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Andrew Selous (South-West Bedfordshire): Like all of us, I am listening to the hon. Gentleman's speech with a great deal of interest. Does he agree that it is very worrying that the take-up levels for the MIG, which were sneaked out in an answer on the last day before the Whitsun recess, show that there has been no improvement in take-up over income support levels? So the Government's claims that things are going to get better are not borne out by last year's facts.

Mr. Webb: The hon. Gentleman is right. There is a myth that circulates in government, and as with many such myths, some of those who believe them are decent people—they are simply misguided. The point is that such non-take-up levels are inherent in mass means-testing. Simply providing a few more leaflets, a few more phone calls or a few more newspaper adverts will not sort the problem out. Fiendishly complicated schemes that are constantly changing and do not meet people's existing needs will always have the property to which the hon. Gentleman refers.

Mr. Oliver Heald (North-East Hertfordshire): Does the hon. Gentleman agree that the situation is getting worse? Some 600,000 did not claim what they were entitled to in 1997. That figure has risen to 700,000, and this year it is predicted that it will rise to 1.6 million. Even by 2006, the figure will still be 1 million. Is that not the scale of the problem?

Mr. Webb: The hon. Gentleman is right to point out that the scale of the problem is simply vast. The fact that 1 million people who are by definition poorer pensioners are not getting what they are entitled to cannot be acceptable.

It is not just the state scheme that—through an inadequate basic pension, a useless second pension and hopeless means-testing to top up the two worthless pensions—is failing. The private sector pension regime is also failing.

Kevin Brennan (Cardiff, West): Is it not disingenuous to describe the pension credit as a means-tested scheme, thereby associating it with schemes from the 1930s, for example, given that any test of resources will not have to

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be made weekly, as the hon. Gentleman knows? Will he tell the House how often any assessment will have to take place?

Mr. Webb: The key question is how the system is perceived by those for whom it is designed. If pensioners were given a choice between a system in which they have to give all the information about their incomes and personal circumstances and report substantive changes in those circumstances, and a simple system involving a higher basic pension for older pensioners, I have no doubt which they would prefer.

The Parliamentary Under-Secretary of State for Work and Pensions (Maria Eagle): Given that the hon. Gentleman is reluctant to answer the question asked by my hon. Friend the Member for Cardiff, West (Kevin Brennan), I shall remind him that the answer is once every five years.

Mr. Webb: I think the Minister will find that although that is the theory, the practice will be very different. For example, let us suppose that a pensioner couple are in receipt of the pension credit and one of them dies. Will the surviving partner have to wait for five years for reassessment? No, they will pick up the phone and report the change. Let me put another point to the Minister. If such people are to be reassessed only every five years, the Department will have to make an assumption about what is happening to their income during each of those five years. Let us consider the example of someone who has a company pension. Will the Department assume that that pension goes up in line with inflation each year? If the Department does, as I assume it will, someone who has a company pension that is not uprated in line with inflation will not get enough benefit. Will they have to ring the Department—assuming that they have worked out what is happening—and say, "You're not paying me enough because you haven't compensated me for the non-indexation of my company pension"? This is the new streamlined system that we are looking forward to. I hope that the Minister will clarify this question, because remarkably, I have yet to receive a straight answer to it.

As I said, it is not just the state system that needs attention; the private sector needs urgent—

Mr. Andrew Love (Edmonton): Will the hon. Gentleman give way?

Mr. Webb: I had better not, as there is an eight-minute limit on all contributions other than those from Front Benchers. I hope the hon. Gentleman will forgive me.

The Government were going to ride to the rescue of the private sector with the wonderful stakeholder pension, which was going to reach the parts that other pension schemes cannot reach. What has happened? Stakeholder sales are down by 22 per cent. on the previous year. Half of all sales in the first quarter of this year were not new; they were money being shuffled from one pot into another. The Minister doubtless has some wonderful figures on the billions going in, but what she may not mention is that a lot of it was already in pension schemes; it is simply under a different label. Nine out of 10 stakeholder schemes designated by employers have no money in them. I am not an expert on pensions, but

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I should have thought that having money in a pension scheme was a prerequisite of a good scheme, on the whole.

The Government are very fond of quoting the Association of British Insurers on this issue. The ABI says that stakeholder pensions


Those whom the ABI calls "wealthier people" are seriously wealthier people.

This does not apply to stakeholder pensions alone: the bedrock of pension provision has been the final salary company pension. Final salary schemes are disappearing so fast that there may be none left by the time the Government appoint a pensions Minister. Who knows? Nearly half of all companies offering a final salary scheme closed it to new members last year, and many more are thinking about doing so next year.

Many people have real anxieties about the threat to their company pensions. They have read stories in the papers, admittedly quite limited, about companies going bankrupt without there being enough money in the pension scheme to pay all the pensions. The current combined pension deficit of the top 100 schemes is £65 billion, which makes us enormously vulnerable. If one of those large firms were to go to the wall, hundreds of thousands of people could find the pensions that they have worked and saved for wiped out—and they could do nothing about it. That is why the issue is so urgent, and why the Government's delay is so culpable. People are really anxious, and the Government have failed to deliver.

Mr. David Drew (Stroud): The hon. Gentleman makes a compelling argument. The problem with the closure of final salary schemes and with what is happening in the public sector is often not talked about—the legacy of early retirement. The Conservative party's answer was always to get people off the books and force them—I use the term intentionally—into early retirement. We now have to pick up the pieces from that legacy. If people had worked to the normal retirement age, many of the problems in the public and private sector would not have come home to roost. Does the hon. Gentleman agree?

Mr. Webb: The hon. Gentleman is right to highlight that as one of several factors that have contributed to the deficits, including the plunging stock market, greater longevity and the £5 billion change to advance corporation tax. A raft of factors has affected the deficit, of which the hon. Gentleman's point is certainly one. The critical point is that with substantial deficits, if a scheme goes belly up, the retired members get the first crack and the people who have worked all their lives in the scheme—and are perhaps within a year of retirement age—receive next to nothing.

Pensions issues are part of a major debate and I shall make a couple of brief points. We must ensure that people are better protected. The right hon. Member for Birkenhead (Mr. Field) proposes to introduce a Bill that attempts to achieve that. There are no easy gains. If the pot of money is inadequate, giving more to one group

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means giving less to another. I have spoken to retired occupational pensioners who are unsurprisingly nervous about the whole agenda. We need some way of balancing the elements more fairly than we do now, which might require some cap on the entitlements of retired pensioners, some multiple for pension protection and more for those who are nearly at pension age and, frankly, cannot do anything about the problem. That is the avenue down which we should be going, and although the Government may have some sympathy with that proposition, they have made no proposals. They have to get on with it.

It has been suggested in the press recently that the Government want to introduce insurance for company pensions. That is an interesting idea, to which we should respond constructively. The idea is that, just as one insures a car against an accident, one insures a company pension in case the company goes bankrupt. The problem is that the Government have, hitherto, refused to say that they would stand behind such a scheme. Unless they do, we could end up with the insurance scheme going bankrupt as well. That would be the cruellest irony of all: to charge people insurance on their pensions, and then, when the company goes bankrupt, not to pay them because the insurance company cannot cope with the scale of the problem.


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