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13 Jan 2003 : Column 400—continued

Action Teams for Jobs

9. Mr. John Lyons (Strathkelvin and Bearsden): If he will make a statement about the effectiveness of action teams for jobs. [89708]

The Minister for Work (Mr. Nicholas Brown): Action teams are performing well, so far helping over 57,000 jobless people in the country's most deprived areas to move into work. An evaluation study of the first year of the initiative found that 80 per cent. of people who found work through action teams moved into sustained jobs.

Mr. Lyons : In parallel with the work of the action teams there are some outstanding local developments and initiatives that are trying to deal with some of the long-term unemployment problems in rural and semi-rural areas. Will my right hon. Friend ensure that we continue to encourage such initiatives so that we can really tackle the problems?

Mr. Brown: I strongly agree. We have to provide a whole range of modern, labour market-oriented services to sparsely populated communities. The Department takes its outreach work very seriously. We are considering initiatives such as mobile centres to give advice on jobs that are available, and indeed on benefits.

Michael Fabricant (Lichfield): But does the Minister believe that the 1 per cent. employment tax starting in April will improve job opportunities?

Mr. Brown: The public services have to be funded.

Dr. Stephen Ladyman (South Thanet): Action teams for jobs have been a great success in my constituency, and there are some wonderful examples of how that initiative has got people back into work. However, does my right hon. Friend accept that its effectiveness is limited in part because it is targeted on priority wards, rather than being provided for the whole district? Can he understand how frustrating it is for somebody to discover that they might be denied help from an action team simply because they live on the wrong side of a road?

Mr. Brown: My understanding is that the action teams are not too prescriptive about this, but I do appreciate the point that my hon. Friend makes. Nevertheless, I think it right that scarce public resources be targeted where the need is greatest, and I do not think that such projects would be helped by the #20 billion cut in public expenditure that we understand is on offer from the Opposition.

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Minimum Income Guarantee

10. Andrew Selous (South-West Bedfordshire): What level of savings fund is necessary for a person not to qualify for the minimum income guarantee. [89709]

The Minister for Pensions (Mr. Ian McCartney): The level of pension savings needed for a person not to qualify for the minimum income guarantee will depend on the level of entitlement to state pension benefits that has been built up over individuals' working lives. The introduction of the pension credit ends the unfair, absolute penalty on savings, thus encouraging people to provide for their own retirement. The existing capital cliff edge will disappear, so those with savings of more than #12,000 will no longer be automatically excluded from help.

Andrew Selous : Is the Minister aware that a pensioner couple in receipt of both housing benefit and council tax benefit need a fund of #142,000 in order not to be subject to means-tested benefits? Does he not agree that letting pensioners keep 100 per cent. of their savings and giving them a higher basic state pension as of right would be the most effective ways to assist saving among the poorest of the population?

Mr. McCartney: I wonder how the hon. Gentleman squares that view with the intention, expressed by Opposition Front Benchers, of cutting public expenditure by 20 per cent., some of which would fall on the poorest pensioners. His party is against the minimum income guarantee, the pension credit and winter fuel payments. The fact is that this is the first Government in history, through the pension credit, to give people the incentive to save—unlike the previous Conservative Government, who imposed a 100 per cent. marginal tax rate on savings, thus forcing many pensioners into poverty.

Mr. George Mudie (Leeds, East): Can the Minister confirm that since 1997, the minimum income guarantee has led to a real-terms increase in the pensions of the poorest pensioners of 37 per cent., taken 1.1 million pensioners out of absolute poverty, and provided an average additional sum of #30 per week for the poorest pensioners? However, can he also confirm that this is the same MIG as the Leader of the Opposition described as having nothing to recommend it?

Mr. Speaker: Order. That was two questions: the Minister should answer the first one, not the second.

