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Mr. Willetts: Let me make this absolutely clear. First, there has never been any proposal to abolish the pension credit. We wanted an alternative approach—we were supported in that by the Liberal Democrats and the right hon. Member for Birkenhead (Mr. Field)—but we never said that the pension credit should be abolished. If the Minister has any evidence that we ever said that, I should be very interested to look at it, because it was never in my mind. We want to increase the value of the basic state pension so that fewer pensioners need to receive it. If one increases the basic state pension, it follows that nobody loses. This is a policy in which there are no losers and the gainers are the people who are not claiming the pension credit. The Minister talks about the problem of the poorest pensioners; the problem is that 1.7 million of them who are entitled to the pension credit are not claiming it. They will be the main beneficiaries of our policy: that is why it is better.

Malcolm Wicks: The record will show that, by implication, the shadow Secretary of State agrees with the Leader of the Opposition—I suppose that that is what is one has to do in his position. Under his strategy, those who are entitled to pension credit and claim it will not be better off. That is inevitable, because if the strategy for four years or so is to raise the basic state pension in line with earnings, meanwhile only raising pension credit in line with prices, most of the resource will go to the better-off and less of it will go to the poorer. That is why, although the Shadow Secretary of State is in denial, I pay tribute to the Leader of the Opposition for understanding the unjust statistics that would be involved in the implementation of the Tory strategy.

Mr. McLoughlin: The Minister keeps talking about helping the worst-off pensioners. Why then is the winter fuel allowance paid to everybody irrespective of their income?

Malcolm Wicks: Because our pensions strategy, like all pensions strategies, seeks to strike the right balance between overall support for all pensioners and special support for the most hard-pressed, many of whom are women and the older elderly who do not have full national insurance contributions. Different Administrations will reach different judgments on that balance; I am presenting our judgment. The fact that older people—for physiological reasons and because they often live in the least energy-efficient homes—may suffer from the cold more than younger people is an added reason for the winter fuel payment.
 
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Mr. James Arbuthnot (North-East Hampshire) (Con): I should like to credit the Minister with a genuine wish to help the poorest pensioners, but does he not accept, like the right hon. Member for Birkenhead (Mr. Field), that over a period of years that will inevitably be achieved at the expense of building up the long-term pension provision that this country had in 1997, of which we were able to be so proud and which we sadly no longer have?

Malcolm Wicks: I hope to address those issues later. Obviously, I always take seriously the important contributions of my right hon. Friend the Member for Birkenhead (Mr. Field.). I look forward to his helpful comments: the wounds heal faster than one might think.

Next month sees the first anniversary of pension credit payments. More than 3 million people in Great Britain now receive pension credit, two-thirds—2 million—of whom are women. What is more, more than 1.9 million households receive more money than before because of its introduction.

In today's complex 21st century society, the role of Government in pensions has evolved considerably since Parliament first legislated—courtesy of the Liberals—to introduce the state pension. That was slightly less than 100 years ago. [Interruption.] The hon. Member for Havant says that the Liberal proposals of our friend Lloyd George were means-tested. In fact, as I have told the House before, they were subject to two tests—a test of means and a test of moral character. I may also have said that of Members currently on the Liberal Benches half would fail one test and half the other, although I am not sure who would be in which half.

To meet the demographic challenges of an ageing population, Government policy needs to be affordable, sustainable and fair. The Government's approach has rightly targeted extra state support at those who need it most and encouraged private funded provision for those who can afford to save. That has enabled us to strike a fair balance between being fair to the poorest, fair to those who have saved, and fair between generations by not levying big tax rises on future generations. By contrast, the policies of the Conservative Opposition are unaffordable, unsustainable and unfair.

Mr. Geoffrey Robinson (Coventry, North-West) (Lab): Will my hon. Friend give way?

Malcolm Wicks: I will, but then I must make some progress in order to be fair to others.

