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Kevin Brennan: We all understand the usual reluctance of Governments to legislate retrospectively,
but is there not a special case to be made for such workers? I do not think that anyone, including even the most virulent opponent of the Conservative party, would suggest that the Pensions Act 1995 ever envisaged that workers would be left to suffer from the jaw-dropping injustice that resulted from the collapse of these companies. As the pension promise was made by successive Governments, is there not a case for considering providing compensation in these instances?
Mr. Webb: That is right. It is helpful that the campaign group, for which I have an enormous amount of respect, has not called for future legislation to be made retrospective. It is not suggesting that these workers will be covered by the insurance scheme in some way. It has done the work that Government should have done by finding out how many people are affected and how much it would cost to solve the problem. The solution is relatively cheap, because if all the balances of the funds go into one big pot of money, it will not be necessary to buy annuities, which are very bad value for money. It will cost the taxpayer nothing for a few years and then, on average, £60 million a year. In the context of even the Department's spare cash, that is affordable.
I hope that people across the parties will recognise that this small group of people has lost catastrophically. Some of them will end up claiming means-tested benefits if we do not help them, and the savings there have not even been included in the costs that I have given. The net cost could be less than I have suggested.
John Robertson: Will the hon. Gentleman tell me his party's policy on compulsory employer and employee contributions?
Mr. Webb: I will deal with that point in a second, but I want to round off my points on the issue of compensation.
Trying to amend the forthcoming pensions Bill against the will of the Government will always be an uphill struggle. I hope that between now and the final drafting of the pensions Bill further discussions will take place. I know that a number of Labour Members are keen for them to take place. My colleagues will be happy to help in a positive way to see whether something can be done. I know that many people have seen the Secretary of State and his colleagues about the issue, but the losses to some people are catastrophic. It is time that we addressed the problem.
I know that many folk wish to contribute to the debate, so I shall draw my remarks to a close. However, I shall deal with the intervention that I have just taken. If the strategy is not mass means-testing or the opportunistic restoring of the earnings link for a few years and then stopping it, what is the alternative way forward? The hon. Member for Havant and the right hon. Member for Birkenhead (Mr. Field) used to say—the right hon. Gentleman still does—that we can target poverty without resorting to mass mean-testing by using the fact that most poor pensioners are old pensioners. In that way, we avoid all the problems of take-up that the hon. Member for Havant referred to and can tackle the problem in a sustainable way. In the short term, using the state pension that is claimed but with additional
amounts for older pensioners tackles poverty effectively. However, in the longer term, the Liberal Democrats believe that compulsory contributions—we would have to begin with employers—are the way to ensuring that we do not let people retire poor and try to catch them inefficiently through a means test. We would make sure that as many people as possible build up good pension rights from the state and the private sector while they are working so that means-testing becomes for the few and not for the many.2.6 pm
Mr. Bill Tynan (Hamilton, South): I welcome this debate, but I am surprised that the Conservative party has chosen it for its Opposition day. Normally, it would select an issue on which the Government were failing and not making progress and on which the electorate were not benefiting from Government policy. When the Conservative party selected this debate, it was good news for the Government. Perhaps the choice is part of a plot to sustain the Labour Government in power until the Opposition manage, perhaps with a new leader, to attract some voter support.
We have no need to apologise for what we have done for pensioners. Many issues have been raised, and I commend the hon. Member for Northavon (Mr. Webb) on his thoughtful speech. He made several excellent points that I shall touch on briefly in my short contribution.
Targeting payments at the poorest people is essential. They are not able to save for retirement, and current pensioners do no have that luxury. The poorest people never had the option of being able to save for retirement, so there is no contradiction between some people saving for retirement and others receiving benefit from the Government. Such benefit can support the people who need it most and who never had the chance to save in the past. We must dispel the myth that targeting the poorest pensioners will create the conditions in which people will not save. The pension credit overcomes that problem and it creates an opportunity for people who have saved.
In the general election campaign, I remember speaking to someone whose support I was seeking. His big concern was the minimum income guarantee. He had contributed to a small occupational pension scheme and, because of that, he did not benefit from the minimum income guarantee. I was able to tell him that there would be a pension credit, and I asked for his vote. I hope that he voted for me. If he did not, he will now realise that what I said at the time was correct. We have introduced the pension credit and he will be one of the beneficiaries.
The issue of occupational pension schemes has been raised. I have come across the problems caused when Melville Dundas went into liquidation in Scotland. People who had 36 years' service and contributed to a sixtieth pension scheme are now worried that they will receive nothing. They do not know whether they will get 100 per cent., 10 per cent. or 15 per cent. of their pension. They have been told that the matter is in the hands of Aon and that they will have to wait and see what money will be available from the pot. We must address that issue in the future.
A television series that was broadcast over three Sundays a few weeks ago showed the dire poverty in which people lived in the early 1900s. I was fortunate
because I was not born until 1940, but I lived in a tenement. Conservative Members might not know what a tenement is—they will never have lived in one.
Mr. Peter Duncan (Galloway and Upper Nithsdale): I know them well.
Mr. Tynan: I am delighted that someone knows what a tenement is. I lived in a two-room and kitchen with three sisters, my brother and my mother and father—there were seven of us. My mum and dad had to let one of the rooms so that they could survive in 1940. One should think about the means-testing that applied at that time and the disdain with which people were treated when they asked for help from the state. If their request was successful, the uniform that they were given to wear was made up of the same jacket, trousers, blouse and skirt, so it could be recognised that they had been to the parish. That was a real stigma for those people. My mum and dad were too proud to accept such help because they did not want their sons and daughters to be identified as those for whom their mum and dad could not provide. That is what I call means-testing.
I despair when I hear people speaking about the 5 million people who are means-tested because elderly people in our society remember the stigma of the means-testing days. At the moment, we are reaching out to the people who most need our help. They have the opportunity to phone a helpline or ask a person such as an MP to help them to fill in a form so that they will receive more money. That is something that we should applaud. We talk about cross-party support, but if we were working efficiently and effectively, we would not worry about take-up because as long as we continue to refer to the means-testing that once existed and deprecate what exists now, we consciously encourage people not to participate in the pension credit. I implore every hon. Member to ensure that we do the best that we can to encourage people to take up the benefit.
Mr. Duncan: I am grateful to the hon. Gentleman for acknowledging that at least one Conservative Member knows what a tenement is. I accept that hon. Members of all parties want all benefits to be accepted by as high a proportion of the population as possible. Why does he think that after three years of pension credit, 1.4 million pensioners, by the Government's figures, are still not in receipt of it?
Mr. Tynan: There are people in this country who are in poverty and some who are not taking the opportunity to get recompense from the Government. We continue to debate means-testing but that system is stigmatised in this country. We must get out of the mindset of comparing the current system with what existed before. I believe—although I have obviously not impressed the hon. Gentleman given that he made his intervention—that it is essential that we do as should be done.
Mr. Oliver Heald (North-East Hertfordshire): When the last Conservative Government were in power, the Labour party talked about means-testing. In "Getting Welfare to Work", it said that means-tested benefits were claimed by more than 3.5 million people. The document went on to deplore the fact that 600,000 people did not receive the income support to which they
were entitled and said that those people were forgoing £14 per week and were among the poorest in Britain. The Chancellor—he was not the Chancellor then—called for the end of the means test. Now that Labour is in power and failing with the means test because people will not claim the benefit to which they are entitled, surely it is a bit rich for the hon. Gentleman and his colleagues to say, "Oh, don't let's talk about this; let's keep it quiet." We should not keep it quiet because it is a disgrace.
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