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Mr. Steve Webb (Northavon) (LD): May I begin by joining in the tributes that have been paid to the outgoing Secretary of State? All of us who worked with him, whether in government or in the House, never doubted for a moment his sincerity and commitment, and we wish him well in his future role, whatever that might be, in the House and beyond.
The Liberal Democrats welcome this debate. No doubt when the former Secretary of State heard that we were announcing our pension proposals yesterday, he looked at them and thought, "There's the answer. No point in my carrying on." Very decently, the Conservatives have given us an opportunity to bring those proposals to the House at the earliest opportunity. We are therefore grateful to both the Government and the Opposition for setting us up in that way.
I have no problem with the Conservative motion. It has been deliberately designed to focus on the analysis that we have in common, and I will ask my hon. Friends to support it in the Division later this afternoon. The opportunity to hear some of the Conservative proposals and to scrutinise them in a slightly more detailed manner has been fruitful. As I mentioned to the hon. Member for Havant (Mr. Willetts) in an intervention, he has a problem. Were the Government to make the pledge that I anticipate—to link the pension credit to earnings—his policy falls down one of two unacceptable routes. If he says, "If the Government are going to link the pension credit to earnings, we will do it as well"—
Mr. Webb: As the hon. Gentleman says from a sedentary position, he could do. He would then link the pension credit to earnings, and the pension to earnings, but the gap between the two, as he knows, is huge—£25 a week at the moment. If both go up proportionately, that gap will never close. The chasm of savings disincentives, which he rightly describes, will therefore always be there.
Mr. Willetts: It will get no worse.
Mr. Webb: As he says, it will get no worse, but there will still be a substantial gap between the pension and the means test. All his rhetoric about incentives to save, his buy-one-get-one-free incentives, his lifetime savings account, and so on, will fall foul of the fact that people who do save will be penalised for doing so, because the chasm will remain.
The hon. Gentleman's alternative strategy, which I anticipate him operating were he ever to have the chance to do so in government, would be to break the link between earnings and the pension credit. That is the only way to close the gap, and that is what he wants to do if the Government do so. Compared with what the Government would promise—an earnings link for the poor—he would offer a price link for the poor. While we agree that many poor people fail to claim, more than 2 million poor people still do claim. For a Conservative party to stand for election on the grounds that it will give less money to poor pensioners than the Government would have done is the wrong priority and unacceptable. Either he does less for the poor, or he fails
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to tackle the savings incentive problem, if that is what the Government pledge. I therefore hope that the Government will pledge that, and I will be interested to know how the Conservatives will square that circle.
Naturally, the principal concern must be the direction in which the Government are taking us. I was dismayed by the Minister's response today. We all enjoy his bloke-ish style, but when we are dealing with matters of precision and entitlement, and with people making choices about their financial future, we need more than just being a good bloke. To say, "I am a layman, and when I say 'guarantee', we all know what I mean," is just not on. People have made mistakes about their future pension provision on the strength of Government leaflets that tell them that their pensions are guaranteed. We have discovered that the guaranteed minimum pension is not guaranteed after all. For the Minister, not having learned the lessons of the last few years, to tell people, "Don't worry, your company pension is now guaranteed," when it turns out that it is not, is unacceptable.
I hope that the Minister will take a message from this debate: however much he might like to be informal, people expect the Minister for Pensions to be the one person who is precise in his choice of language, so that they know where they stand.
Mr. Willetts: The hon. Gentleman will be aware that there are two theories about why the Minister goes around saying this. One is that he does not understand what he is saying. That is ungenerous. The other is that he is being very clever, and that every time he says the pension is guaranteed it becomes more difficult for the Treasury ever to do anything other than pay 100 per cent., or 90 per cent. At some point in the future someone will go to the Treasury and say, "You must cough up to rescue the pension protection fund after everything I have been saying." I do not know which theory the hon. Gentleman endorses.
Mr. Webb: Given a choice between whether the Minister is very stupid or very clever—[Laughter.] If it is a subtle negotiating ploy—and if it is, it is beyond me—it is a high-risk strategy. People are going to make decisions based on it, and if it does not turn out to be successful, other people will be vulnerable. That would worry me.