Mr. Robinson: I am sure that my hon. Friend will come to this point, and I was anxious not to interrupt his exposition, but I am grateful to him for giving way. We have been in correspondence regarding Turner and Newall and Federal Mogul, and I thank him for his constructive tone in that. While in no way wishing to make his difficult position more difficult, he must be aware that that matter affects the constituencies of many Members on both sides of the House and that there is great concern about it. If by some cruel accident of timing the pension were to find itself in limbo between the two schemes, it would be unthinkable to us, and ethically and politically impossible for the Government,
 
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were the Government not to take action to ensure that a certain level of provision in line with the pension protection fund was forthcoming.

Malcolm Wicks: I understand my hon. Friend's concern about that issue, to which I shall turn shortly. I certainly understand its importance.

Conservative policies are unaffordable, as even on the basis of the party's own figures there would be a £500 million-a-year black hole by the end of a Tory Parliament. Does anyone really know where their money would come from? Last year at the Conservative party conference, the hon. Member for Havant said that he would abolish the

"useless schemes and wasted money"

of the new deal. He has been quite honest about that. Nearly 1 million people have found work through the new deals, yet the shadow Secretary of State would scrap them. They have been a major contributor to our ability to move back towards full employment and to abolish, among other things, long-term unemployment among young people.

Conservative policies are unsustainable because the earnings link would cost £12 billion by 2020, rising to £69 billion by the middle of this century—2050. No party—certainly, no tax-cutting party—could ever deliver those funds. Moreover, their policies are unfair, because an in-built feature is that within around 20 years incomes for the poorest would drop from 21 per cent. of average earnings to 16 per cent. of average earnings. This Labour Government—indeed, only a Labour Government—have proved able to tackle pensioner poverty while ensuring that our policies are affordable, sustainable and fair.

However, tackling pensioner poverty is only part of the story. Again, I would like to ask hon. Members to sit back for a moment and imagine. This time, I ask them to imagine a Britain where people lose their pensions when their company goes bust and leaves the pension scheme underfunded; a Britain where people are not saving enough for their retirement and individuals have lost confidence in the security of their pensions.

We have seen that Britain all too recently. The challenges that face—[Interruption.] The challenge is not to harrumph but to take action. The challenges that face funded pension provision in this country are very real. However, the Government—and only a Labour Government—have acted to meet those challenges.

I have met many of those who lost some or all of their pensions when their employer became insolvent. I have seen what it has done to their lives as I heard their quiet and dignified stories of shattered security and shattered dreams for the future. Sometimes their health gives way through stress, sometimes family life and marriages are affected. All those lives are changed for ever.

However, I have also met people who do not face that risk. Members may remember Mr. Johnson. I first mentioned him on Second Reading of the Pensions Bill. He is 58, has worked for the same employer for 30 years and has contributed to his occupational pension throughout that time. When his employer went bust, Mr. Johnson knew that his pension was safe because he is an American and the US Pension Benefit Guaranty Corporation meant that his pension savings had been protected for decades.
 
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What Government could sit back and watch while hardworking Britons lost their pensions? Not this Government. While Opposition Members were busy declining to give the Pensions Bill a Second Reading—we shall remind them of that in the months until next spring or the following spring—the Government took pride in the fact that, through the Pensions Bill, we were making the pension protection fund a reality. It will bring genuine security and peace of mind to more than 10 million defined benefit pension scheme members. The Government, and only this Government, are building confidence that a pension promise made will be a pension promise honoured.

I am afraid that there is more of the sorry tale of woeful resistance from Opposition Members. Some of those who had their accrued rights cut were employees who worked for solvent employers. When those employers wound up their defined benefit scheme underfunded, non-pensioner members could receive cash equivalent transfer values, which were too low to provide them with the pension that they expected at retirement.

Again, the Government acted. We introduced the full buy-out regulations so that trustees can require solvent employers who want to wind up their pension scheme to buy out members' rights in full. However, as recently as July, the Leader of the Opposition prayed against the regulations. The Labour Government, and only the Labour Government, are building confidence that a pension promise made will be a pension promise honoured.

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