Previous SectionIndexHome Page

Maria Eagle: On a point of order, Mr. Deputy Speaker. The hon. Member for Sutton Coldfield (Mr. Mitchell) accused me of quoting selectively from the Select Committee report—

Mr. Deputy Speaker: Order. I hate to interrupt the Minister so quickly, but this sounds more like a matter for debate than a genuine point of order. We are short of precious time, and perhaps this is an issue that she can take up at a later date.

6.43 pm

Paul Holmes (Chesterfield): This has been a truncated debate on an important issue, but despite its brevity it has been excellent. My hon. Friend the Member for Northavon (Mr. Webb) gave his usual masterly tour de force. As he does every time he speaks on this subject, he not only explained the complexities of the pension system in a clear and understandable way, but made it entertaining. He outlined the failures of the inadequate state pension, the nightmare of means-testing, and the Government target through which they set out to miss 1 million of the poorest pensioners—who should be entitled to the tax credit—just as they missed one third of those entitled to the minimum income guarantee. He also outlined the failure of the stakeholder pension.

The Under-Secretary of State for Work and Pensions, the hon. Member for Liverpool, Garston (Maria Eagle) responded by denying that there was a pensions crisis, although nobody else seemed to agree with that. We heard that the Government had consulted widely and at great length, but so far to no avail. We heard criticism of our policy to target directly the poorest pensioners in the older age ranges through an age addition to the pension. The argument was that that would miss some of the younger pensioners whom the means-testing process was designed to hit. However, the Under-Secretary herself admitted that the Government expect to miss 1 million of the poorest pensioners anyway under the existing system. Our system would miss some, as my hon. Friend the Member for Northavon has

4 Jun 2003 : Column 266

pointed out in previous debates, but far fewer than the 1 million whom the Government plan to miss under the new scheme.

The Minister went on to tell us how simple the application process was for various means-tested benefits, particularly the pension credit. In that case, why do one third of the people at whom it is aimed fail to claim it? In closing, however, the Minister attacked Conservative policy, so I could find some agreement there.

The hon. Member for North-East Hertfordshire (Mr. Heald) started by denying his own party's statements about seeking 20 per cent. cuts in order to cut taxes. I certainly disagree there, but he made three valuable points with which I agree. He attacked the consultation culture, which is often bought at the expense of delivery. He mentioned the fact that the Government are considering taking council tax out of the inflation rate, yet the inflation rate is used for uprating pensions. We believe that measures of inflation should take into account the real and major cost to pensioners of items such as council tax. The hon. Gentleman also made a valid point—I recall encountering it elsewhere in my role as spokesman on disability—about the failure or absence of consultation on the introduction of PIN pads, which many pensioners simply cannot use.

The hon. Member for Wycombe (Mr. Goodman) made the valuable point that when in opposition, the Chancellor said that he intended to end means-testing completely. Instead, after six years in government, he has massively expanded it beyond anything that we have seen before.

In the few remaining minutes, I shall move on to two linked items from the motion. The new Minister for Pensions, when appointed, will be the sixth in six years. That rapid turnover, and the long delay in appointing a new Minister, suggests the lack of priority accorded by the Government to pensions issues. Similarly, I note a lack of urgency in dealing with the problems of private company pension schemes, which are a matter of great concern to many people. Numerous examples have arisen and been widely discussed in the House and across the country.

The Government urge everyone to pay into private pension schemes, warning that we can no longer rely on the state pension. Yet horror stories about underfunded schemes and schemes that fail to pay out when companies go into receivership are numerous and growing and can only deter people of working age from entering into such schemes. Examples abound: some have been raised today, and others in the past by myself and other hon. Members.

