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27 Feb 2003 : Column 458—continued
3.36 pm
Mr. Steve Webb (Northavon): I shall be similarly succinct. The hon. Member for Havant (Mr. Willetts) touched on the key issue. The Government Actuary's report on the order identifies £11 or £12 billion of public money that is spent on contracted-out rebates. However, when I tabled a written question to ask how many people were receiving those rebates, the Government could not tell me. It is breathtaking that £12 billion can be spent without anyone knowing who is receiving it, how many are receiving it and whether the amount is going up or down.
I hope that the Minister will flesh out what the report says on page 10, as quoted by the hon. Member for Havant, and give us some idea of when we will receive the information that is "now becoming available". What worries me most about the lack of that information is that we are in a short consultation period on the Green Paper on pensions, on which the future of the scheme will be based. Without the information, it will be policy-making in a vacuum. That cannot be acceptable. We will support the motion, but I hope that the Minister will tell us when the information, which we need urgently, will become available.
3.37 pm
Paul Flynn (Newport, West): I am always astonished by Conservative Front Benchers who present themselves as people with a record on pensions to be proud of. The appropriate response for the Opposition spokesman, especially as he played a major part in the Conservative Government, would be to repeat "mea culpa" for five minutes and then don sackcloth and heap ashes on his head, because their record is so abominable.
I praise the record of the Government, which is remarkable. Since 1997, the Government have achieved the greatest shift in the redistribution of wealth from the rich to the poor since 1945. It is called stealth socialism, and we are almost ashamed of it in case the Daily Mail finds out and attacks us for it. Despite the Government's good record, I have several concerns.
I wish to raise the possibility of restoring the Treasury supplement. That suggestion will cause panic among the civil servants, who will probably have to ring up somebody in retirement to find out what it was all about. The last successful Liberal politician, David Lloyd George, introduced it and—until it was abolished in the late 1980s—it was worth 18 per cent. in annual contribution from the taxpayer to the national insurance fund for pensions. That fine principle ensured redistribution.
I welcome many of the Government's changes, especially the pension credit, which undoes the great injustice suffered by those who made contributions for many years from small disposable incomes but found on retirement that they received no value from the contributions whatever. That move is of great benefit, but it is sad to see that the number of pensioners depending on means-testing will increase.
The prime factor in the fact that the very poorest pensioners do not claim income support is the stigma involved. Every hon. Member will know pensioners who take pride in the fact that they have never received a handout in their lives, or claimed benefit. They say that, in their retirement years, they will get what they paid in
for but that they will not fill in a form that offers what they regard as a handout. That has been a problem for many years, and it remains one now.The house magazine for people of my generation is Saga Magazine. It was disappointing to read in an article by Paul Lewis that the Government assume that the take-up of pension credit will be only 67 per cent. That means that very many people will not get the benefit that they have missed before. We need to address that very important problem.
I am very proud of the Government's record on pensions, but we should reconsider restoring the link to make sure that the minimum income guarantee is the basic pension. It is affordable, and would give much satisfaction to the million or so poorest pensioners who do not claim income support.
3.41 pm
Mr. Oliver Heald (North-East Hertfordshire): I was not going to respond to this short debate until I heard the remarks of the hon. Member for Newport, West (Paul Flynn). The means-testing to which he referred is important when it comes to uprating the guaranteed minimum pension, but the increases to that pension are under threat in a variety of ways.
The first threat comes from the means test, which erodes pension levels. The second is that the overall picture of pension schemes reveals a huge decline in income levels. In the debate earlier this afternoon, I referred to the Government's miserable performance in taking pensioners out of poverty. For the bottom fifth of the pensioner population, the picture has been absolutely flat, but the gap between rich and poor has widened. I am sure that the hon. Member for Newport, West would not be pleased with that. One of the factors behind those figures is the fact that take-up is so poor.
David Winnick (Walsall, North): Will the hon. Gentleman give way?
Mr. Heald: In a moment, as I have three or four other points to make.
The introduction of the occupational pension scheme was probably the most important social welfare reform measure of the 20th century. The number of such schemes has fallen from 130,300 in 1998 to 103,000 now—down 30,000. The number of members of schemes that have started to wind up has risen from 10,000 to 40,000. The pension status of adult employees in 1994–95—I am sorry, I mean 1998—
Mr. Andrew Smith: The hon. Gentleman wants to choose the worst possible figure for the Government.
Mr. Heald: No, I was being generous to the Government. The date I shall choose, 1994-95, is worse for me. In 1994–95, 64 per cent. of adult employees were in an occupational or personal pension. In 1998, the proportion was 60 per cent. That figure is now 56 per cent. now, which shows the collapse that is happening.
Mr. Tim Boswell (Daventry): Does my hon. Friend agree that the decline in private sector occupational
pension schemes—whether defined benefit or defined contribution schemes—risks a rather invidious comparison with what is available under publicly financed schemes, including those available to Members of Parliament and civil servants? Is there not a danger that there could be two nations in respect of pensions, as hon. Members have suggested is possible in other areas?
Mr. Heald: I understand entirely the concern felt by many that we are developing two nations in pensions. At the top of the pile among public sector pensioners is the Lord Chancellor, who gets an absolutely enormous public pension. At the other end of the scale, there has been a collapse in private sector pensions.
However, I must not go down that road too much, as we are talking about the guaranteed minimum pensions. Many recently retired pensioners receive guaranteed minimum pensions, which are being uprated by this order. In 1997–98, the percentage of recently retired pensioners with an occupational pension was 67 per cent.; now it is 59 per cent.
David Winnick: If we look in the round at the way in which pensioners on limited incomes have to try to make ends meet, we can see how difficult that is. I cannot understand why the hon. Gentleman's Government refused any additional help during the winter months, whereas this Government introduced from the very beginning the winter fuel allowance, which is now £200 per pensioner household. Why did his Government not do anything of the kind? I know that he is not responsible—he is a more reasonable or moderate Tory.
Mr. Heald: In fact, the hon. Gentleman is entitled to an answer because I was the junior Minister for two years. I suggest that he puts the matter in its overall context. In the Conservative years, those who had an occupational pension or a personal pension saw marvellous results. The yields on investments in those pensions were about 10 per cent.; now they are running at less than 5 per cent. The stock market has collapsed and occupational schemes are closing hand over fist. In the past year alone, the rate of closure of schemes to new members has doubled. The National Association of Pension Funds says that a large number of schemes are moving towards wind-up. One has to ask why that has happened, and the reason is the Chancellor of the Exchequer.
Madam Deputy Speaker (Sylvia Heal): Order. Some latitude has been allowed, but I hope that the hon. Gentleman will now return to the matter under discussion.
Mr. Heald: The Chancellor of the Exchequer put at risk the livelihoods and the financial position of those who receive guaranteed minimum pensions and this uprating because he whacked a £5 billion-a-year tax on pensions, the effect of which has been disastrous. We warned about it time and again, but what have we got out of it? Not very much.
Finally, I want to ask the Minister about a technical aspect of guaranteed minimum pensions. Actuaries say that one of the greatest problems involved in winding up
pension schemes and one of the reasons for the delays is having to sort out the equalisation of guaranteed minimum pensions as between men and women following the judgments of the 1990s. That is relevant in the context of uprating guaranteed minimum pensions. I would be grateful to know whether the Minister has any plans to sort that out and to provide the help for which those in the actuarial profession are asking.
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