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7 Mar 2003 : Column 1118—continued
Lawrie Quinn: The hon. Gentleman has shown that he has done considerable preparation for his contribution. Did he study the important ABI document entitled "Annuities—The Consumer Experience", which suggests that only one in 20 pensioners will benefit from the measure? What is his party's position on that?
Dr. Cable: The hon. Gentleman is right that as of now only a small minority of pensioners would benefit. However, more and more pensioners are being thrown into money purchase schemes. For that reason, in five or 10 years' time, the number of people affected will have grown. The hon. Gentleman is also right that I spent some time preparing for the debate. I know that I am stretching your patience, Mr. Deputy Speaker, and I would like to bring my remarks to an end. I am happy to debate these matters but I believe that I am required to draw my remarks to a conclusion, so I will.
I know that the Government want to deal with the issue by developing the annuities market. That is their solution to the problem. It is—[Interruption.] I know that I could speak for 80 minutes, but I am trying to be fair to other Members. I know that there are many Labour Members who would like to speak. The Government wish to deal with the issue through the annuities market, and there have been positive developments there. I noticed in the Green Paper that there are attempts to introduce new, more flexible, instruments, and that is welcome. There are attempts to extend the income draw-back scheme in ways that are also welcome. The problem is precisely the problem that is raised in objection to the reforms proposed from the Opposition Benches. The proposed flexible annuities can really only be accessed by people with very large pension pots. They are also very expensive—the fees are expensive and the annuities are complex. Precisely the same objection can be raised to the Minister's approach as can be raised to the Bill.
The effectiveness of annuities depends heavily on people having access to good financial advice. We should be having a debate—I do not think that we have ever had it in the Chamber, although we have numerous debates on pensions—on what is happening to independent advice. The Financial Services Authority is moving in directions that seem to me to bring to an end, or threaten to bring to an end, genuinely independent advice. I am also concerned that the Government, having declared their intention, I think two years ago, of trying to introduce the genuinely enlightened idea of pro bono advice, working with the citizens advice bureaux, seem now to have dropped the idea. That would be a useful adjunct to pensions policy to help people navigate their way through the complexities of annuities.
I have already taken 10 minutes, and I have much else to say, but I shall be happy to give way to Labour Members—
Caroline Flint : Will the hon. Gentleman give way?
Dr. Cable: —including the hon. Member for Don Valley (Caroline Flint), who would like to say something.
Dr. Cable: I would rather give way to the hon. Lady to enable her to make a speech, which I am sure she wishes to do.
1.42 pm
The Financial Secretary to the Treasury (Ruth Kelly): I start by congratulating the hon. and learned Member for Harborough (Mr. Garnier) on his success in the ballot. However, I would say that even before the ballot had taken place, the hon. Member for Havant (Mr. Willetts) had made it clear that the Conservative Member who achieved the highest place in the private Members' ballot would have the privilege of relaunching the Bill that was introduced last year by the right hon. Member for Skipton and Ripon (Mr. Curry). That being so, I am not quite sure that congratulations are in order. Perhaps I should extend my commiserations to the hon. and learned Gentleman.
The hon. and learned Gentleman introduced his Bill eloquently but also with great brevity. Indeed, he did so with such brevity that I am tempted to wonder whether he learned anything from the debate that took place on these matters last year. Indeed, he admitted that the Bill was an exact replica of the measure that was introduced last year. He has not even attempted to correct any of the obvious deficiencies that became apparent during last year's debate.
I shall mention a few. I intend to expand upon them in greater depth as I develop my argument. First, there is the cost to the Exchequer, which could run into hundreds of millions of pounds. Secondly, there is the restriction of choice for the vast majority of pensioners, albeit with the extension of choice in certain directions for a few privileged pensioners. Thirdly, there is the impact on the gilts market. It is not at all clear that the
gilts market would in any sense be able to cope with the hon. and learned Gentleman's requirement for index-linked annuities for everybody at the age of 65. Fourthly, there are arguments surrounding the compulsory introduction of unisex annuities, and those were well rehearsed by my hon. Friend the Member for Hendon (Mr. Dismore). Fifthly, there is an inherent conflict between the Bill and the Government's desire for flexible retirement and active ageing.Despite those obvious deficiencies in the Bill, it is helpful to have the debate in order to set out the Government's approach to some of the issues. I was interested to hear the hon. Member for Arundel and South Downs (Mr. Flight) admit that the Bill's purpose was to provoke debate, and that he did not stand by the substance and detail of the Bill, despite the fact that the Bill is, as far as I understand it, current Conservative party policy—a surprising admission.
As hon. Members know, the Government encourage people to make private pension provision for their retirement by offering generous tax incentives. Contributions paid by both individuals and employers to occupational and personal pension schemes, including stakeholder pension schemes, get full tax relief, as do pension fund investment returns and capital gains. After—
Mr. Garnier rose in his place and claimed to move, That the Question be now put.
Question put, That the Question be now put:—
The House proceeded to a Division.
Mr. Patrick McLoughlin (West Derbyshire): On a point of order, Mr. Deputy Speaker. One Lobby has been emptied but there seems to be a delay in the other Lobby. Is there any chance of checking that out?