In 2001 Chesterfield Cylinders, one of six companies in the country owned by United Engineering Forgings Ltd., went into receivership. The employees, some of whom have worked for the company and paid into its pension scheme for 40 years, are still waiting to hear precisely what will happen, but have been advised that they may receive as little as 30 or 40 per cent. of the pension that they had saved for over their whole working lives. The following year, Dema Glass, also in my constituency, went into receivership and the workers were told exactly the same story: they would eventually receive a tiny fraction of the pensions that they had paid into all their working lives. Many of my constituents

4 Jun 2003 : Column 267

have been hit during the past few months by the problems of another company, Coalite Products Ltd., which is based just outside my constituency in Bolsover. Eighty-two of my constituents have been made redundant, and all now face vastly reduced pension payments for the same reason. We heard from the hon. Member for Cardiff, West (Kevin Brennan) about similar problems with Allied Steel and Wire.

The common factor is not fraud, as happened with the Maxwell pensioners. People are losing 50 to 60 per cent.—possibly more—of the pensions that they have paid for all their working lives, but it is legal. It is the product of several factors. The fall in stock market values is one, and pension holidays, which companies take in good times without making up for them in bad times, are another. Using funds for early retirement rather than redundancy robs the pension fund for people who are still in work. To add insult to injury, 15 per cent. or more of what is left in the fund often goes to the receivers in the long drawn-out process of winding schemes up.

I raised those issues in a letter of 2001 to the former Minister for Pensions, the right hon. Member for Makerfield (Mr. McCartney), in oral questions and in debate in the Chamber last year. Two years on, however, there has been no concrete response—nothing, other than saying that measures exist to counter fraud. As I said, this is not fraud: it is legalised robbery. The only concrete proposals from the Government side in those two years have come from the private Member's Bill introduced by the right hon. Member for Birkenhead (Mr. Field). I shall be here to support it on Friday 20 June.

I close by repeating the cry that we have heard from several hon. Members over the past two hours. The Government must act on pensions very quickly to tackle the pensions crisis and bring two years of dither and denial to an end.

6.49 pm

The Parliamentary Under-Secretary of State for Work and Pensions (Malcolm Wicks): This has been a useful and interesting debate, and I congratulate the Liberal Democrats on introducing it. In a spirit of generosity, I confirm that it is wholly fitting that the Liberals should talk about pensions, although when I told a political colleague that I intended to be generous to the Liberals, I was counselled against it. However, it was the Liberal Government in 1908—some time ago—who introduced the first old age pension, at the generous rate of 5 shillings. It was subject to a means test—and, apparently, a test of moral character. I have no doubt that the great majority of Liberal Democrat Members would satisfy at least one of those tests. Whether they would all satisfy the same test is not for me to judge.

A few years later, the Liberals introduced the National Insurance Act 1911, and it was the greatest of Liberal reformers, William Beveridge, who introduced the historic 1942 report on post-war social reconstruction. That is the Liberals' historical record up to the 1940s. Sadly, search as I might, I could find no further achievements in the following six decades. Indeed, while the winding-up speech from the hon. Member for Chesterfield (Paul Holmes) contained a critique, it did not contain any concrete proposals.

4 Jun 2003 : Column 268

The hon. Member for Northavon (Mr. Webb), who introduced the motion, made a useful speech, much of it an application for the job of Pensions Minister. I am on the working age side of the Department and have some responsibility, together with my right hon. Friend the Minister for Work, for Jobcentre Plus. It can normally find the job that people are seeking, but that may not be possible on this occasion. I shall discuss it with my colleagues, but the hon. Gentleman should not call us; we will call him—or not.

When we took office, the most immediate challenge that we faced was pensioner poverty. We have therefore had a strategy of targeting the poorest pensioners. We do not apologise for that; indeed, we are proud of it. The targeting has meant that the bottom one third of pensioners in terms of income have gained £3.5 billion a year, which is some four and a half times more than the resources that would have been necessary to restore the earnings link, as some suggested we should do. Pension credit will entitle the poorest 50 per cent. of pensioners to £400 extra a year in addition to what they receive at present.

We have heard some textual criticism of the Work and Pensions Committee's report, and dispute about its conclusions, but it is clear what is meant when it says:

The renowned Institute for Fiscal Studies, for which the hon. Member for Northavon has some regard—he may even have a pension from it—has said:

Next Section

IndexHome Page