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Mr. Webb indicated dissent.

Mr. Davies: No, he did not. I am greatly relieved, and the hon. Gentleman's high reputation in my eyes is at no risk of damage.

Secondly—he repeated this point on several occasions—he favours the abolition of the contributory principle. The most shocking and thought-provoking thing that came from the Government this afternoon was the new Secretary of State's implication that he is tempted in that direction, too. I was struck by the irony of the Liberal spokesman making that point, when Liberals invented the contributory principle—Lloyd George and Beveridge will be spinning in their graves. I agree with the right hon. Member for Birkenhead, who lucidly deconstructed that argument.

The economic arguments on contributory entitlements concern both incentives to save and to work. No one will work a day longer than they need to if they are working for benefits that they would get anyway, even if they did not work. That would be economically crazy and morally unjust. A civilised society cannot send out the signal that it does not matter whether one works because the rewards will be exactly the same. That message would corrode not only our economy, but our value system. I object to that and I want to place my objection on record.

I should like to make one or two suggestions. Despite the enormous damage that the Government have done to the occupational pensions system, especially the defined benefit aspect of occupational pensions, we should not give up on it. I hope that the next Conservative Government will make reviving such schemes a priority, but we must think carefully about how to do that. Tax and other incentives are always expensive and one must therefore be cautious. I hope that my Front-Bench colleagues will consider the possibility of following the example of the American employee retirement funds—the famous Employee Retirement Income Security Act, or ERISA, scheme. A central principle is that the tax benefits of the regime that applies to the funds are available only to a scheme that is open to all the relevant firm's employees. That breaks the distinction between special deals for top executives and provision for everyone else in the company.

There will always be a powerful incentive for members of top management to devise pension schemes that are good for them. As we know, defined benefit schemes are the best and impetus towards them will continue despite the difficult experiences under the Labour Government between 1997 and 2005. We should harness that impetus and ensure that there is an incentive to establish a defined benefit scheme with the same conditions for all employees. Clearly, the actual benefit will differ, depending on whether the person's final salary is £20,000 a year, £200,000 a year, or even £1 million a year in the case of a company chairman or chief executive. Nevertheless, the terms, conditions and principles will be the same for all employees.
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The Americans have run such a system extremely well for many years. I believe that I am right—doubtless the hon. Member for Northavon will correct me if I am not—that the ERISA system was introduced in the 1960s. It is therefore not experimental or untried.

We need to go back on means-testing, which is a disease. Its appalling consequences are economic, social and, indeed, moral in the sense of injustice that it creates. I have already elaborated a little on that. How do we go back on it? Of course, some means-tested benefits have to exist—we all appreciate that we must have some sort of safety net if we believe in a civilised society, with nobody starving on the streets. There has always been an element of means-testing in the system. Even in the days of Beveridge, the system was not purely contributory.

However, we could and should switch the positions of the pension credit and the state retirement pension. The latter should be earnings related. My hon. Friend the Member for Havant (Mr. Willetts) is right about that; his policies have been thoroughly worked out over several years. Indeed, he and I were shadow Cabinet colleagues when the proposal was introduced. It makes sense. Of course, one sets a programme for only the length of the next Parliament. At the end of it, we would have to consider the extent to which it was possible to continue with the earnings linkage. However, I am convinced that it is a sensible move.

The pension credit should not be abolished. We cannot abandon the poor pensioners about whom the hon. Member for Aberdeen, South (Miss Begg) spoke with great and genuine feeling in a good speech. Although it possibly reflected a different political standpoint from mine, I genuinely admired it. We cannot leave people destitute. However, the pension credit should be linked to prices so that, instead of indexing at a higher rate the benefit that people who do not work or contribute get, we should reward best those who have worked and contributed, while providing something for people who have no contribution record. That is rational, economically sensible, prudent, fair and just, and therefore economically and morally sustainable.

I want to deal with the issue of age discrimination, which was raised earlier by a Labour Member. As life expectancy increases, it is generally expected that we will have a longer active life—to which I look forward, God willing, if my electors and the Almighty allow it to me. It is completely barmy to produce documents that say that we will need to work longer, and even to provide moral exhortation to people to work longer, and yet to have a situation in which the greatest form of discrimination in the job market is not with regard to sex, race or disability—from which we have suffered in the past, and which have been effectively dealt with by legislation—but age. All of us have people who come into our surgeries who are in their 50s, well qualified, motivated and keen, who have sent off 200 job applications and who do not get a single response. They know why: it is because they declared their age. Occasionally, I have told them to try not declaring their age, and it works. I have carried out some experiments, and I take full responsibility, having said it in the House of Commons. It is not deception; it is self-protection from a complete scandal.
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The best solution would be an age discrimination Act. I do not want to blow my own trumpet too much, but I first proposed a private Member's Bill on age discrimination, under the ten-minute rule, under the Major Administration. Of course, I got nowhere. I tried again at the beginning of the first Blair Administration, and of course got nowhere. I asked the Prime Minister at Prime Minister's questions back in 1998 what he was going to do about age discrimination, as I thought that he was in favour of doing something. He said that he and the Government were still committed to that. After seven years, we are still waiting, so I hope that something can be done.

My final point is simple. It is a party political point, but it seems artificial not to say it because it is blatantly clear. The Government now say that they will not tell us their policy on pensions and pension-related issues until after the election. But they have been thinking about it for months—they have commissioned a report, they are talking about it now, and they have several months to go before the election—so that will not wash. I have great regard for the Minister for Pensions; he is a great expert, and he has said some very sensible things on the subject, about which we have been talking for many years in different contexts, on the Back Benches and the Front Benches. He probably knows more about the subject than most in the House, and I know that he has strong views. But what he is about to tell us, and what the Secretary of State has told us, is that they will not tell the public or the electorate what the Government's real views are until after the election.

Even were the Government's credibility much higher than it is, and their reputation for reliability, frankness, candour and keeping their promises much higher, people would still be intensely suspicious of a Government who went through an election saying, "We will give you the news as to what our policy is on this vital matter after the election, if we're elected." As the Minister for Pensions cannot acknowledge, but knows perfectly well, the Government's reputation for those qualities is far from high, and I am afraid that the policy on which he is embarking will be a disaster. Everybody knows what it means, en clair: some very bad news will be in the pipeline if the electorate re-elect a Labour Government. The Government know what it is, but they will not say it. It is so bad that they do not even think that they can spin their way out between now and polling day.

Mr. Tom Harris : Will the hon. Gentleman give way?

Mr. Davies: Not at this stage.

The Government hope to keep it quiet. That will not work. It should not work in an open society or a sophisticated democracy. The Government have hung a millstone round their necks. The Opposition will be delighted, and the Government will thoroughly merit the fate that they then receive.

6.3 pm

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