I am also concerned about the Minister's response to the perfectly proper question asked by the hon. Member for Havant about the position of workers between the time when the priority order on wind-up changed and the time when the pension protection fund comes in. I gather that in the other place Baroness Hollis has started referring to that period as the "sandwich year". I accept that we cannot talk in great detail about individual schemes. It may well be that the Turner and Newall workers' pension fund will not be wound up, and obviously we all hope that that is the case. But workers of that sort, and many others, want to know where they stand.
When the financial assistance scheme was presented to the House during the Report stage of the Pensions Bill, the Minister never said, "This will not apply to people from now on." If I am wrong I am happy to be corrected, but I am convinced that at no time during the
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hours we talked about the issue were we told that the protection would not apply in future. I do not suppose that, when we voted just a few months ago, a single Labour Member thought that if a firm in his constituency went to the wall after the vote, there was a danger that it would not be covered by the hardship fund. I do not suppose that one of the Minister's colleagues was aware of that.
And the Government have not even decided yet! The Bill will finish its progress through the House in a few weeks. When will the Government make up their mind? People need to know where they stand now. I find it extraordinary that the Minister says, "Well, we are still thinking about it." I think that that is totally unacceptable.
When the financial assistance scheme was proposed, we were promised something else on which the Government are now backtracking. We were promised a three-yearly review, which was another sop to the Back Benches. "Yes, perhaps £400 million is not enough," we were told, "but do not worry—we will look at it again in three years." The workers who have been suffering as a result of wind-ups, who have had meetings with the DWP, have been told by officials that the three-yearly review was not about the amount of money in the scheme, but about how it was carved up. If in three years' time it is proved that there was not remotely enough money, the Government have made no undertaking to increase the amount.
The basis on which the Minister's hon. Friends accepted his compromise is being undermined by the day. Four hundred million pounds was never enough. The promise was of a three-yearly review; but if the review does not examine the amount and the adequacy of that amount, what is the point of it?
Mr. Dorrell: Varying the liability.
We have grave concerns about what is being done for the security of occupational scheme members, and also about where things are going with pension credit. As the hon. Member for Havant said, we are given new figures each month about how they are going. The most recent figures, which have just come out, show that pension credit is running out of steam. The most recent month was the worst month ever for new cases: just 33,000 people went on to pension credit, while 1.7 million are missing out on the money to which they are entitled. The Government are not even beginning to scratch the surface.
Can the Minister confirm that every one of those 1.7 million who are missing out is, by definition, living below the poverty line—that every one is living below the minimum level that society considers adequate? If all those people are living below the poverty line, when the Minister talks about doing more for the poorest pensioners he should be concentrating on them. His policies are doing nothing to assist Britain's poorest pensioners. [Interruption.] They do not get the money. If they do not get the money, it is very hard to see how they benefit.
The Minister talked of the past and the future. There are three possible futures. The Minister's strategy of mass means-testing does not just apply to the 50 per
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cent. of all pensioners who are currently entitled to means-tested benefits; it is a projection that perhaps three quarters of all pensioners will be entitled to means-testing. This is the paucity of the Government's vision. Over seven years, the Government had a chance to establish a long-term vision of the sort of society in which they wanted older people to live. The vision that they have set before us is one of mass means-testing, in which three quarters of pensioners retire too poor to live on what they have accumulated, and have to go to the Government for a top-up. How can that be the vision that we want for the future?
When the Prime Minister was quizzed by a journalist at his press conference yesterday—"What is your answer to the pensions crisis, Prime Minister?"—he began by talking about welfare to work and incapacity benefit. Then he suddenly realised that that was not the answer to the pensions crisis, and said, "Well, we have asked Adair Turner." Seven years in, the Prime Minister's best answer on the pensions crisis is, "Adair Turner will report next month with some analysis"—to which we all look forward—"and after the election he will tell us what his recommendations are. Then we might look at the pensions crisis." That was the Prime Minister's answer. If the Prime Minister does not know how things are going, what hope is there for pensioners?
The Government do not seem to have a strategy for tackling the imminent crisis, but their long-term vision—their target—is the means-testing of three quarters of all pensioners. That is not a future that I want to see.
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