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Mr. Webb: As the hon. Gentleman says from a sedentary position, up to 3 million poorer pensioners will have to wait and see. It is therefore no surprise that the Pensions Policy Institute has looked at the Conservative proposals and has found that they favour the better off.
Mr. Willetts: When I said, "Wait and see," what I meant was that we will wait and see what the Government say they will do to the pension credit. It is perfectly reasonable for us to say that, in preparing our
plans, until we know what they will do to the pension credit, it is sensible for us to assume price indexation, which is all that they are committed to do. In relation to the Pensions Policy Institute, does the hon. Gentleman accept that the other flaw in that analysis is that it assumes 100 per cent. take-up? As one of the big problems with these means-tested benefits is low take-up, there is no point modelling effects that assume away one of the biggest problems that we all know that our constituents face.
Mr. Webb: The Pensions Policy Institute's analysis of the Conservative proposals published today considers an illustrative person who claims the pension credit. As I just said to the hon. Gentleman, of the 4 million poorest pensioner households in the land, we are agreed that 3 million will claim it, and 1 million will not. While the hon. Gentleman's proposal will be better for the 1 million who will not do so, it will be worse for the 3 million who will, because he wants to give them price indexation.
Kevin Brennan: As the hon. Gentleman has such a command of statistics, and as he is talking about illustrations, can he enlighten the House as to what proportion of pensioners in this country have savings of £20,000, as in the illustration given by the hon. Member for Havant?
Mr. Webb: Among pensioners who might consider claiming the pension credit, it would certainly be a tiny fraction. The hon. Member for Havant made another somewhat disingenuous observation. He harangued the Government for assuming that pensioners can get 10 per cent. on their savings when they apply for the pension credit, not mentioning that when he helped to introduce this system in 1988, the assumed rate was 20 per cent. Perhaps he has changed his view.
It gets worse. How will the largesse be paid for by scrapping the new deal, which is a flat amount every year, whereas the cost of the earnings link is a rising amount every year? That provides no sustainable way of paying for it. The hon. Gentleman's other proposal, apart from the netting off of means-tested benefits, which is of course what would happen, is forcing lone parents with secondary school age children to apply for jobs. Apparently, that would save £400 million a year by the end of this Parliament. I do not follow that logic. If we require a lone parent with secondary school age kids to look for work and she does not get it, we have not saved anything. If she does get it, unless it is a new job that has appeared like confetti from the sky, it is a job that someone else who was otherwise on benefit would have taken. Therefore, where does the £400 million come from, and how is the policy sustainable when most of it is paid for by abolishing something that costs the same amount every year? It simply does not add up. I hesitate to lecture the hon. Gentleman on fiscal rectitude, but as we believe in it in our party, I should share it with him.
Reference has also been made to other aspects of the hon. Gentleman's proposals for solving the pension crisis. The hon. Member for Cardiff, West (Kevin Brennan) mentioned the fertility proposals of the hon. Member for Havant. I have been back to the Conservative website to find a rather amusing proposal
on that front—[Interruption.] There is a different password for the section on fertility. The hon. Member for Havant's policy is headed, "Make more babies to solve EU population problems". It states:
- "David Willetts has called on couples"—
- "to have more children to counter Europe's ageing population and boost . . . flagging economic growth."
- "Europe has a birth-dearth."
- "Feminism is the new natalism."
What we have had from the Conservatives is an entirely opportunistic policy of allegedly restoring the earnings link and breaking it in four years, smaller rises for the poorest pensioners that cannot be paid for anyway, scrapping rebates—which is an £11 billion tax hike but they are not sure where the money will go—and, dare I say it to the hon. Gentleman, saying different things to different audiences. I always find that very difficult.
What of the Government's strategy for dealing with the pensions problem? The Secretary of State did not counter the hon. Gentleman's assertion that so far virtually everybody receiving the pension credit was already on the previous system. He published figures yesterday saying that 1.9 million pensioner households are now getting payments of pension credit. I understand that 1.8 million pensioner households, to the nearest 100,000, were getting the minimum income guarantee—I hope that he will correct me if I am getting anything wrong. That implies only about 100,000 to 150,000 new extra recipients. He has written to 1.6 million pensioner households, so fewer than one in 10 of them are gaining from those letters. If I am wrong on that, I hope that he will clarify the matter. That gives us real cause for alarm, however, about the prospects for hitting even his meagre take-up targets. If only one in 10 of the people to whom he writes are claiming, what prospect do we have of reaching the 4 million who should be entitled, or even the 3 million that he is trying to reach? If what is happening is that vulnerable pensioners are getting those letters and do not know what to do with them, or are not responding in significant numbers, his whole policy is flawed. He has not queried those numbers or that analysis, so we must take it that it is correct.
The other key pension crisis that we need to address is confidence in occupational pensions. If people's occupational pension rights are not honoured, they will find themselves claiming state benefits, and many people do not want to be in that position. At our party conference, we were visited by workers from Allied Steel and Wire, including workers from the sister plant to the one in the constituency of the hon. Member for Cardiff, West, and by workers from Dexion in Hemel
Hempstead. They will not benefit from the pension protection fund to which the motion refers, because it will come in too late for them.We have joked about a cross-party consensus, and a key question for the House is the problem faced by a relatively small number of people. About 20,000 seems to be the best estimate, but if the Secretary of State disagrees with that figure, I hope that he will provide me with an alternative. Those people have worked hard for firms and saved hard, but found as they came up to retirement that their company had gone bankrupt and that there was not enough money in the pension fund. Those people have lost catastrophically; they have lost not just a pound or two but potentially all their life savings.
We met Dave Allen from Dexion in Hemel Hempstead, who told us that he was coming up to his 40th year of working for the company. All his pension was in that pot and, because he will receive virtually no pension, he feels that he has failed himself and has failed to provide for his wife in retirement. In the town where the company is based, the people who have retired and who are drawing their pensions cross the road rather than talk to him. They feel embarrassed, because they receive a pension when he will not. The problem is dividing communities and causing catastrophic losses for relatively small numbers of people.
Although we are not talking about millions, the problem is critical for each of those whom it affects. I condemn the Government because they do not know how many people are affected. When a scheme winds up, the Government do not ask for and collect the information. Ros Altman and the campaign groups have been to see the Secretary of State and they have come up with their own estimates. They think that about 20,000 people are affected and that it will cost an average of £60 million a year to sort out the problem. The Secretary of State's Department has annual unallocated expenditures of £150 million for next year and £200 million for the year after that. I should have thought that, prior to the introduction of the pension protection fund, such a scheme would make good use of unallocated departmental resources to help a small number of people who would otherwise suffer catastrophically.
I listened to the Secretary of State's conference speech with great care, and he repeated the same soundbite in his speech today. He said:
- "A pension promise made must be a pension promise honoured. When a firm goes bust, it can't be right that workers see their life savings destroyed."
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