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7 Mar 2003 : Column 1084—continued
Mr. Dismore: My hon. Friend is right.
The third option was setting the MRI at a level that represented the income produced by the basic state pension and the state earnings-related pension scheme for someone who was formerly on national average earnings. At the time, the figure was £140 a week, and will be £160 from 2003. The RIWP recommended that option on the ground that it struck a suitable balance between flexibility and certainty and marked a link between the income from contracting out SERPS and the income that would be produced by remaining contracted in.
However, £160 a week would not achieve the honourable and learned Gentleman's express policy objective of preventing dependence on the state, as I am about to demonstrate.
Martin Linton: Will my hon. Friend explain how MRI could take account of high levels of housing benefit, which are often paid in constituencies such as mine and his? How could it take account of the fact that many people do not receive full state pension? It is impossible to predict precisely the contribution that every individual will make during their lifetime to entitle them to a full state pension.
Mr. Dismore: My hon. Friend is ahead of me. I am about to develop that point at some length to explain to the honourable and learned Gentlemen where he has gone wrong in his definition of dependence on the state. His press release includes the words
- "becoming dependent on the state".
As I understand the honourable and learned Gentleman's policy objective, the purpose of MRI is to ensure that anyone who buys one of the products that he is promoting will not have to fall back on the state's resources. I question that because of the wording of the Bill, which appears contradictory. Clause 2(1) states:
- "The amount of the Minimum Retirement Income shall be set for each financial year by the Chancellor of the Exchequer by order before 31st January in the preceding financial year, and he shall set the amount for the financial year in which this Act comes into force within two months of the date on which this Act is passed".
Clause 1(4)(c) introduces subsection (8) to proposed new section (1A) of the Income and Corporation Taxes Act 1988. It states:
- "The income provided each year from the annuity under section (1A) must increase by reference to increases in the retail price index, so far as not exceeding 5%."
Lawrie Quinn: Is my hon. Friend aware of the detail of the letter that every hon. Member has received from the Association of British Insurers? It states that the minimum retirement income would have to be set at a level in excess of £200 a week if individuals were not to
find it necessary to claim a means-tested benefit during their retirement. Should not the hon. and learned Member for Harborough (Mr. Garnier) have done his homework and been conscious of this, and should he not have factored it in to the significant repair work to the original Bill proposed by the right hon. Member for Skipton and Ripon (Mr. Curry) some time ago? These were the key points that we made on many occasions in Committee at that time.
Mr. Dismore: My hon. Friend is absolutely right. This is one of the major criticisms of the hon. and learned Gentleman's Bill: he has entirely failed to say what he thinks the figure should be. He has passed the buck to the Chancellor, while giving the Chancellor conflicting provisions that say neither one thing nor the other and do not interact. He has given no explanation whatever for that. If he is seriously asking the House to approve his Bill, I hope that, when he responds to the debate—which may not happen for some time—he will at least have thought up a figure which he thinks is the minimum that someone should be expected to live on.
Mr. Love: Perhaps the hon. and learned Gentleman could also comment—he did not do so during his speech—on the issue raised by my hon. Friend the Member for Ealing, North (Mr. Pound) in relation to the pension credit. This important new benefit is now being introduced, but it does not seem to figure anywhere in the hon. and learned Gentleman's calculations.
Mr. Dismore: My hon. Friend is entirely correct. There is a whole series of questions relating to the detail of the pension credit, which I am afraid I shall have to pose to the hon. and learned Gentleman, because he took so little time to introduce his Bill and made no effort to deal with these issues.
Mr. Bryant: My hon. Friend the Member for Scarborough and Whitby (Lawrie Quinn) referred earlier to repairs to the Bill. May I urge my hon. Friend the Member for Hendon (Mr. Dismore) to exercise great caution on the issue of repairs? Of course, the hon. and learned Member for Harborough (Mr. Garnier) could, if he were still interested in this debate, say that these issues could be repaired in Committee. Is not the truth, however, that the failure to consider the issue of how the MRI might stand goes to the very heart of the Bill? Is that not a reason why the Bill should not go any further, and should not go into Committee at all?
Mr. Dismore: My hon. Friend is right. This repair job needs to involve demolition and complete rebuilding. The hon. and learned Gentleman might be left with the façade of the long title, but everything else will have to go. He should start again. Frankly, the House would be well advised to reject his Bill in those circumstances.
Getting back to the point about minimum retirement income, I am concerned that the Bill contains no provision to require the Chancellor to consult anybody about what rate he should set for the MRI. In these days of political inclusiveness, I am surprised that the hon. and learned Gentleman has not included in the Bill a suggestion that the Chancellor should consult the insurance industry and pensioners' groups, some of
which are very active in private sector pension provision, before deciding what rate should be set. All sorts of different figures have been suggested already, before I even started to outline the problems involved.I am also surprised that the hon. and learned Gentleman suggests that the appropriate rate should be linked to the retail prices index. I am sure that he is serious about making sure that the provision that people make is sufficient to ensure that they are not dependent on the state, but the Bill simply would not achieve that. He might not like to hear it, but the Government have been very generous to the least well-off pensioners through the minimum income guarantee, which increases every year in line not with inflation but with earnings. We know that the intention is to increase it to more than £102 a week for 2003, and it will continue to increase and overtake the RPI increase.
The hon. and learned Gentleman and his party are not keen on the earnings link. They abolished it for the basic state pension in the early 1980s. If, at some remote date in the distant future, the Conservatives should return to government, it is possible that they might not continue this Government's policy of generosity to the least well-off pensioners by maintaining the earnings link for the minimum income guarantee. I would be happy to take an intervention from Members on the Opposition Front Bench, if they would like to give us an assurance that they would continue that policy. I see no one seeking to intervene, so it would seem that my assumption that they have no intention of continuing that policy should they ever return to government is correct.
Assuming that the present Government's policy continues, the Bill in its present form would mean that pensioners would quickly find themselves falling behind the hon. and learned Gentleman's targets and becoming dependent on the state. I am about to come to the point about housing and council tax benefit raised by my hon. Friend the Member for Battersea, but before I do—
Mr. Howard Flight (Arundel and South Downs) rose—
Mr. Flight: I thank the hon. Gentleman for giving way. Does he agree with the Government's own proposals in section 5 of the revenue Green Paper to end the obligation to buy an annuity?
Mr. Dismore: If the hon. Gentleman is patient, he will hear me refer to the Government's policy at some length, because it is important that we understand where the Government are coming from. However, I am afraid that he might have to wait a little while—possibly quite a long while—for me to get to that.
Lawrie Quinn: I am grateful to my hon. Friend for giving way to me, I think for about the eighth time. May I remind him that he has been on his feet for almost 90 minutes? Does he not agree that the hon. Member for Arundel and South Downs (Mr. Flight) has scored a
classic own goal, just as the Conservatives did during their 18 years of government through their terrible treatment of pensioners?
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