Mr. Deputy Speaker: The hon. Gentleman can leave such matters to the Chair. I ask the Serjeant at Arms to investigate the delay in the Lobby.
The House having divided: Ayes 127, Noes 29.
AYES
Ainsworth, Peter (E Surrey)
Arbuthnot, rh James
Atkinson, David (Bour'mth E)
Atkinson, Peter (Hexham)
Bacon, Richard
Baldry, Tony
Barker, Gregory
Bellingham, Henry
Bercow, John
Beresford, Sir Paul
Blunt, Crispin
Boswell, Tim
Bottomley, rh Virginia (SW Surrey)
Brady, Graham
Brazier, Julian
Browning, Mrs Angela
Burns, Simon
Burt, Alistair
Cable, Dr. Vincent
Cameron, David
Chapman, Sir Sydney (Chipping Barnet)
Chope, Christopher
Clappison, James
Clifton-Brown, Geoffrey
Conway, Derek
Cormack, Sir Patrick
Curry, rh David
Davis, rh David (Haltemprice & Howden)
Djanogly, Jonathan
Duncan, Alan (Rutland)
Evans, Nigel
Fabricant, Michael
Fallon, Michael
Field, rh Frank (Birkenhead)
Field, Mark (Cities of London & Westminster)
Flight, Howard
Flook, Adrian
Forth, rh Eric
Fox, Dr. Liam
Francois, Mark
Gale, Roger (N Thanet)
Garnier, Edward
Gibb, Nick (Bognor Regis)
Gillan, Mrs Cheryl
Goodman, Paul
Gray, James (N Wilts)
Grayling, Chris
Green, Damian (Ashford)
Grieve, Dominic
Hague, rh William
Hammond, Philip
Hawkins, Nick
Heald, Oliver
Heathcoat-Amory, rh David
Hendry, Charles
Hoban, Mark (Fareham)
Horam, John (Orpington)
Howard, rh Michael
Howarth, Gerald (Aldershot)
Hunter, Andrew
Jack, rh Michael
Jenkin, Bernard
Johnson, Boris (Henley)
Key, Robert (Salisbury)
Kirkbride, Miss Julie
Knight, rh Greg (E Yorkshire)
Leigh, Edward
Letwin, rh Oliver
Liddell-Grainger, Ian
Lilley, rh Peter
Loughton, Tim
Luff, Peter (M-Worcs)
McIntosh, Miss Anne
Mackay, rh Andrew
Maclean, rh David
McLoughlin, Patrick
Malins, Humfrey
Maples, John
Mawhinney, rh Sir Brian
Mercer, Patrick
Mitchell, Andrew (Sutton Coldfield)
Moss, Malcolm
Murrison, Dr. Andrew
Norman, Archie
O'Brien, Stephen (Eddisbury)
Ottaway, Richard
Page, Richard
Paice, James
Paterson, Owen
Prisk, Mark (Hertford)
Randall, John
Redwood, rh John
Robathan, Andrew
Robertson, Hugh (Faversham & M-Kent)
Robertson, Laurence (Tewk'b'ry)
Roe, Mrs Marion
Rosindell, Andrew
Ruffley, David
Selous, Andrew
Shephard, rh Mrs Gillian
Simmonds, Mark
Simpson, Keith (M-Norfolk)
Soames, Nicholas
Spicer, Sir Michael
Spink, Bob (Castle Point)
Stanley, rh Sir John
Steen, Anthony
Swayne, Desmond
Swire, Hugo (E Devon)
Syms, Robert
Tapsell, Sir Peter
Taylor, Ian (Esher)
Taylor, Sir Teddy
Tredinnick, David
Tyrie, Andrew
Walter, Robert
Watkinson, Angela
Whittingdale, John
Widdecombe, rh Miss Ann
Wiggin, Bill
Wilkinson, John
Willetts, David
Wilshire, David
Winterton, Ann (Congleton)
Winterton, Sir Nicholas (Macclesfield)
Yeo, Tim (S Suffolk)
Young, rh Sir George
Tellers for the Ayes:
Mr. George Osborne and
Mr. Nigel Waterson
NOES
Allen, Graham
Bryant, Chris
Buck, Ms Karen
Byers, rh Stephen
Casale, Roger
Corbyn, Jeremy
Dismore, Andrew
Eagle, Maria (L'pool Garston)
Fitzpatrick, Jim
Flint, Caroline
Keen, Ann (Brentford)
Kelly, Ruth (Bolton W)
Kemp, Fraser
Lammy, David
Linton, Martin
Love, Andrew
McCabe, Stephen
McIsaac, Shona
McKenna, Rosemary
Mandelson, rh Peter
Munn, Ms Meg
Pound, Stephen
Prentice, Ms Bridget (Lewisham E)
Quinn, Lawrie
Shipley, Ms Debra
Skinner, Dennis
Vis, Dr. Rudi
Wright, Anthony D. (Gt Yarmouth)
Wyatt, Derek
Tellers for the Noes:
Mr. Nick Ainger and
Mr. Gerry Sutcliffe
Question accordingly agreed to.
Question put accordingly, That the Bill be now read a Second time:—
The House proceeded to a Division.
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