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Mrs. Iris Robinson (Strangford) (DUP): Is the hon. Gentleman aware of the double injustice meted out to the former employees of Irish Fertiliser Industries? Workers in the Northern Ireland plants will receive only about 20 per cent. of their entitlement while those who were based in the plants in the Irish Republic will get their full entitlement. Should not the Government press the Irish Government to ensure equity?
Kevin Brennan: I doubt whether the hon. Lady is making an argument for a united Ireland, but I take her point and sympathise with the workers whose cases she eloquently highlighted in her intervention.
I believe that the Government accept, and have great sympathy for, many of the arguments. They have given tremendous attention to cases, met many affected workers and been genuinely moved by their stories. They have shown a willingness to help if possible. However, I understand the concerns that they have raised. Worries about cost and how one draws a line are not to be baulked.
Although it is easy to make the sums appear and sound large—huge amounts of money are involved—let us be clear: the state provides tax incentives to private pensions. We cannot pretend that the state has nothing to do with private pensions. It provides them with tax incentives of up to £14 billion a year. Half of that goes to the top 10 per cent. of taxpayers and a quarter to the top 2.5 per cent. We could reduce the costs if we stopped buying annuities—Dr. Ros Altmann made that point well—and allow the pension funds to fulfil their current commitments, until the point when they need more funds. Some pension funds might recover in that period
if, as expected, the stock market recovers. During that lull, the Treasury could set aside funds for an occupational pensions assistance board of some sort. I do not mind whether it is associated with the pension protection fund, as the hon. Member for Havant (Mr. Willetts) mentioned, or whether it should be insulated from that so as not to confuse matters.Whatever the method, it should be possible to provide some sort of assistance board, for which we would not have to pay out for many years. I appreciate that the costs may, according to one estimate, eventually be about £100 million a year. Another estimate from a TUC pension adviser is that it is likely to be closer to £50 million a year. Although that is a large sum, it is a small proportion when compared with Government involvement in subsidising private pensions. We must bear it in mind that many workers will claim the pension credit if they do not receive some form of assistance. They do not want to do that when they believe that they have made all the necessary provision for their retirement and that they should be paid accordingly.
Let us consider the point about drawing a line. It would be helpful if we all acknowledged—I make a special plea to Conservative Members to do so—that we are not considering Equitable Life but a completely different issue. It is neither Equitable Life nor Maxwell. There are two main reasons for that: compulsion was involved for many of our constituents and there was a lack of a proper health warning. The problem has largely developed since the Pensions Act 1995, and all those who have been affected by a specific date should be permitted to apply to an occupational pensions prior claims assistance board.
We are not considering fat cats. A medal should be struck for Dr. Ros Altmann for all her work on the matter. She estimated that for the average worker—the active pensioner—we are talking about a pension of a maximum of only £8,500. We would not let that happen to our parents or to us, and Ministers would not let it happen to them. We should not let it happen to our constituents.
3.4 pm
Mr. David Ruffley (Bury St. Edmunds) (Con): What on earth have the Government been doing for the past six and a half years? The pensions industry is in a mess, pensioners are worried and Ministers appear to believe that serial consultation, with no results, is an adequate substitute for the serious radical reform that we need of our private and public pension provision.
In December 2002, the Government set out, in response to a question, the list of Government consultations that had taken place since August 2001. Yet, unbelievably, Ministers were unable to provide details of their consultations between May 1997 and August 2001. They gave the following reason for not providing the information:
- "A detailed list of consultations before this date"—
- "is not readily available and could only be provided at disproportionate cost."—[Official Report, 9 December 2002; Vol. 396, c. 140W.]
Adair Turner, chairman of the Government's Pensions Commission, said that in the past five years
- "Sixty per cent. to 70 per cent. of private sector defined benefit schemes—weighted by number of employees—have closed to new members".
In our naivety, we might have supposed that a new measure called "Pensions Bill 2004" would, after all this time, include some radical and effective provisions. It is any Government's duty to supply them in circumstances in which pensioners cry out for effective action. Such reform was not to be. The Bill fails on several counts. It contains no serious proposals to reform and improve the basic state pension provision, especially in a way that will rein in the pernicious effects of means-testing, about which my hon. Friend the Member for Havant (Mr. Willetts) has often spoken so eloquently.
The reform of the basic pension is a prerequisite for encouraging employees to make more private provision through personal or occupational pensions. One needs a solid platform of basic state provision from which to float pensioners off means-testing and give them the confidence to invest over and above state provision without the risk of the means test kicking in and making their extra and responsible private savings throughout their lives of nugatory value.
Alan Howarth: Has the hon. Gentleman estimated the level of the basic state pension necessary to float pensioners off means-testing, and how much it would cost?
Mr. Ruffley: I did not say that we would devise a scheme in the first term of a new Conservative Government—[Interruption.] Labour Members should listen. I never said that we could devise a scheme to float all pensioners off the means test in the first term of office. Change would be incremental. My hon. Friend the Member for Havant has described relinking the basic state pension with earnings in the first four years of any Conservative Administration. That would deliver approximately £8 to £10 a week for the average pensioner. That is a start, which would get rid of the bottom end of the means test. The election of successive Conservative Administrations would mean that we could make even more progress on whittling away the disgraceful means test.
John Robertson: The hon. Gentleman has mentioned a figure of £8 to £10. Where would that leave the 3,000 beneficiaries of pension credit in Havant, who receive more than £40 extra a week?
Mr. Ruffley: The hon. Gentleman should refer to the excellent pamphlet, "A Fair Deal for Everyone on Pensions", which is on the Conservative central office website. I do not have time to go into that now, but he will there discover the answer to his question. We will also find savings from the administration of the means test, and there are many other ways in which we can ensure that no pensioner who is currently at or just
above the level of the old minimum income guarantee, or the guaranteed pension level, will be a loser in any shape or form.The elegant insight into cutting into the means test that my hon. Friend the Member for Havant supplied shows an imaginative and simple solution. That elegant solution is to boost the basic state pension in ways that would provide more incentives to save, and fewer disincentives to do so. Although the hon. Member for Glasgow, Anniesland (John Robertson) mentioned the pension credit, I stress to him that there would be no losers under my hon. Friend's proposal. The hon. Gentleman should have faith in the brilliance of my hon. Friend who, unlike Labour Members, knows what he is doing. My hon. Friend has displayed imagination in coming up with his idea. Labour Members might find counterintuitive the idea that the Conservatives want to restore the earnings link, but the proposal works and the numbers stack up—in the first instance, for the limited period of the first four years.
The other problem with the Bill, apart from the lack of imagination to which I have referred, is that it makes no constructive proposals for reforming occupational pensions in a way that would prevent future losses of the kind that we saw in Allied Steel and Wire and other depressing cases.
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