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John Barrett (Edinburgh, West) (LD): I begin by thanking the hon. Member for Cities of London and Westminster (Mr. Field), who is my MP when I stay in London. However, he may not get my vote at the next election.

Life has moved on since Beveridge and the introduction of the welfare state. It is clear from today's debate that there are many different points of view around the House, but also that there is no consensus about what needs to be done. Consensus can be found on one issue only—that a pension crisis now exists.

All the different parties have produced different ideas. I was especially pleased to hear the Secretary of State open the door to the possibility that women might receive a pension that was not linked to the amount of contributions that they have made. Many women have spent their lives bringing up families or as carers and they will welcome what the right hon. Gentleman said, as do I.

Every week, I meet constituents who have worked all their lives who do not know what will happen to them when they retire. The more elderly of them have fought for their country, while others have watched children and grandchildren grow up. All the time they have thought that their pension would look after them in their later years. Those who have made contributions throughout their lives imagined that all would be well, but now they hear and read about the pensions crisis. As a result, many realise that they have been living in a fool's paradise—that they have not paid enough, worked long enough or saved enough.

For many, it is too late to make any change. When the state pension was first introduced, life expectancy was about 65. People live much longer now, but it is not possible to tell everyone to work longer. Those who have worked in industry or in any type of manual labour do not have a long life expectancy, so working longer is not an option.

People are being told to save more, and that is all very well if they have the cash, but many do not. Again, in an ideal world it would be fine to say that people should pay more into pension schemes, but for many it is not an option. Many people are also amazed to discover that, although they have saved for their pensions, their
 
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caution brings little or no dividend. Recent figures show that savings have to be very substantial if they are worth making at all.

Earlier, it was stated that some people may choose between taking a second holiday and putting money into pension schemes. However, if that money were to bring no gain because of the effects of means-tested benefits, people might be better advised to take that second holiday and go off to Spain.

Many of our old people feel dazed and confused. Perhaps they are not as fit as they used to be, and their memories may not be as sharp as they once were, but they are watching post offices close and their pension books being replaced while council tax goes up every year. The link between council tax and people's pensions is crucial, and many pensioners devote a huge proportion of their pensions to paying their council tax bills.

Means-testing produces many problems, but I shall concentrate on just two. The first is that many pensioners do not apply for means-tested benefits. That exposes as a lie the contention that the poorest pensioners are helped by targeting them in that way. The poorest pensioners are not those who apply for and get the benefits to which they are entitled. The poorest pensioners are the ones who do not claim the benefits to which they are entitled, and those people must be moved out of poverty and on to a decent basic pension without delay. At present, 125,000 Scots do not claim their benefits.

The second group are an as yet unknown number—those who know that they are entitled to means-tested benefits but have decided, for whatever reason, not to apply for them. That could be because they have never claimed benefits and do not want to start now, or it could be, like some of my constituents who attended the pension credit stall at a local shopping centre, that they feel that they can do without the additional benefit. If they did not claim it, they thought, more deserving people would get it. We know that that does not happen and it was explained to my constituents that that would not happen.

The system for many is confusing, complex and keeps many old people poor. Older people fail to claim £2.5 billion in benefits, and hundreds of thousands of them live in poverty. Pension credit is a benefit aimed at the poorest older people, but it is claimed only by half of those entitled to it. It has changed its name three times in the past seven years, and that only adds to the confusion. Many people do not know what they are entitled to and they see the system as too complex. Moreover, means-testing is just not popular. Many people also do not claim the amount of council tax benefit to which they are entitled. It has been estimated that approximately one in seven pensioners is entitled to council tax benefit, but do not claim it.

Miss Begg: In Aberdeen, the Pension Service has done a lot of outreach work. When it did the calculation for pension credit, it discovered much under-claiming of housing benefit and council tax benefit. The whole process of claiming for pension credit has been
 
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beneficial to many pensioners who have received much more than just the credit. Many have also received attendance allowance as well.

John Barrett: It is still a huge problem. Pensioners paid a staggering £770 million too much council tax in 2001–02.

I am running out of time, but as I said earlier, it will be an improvement if the Secretary of State is prepared to give a fair deal to women who do not have a full contribution record. I also wish to mention the sometimes questionable behaviour by trustees of company pension funds, such as directors receiving large sums of money before they retire and bleeding pension funds dry. I hope that current legislation will ensure that people who have paid into a pension fund can be sure that the money will be there on their retirement. There is a real crisis in company pensions.

As many hon. Members have mentioned, we here are all right because we have a decent pension scheme. However, many hon. Members used to be councillors and in non-pensionable employment. There are many people, both inside and outside the House, who will struggle through retirement. As we approach the general election, it is vital that the report that was published yesterday engages the public in the debate. They will hear different views from different parties, but what they want to hear is a degree of honesty. The public also want politicians to think for the long term. Whatever happens, and whatever view we take of means-testing or ways of funding pensions in the future, the general public will not be impressed by a bidding war for their votes. Unrealistic promises will let the public down, and the lack of respect that they have for politicians of all parties will only increase. The debate must start now. Pensions are a long-term problem and we have to deal with it for the sake of this generation and of generations to come.

6.29 pm

Mr. Nigel Waterson (Eastbourne) (Con): I am always taken by a Liberal Democrat talking about honesty in politics. I declare an interest, in that I have private pension provision.

This has been a fine debate. There have been many knowledgeable and interesting contributions, against the backdrop of the Turner report, which has informed much of the debate.

We now know that the Prime Minister intends to postpone his retirement from No. 10, but he did not make it clear at the time that he would be forcing millions of other people to work longer, too. Almost everyone agrees that there is a pensions crisis, except possibly Ministers at the Department for Work and Pensions. The new Secretary of State said:

"It is not a crisis happening now."

He said that it would happen in 10 or 15 years when, on any view, he will be doing another job—perhaps returning to delivering letters. He also asserted that we do not want what he described as a knee-jerk reaction. I have news for him: he is dead wrong about that. The crisis in pensions is with us now. There is no getting around that fact, even if Ministers are in denial.

Ministers are trying to shut down the whole debate. We shall not let them do that and nor will the country's pensioners. As Rodney Bickerstaffe, the president of the
 
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National Pensioners Convention, said, something must be done now. One example is the Government's financial assistance scheme for those who have already lost pension rights—at least 65,000 people. Faced with defeat in the House, the Government cobbled together a rescue package at the last minute, and it shows.

Everyone agrees that the allocated figure of £400 million is grossly inadequate to compensate even those people who are already in difficulties. Obtaining details of how the scheme will actually work and how the money is to be distributed is like pulling teeth, a point made in the Lords only this week during debates on the Pensions Bill.

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