Mr. McCartney: That was always my intention, Mr. Speaker—although perhaps I should ask my hon. Friend to repeat it, as I cannot remember it. [Laughter.] He is absolutely right, and perhaps the most important point to make is that, hopefully, hon. Members on both sides of the House will come together from April of this year and adopt a bipartisan approach to securing the successful implementation of the pension credit. It will provide more than #2 billion in the way of additional

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income for the poorest pensioners and, for the first time, for those who suffered under the previous Conservative Government, when they saved a little and lost a lot.

Mr. Peter Lilley (Hitchin and Harpenden): Can the Minister confirm that under the pension credit, which will affect the majority of pensioners, any pensioner will keep only 60p of every extra pound of pension income that they save?

Mr. McCartney: When the right hon. Gentleman was Secretary of State, pensioners got nothing: for every pound saved, they lost a pound. He gave with one hand, and took with the other.

Mr. Lilley indicated dissent.

Mr. McCartney: Perhaps I should start again. The right hon. Gentleman owes this House and our country an apology for the way he managed this Department as Secretary of State. He introduced rules that meant that for every pound a pensioner saved, their entitlement was reduced by a further pound. The pension credit has at last put right the mistakes that he made.

Pension Yields

11. Dr. Julian Lewis (New Forest, East): What his estimate is of trends in average pension yields over the next decade. [89710]

The Parliamentary Under-Secretary of State for Work and Pensions (Maria Eagle): The Government do not make an official estimate of future investment returns. Over the past 10 years, overall pension investment returns have been 7.5 per cent., and private sector estimates suggest that they will be around 7 to 8 per cent. over the next 10 years.

What is clear is that people need to put sufficient aside for their retirement and regularly monitor their level of saving. Many of the proposals in our recent Green Paper XSimplicity, Security and Choice" will help them do this.

Dr. Julian Lewis : It is surprising—is it not?—that one can have an answer to a question like that without any mention of the #5 billion a year taken from pension funds by the Government since they abolished the tax credit on dividends in 1997. The Under-Secretary was waxing eloquent about the iniquity of firms in closing final salary schemes, but does she accept that the Government's pensions raid has little to do with those firms doing what they have done? They could have absorbed it, they should have absorbed it, but if the Government had not taken that action, the problem might not have arisen.

Maria Eagle: No, I do not accept that. The Conservative party is for ever talking about the #5 billion without mentioning the offsetting corporation tax cuts, for a start. As is well known in the House, throughout the industry and by anybody who considers these issues, many factors have led to some of

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the problems in respect of defined benefit schemes and their closures, not least the stock market falls that have been taking place over the past couple of years.

Kevin Brennan (Cardiff, West): I know that my hon. Friend is aware that the pension yield for ex-Allied Steel and Wire workers from Cardiff over the next 10 years may be as low, according to some predictions, as 16 per cent. of the pension they expected on retirement. I know that she will want to join me in welcoming last week's announcement that Celsa is reopening the steel plant in Cardiff, which will save many hundreds of jobs. Will she also agree to look at the plight of those workers who lost their pension as a result of losing their jobs at a time when the pension fund was at a low ebb?

Maria Eagle: Yes, and I know that my right hon. Friend the Minister for Pensions has met some of the workers affected in this particular case. Much of the Green Paper deals with issues that have been raised by right hon. and hon. Members on both sides of the House in respect of those who work and save into occupational pensions and whose legitimate expectations are not met. We must get right the changes that will arise following the consultation on the Green Paper. If we do not, it is much less likely that people will be confident enough to save into occupational pensions the amount of money that they need to ensure a secure retirement.

Dr. Vincent Cable (Twickenham): Does the Minister agree that the fall in pension yields has been particularly serious for annuitants? As the Government have held at bay the amounts for compulsion in other elements of pension policy, why do they cling to compulsion in this area rather than allowing pensioners to make their own investment decisions?

Maria Eagle: The hon. Gentleman will be aware that annuities are the only way of securing an income for the lifetime of a person who has saved, and of course we all celebrate the fact that people are living longer. That is what pensions are for, and that is why annuities are important. I am sure that the hon. Gentleman and his party will be responding in full to the Green Paper consultation, and I look forward to seeing what they have to say.

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