Wicks): First, may I apologise to the hon. Gentleman for the extremely poor service that one of his constituents received earlier this year? The hon. Gentleman has been in correspondence with the Department about that.

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The creation of Jobcentre Plus and the Pension Service represent one of the biggest operational changes that the civil service has ever experienced, so, perhaps inevitably, there has been some disruption to the high standards of service that we prefer to give. I am pleased to say, however, that Jobcentre Plus contact centres are already providing improved telephone access and response times to many customers and we are determined to improve and develop standards as those changes go nationwide.

Dr. Harris : I am grateful to the Minister for that answer. Does he agree that clients of Jobcentre Plus, the Pension Service and the former Department of Social Security are among the most vulnerable and that, owing to the work load of the hard-pressed staff, the changes to which he has referred may create more problems than heretofore, so the provision of adequate telephone lines and the means for those clients to complain is very important? I was especially disappointed to find that the number of the Banbury incapacity benefit manager, which I was given to ring to follow up my complaints, was engaged all morning, as I found out when I tested it before I came to the Chamber. Will the Minister ensure that there is adequate telephone capacity so that vulnerable people can make inquiries and complaints?

Malcolm Wicks: Of course I shall check on that and I apologise again to the hon. Gentleman and especially to his constituent. From time to time, we all experience the frustration of not being able to get through on the telephone. However, overall national performance on all aspects of customer service is currently about 84 per cent. against a target of 79 per cent. That measures speed of response, accuracy and so on. However, when individuals are not getting that service in response from the Banbury office, I realise that ministerial statistics butter no parsnips—they certainly butter no Banburys.

Hywel Williams (Caernarfon): Will the Minister tell us about the availability of telephone help through the medium of Welsh and other languages? I made a test of that this morning and contacted a Benefits Agency office only to be told that there was no such service because the person concerned was away on a Welsh course. The service seems rather fragile. Would the Minister care to comment?

Malcolm Wicks: Like the hon. Gentleman, I pay tribute to the high training standards in our Department as evidenced by the colleague who was taking the Welsh course. May I write to the hon. Gentleman about the services that we offer through the medium of the Welsh language? As a former external examiner for the University of Wales, I appreciate the importance of that.

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