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Huw Irranca-Davies (Ogmore) (Lab) rose—

Mr. Osborne: Sorting that out is the pensions challenge—the third of the long-term economic challenges that this country faces. I would be interested to know what the hon. Member for Ogmore (Huw Irranca-Davies) thinks about compulsory saving.

Huw Irranca-Davies: I am particularly interested in the hon. Gentleman's statement about what has happened since this Government came to office. What does he feel when looking back at 1997, when the basic state pension was £69 a week? Does he not realise that when we knocked on doors during the election campaign, people who had to exist on that were saying to us that the pension credit helped them out of absolute poverty? Does he not recognise that, or is he condemning his party to another era out of government?

Mr. Osborne: I had better read out again what the right hon. Member for Birkenhead, the first pensions Minister in this Government, said, and the hon. Gentleman should pay attention this time:

With the greatest respect to the hon. Gentleman, I have more respect for views of the right hon. Member for Birkenhead on pension policy than for his.

Chris Bryant (Rhondda) (Lab): Will the hon. Gentleman give way?

Mr. Osborne: I cannot resist giving way to the hon. Member for Rhondda (Chris Bryant).

Chris Bryant: I am grateful to the shadow Chancellor. Does he not understand that hundreds of thousands of people, women in particular, get to pensionable age without having acquired a full stamp and without having a full basic state pension behind them? Those are the poorest pensioners, whom this Government have done so much to help, and I can tell the hon. Gentleman that the people of Rhondda are extremely grateful to the Government for rescuing people from pensioner poverty.

Mr. Osborne: I agree that there is a problem with poor female pensioners who have not built up national insurance contributions over their lifetime. In the general election the Conservative party put forward policies to help remedy that. However, I suggest that this is something that Adair Turner's commission particularly needs to look at. I point out that the commission is especially critical of the pension credit because it acts as a disincentive to saving, and one cannot solve the pensions crisis if there is a disincentive to saving.

Huw Irranca-Davies rose—

Mr. Osborne: I have already given way to the hon. Gentleman, and I want to make progress, but I cannot resist giving way to him again.

Huw Irranca-Davies: I am disappointed at the hon. Gentleman's lowly esteem in the House, but after his last comment I can only say that we may have a mutual estimation of each other's worth.
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When I knocked on pensioners' doors, they said that they were interested in looking at the Conservatives' pensions proposals, but they asked why, in the whole of the period for which they were in government, the Conservatives only once raised the earnings link with the basic state pension, and left pensioners on £69 a week. Will the right hon. Gentleman answer a simple question? Does he feel that £69 a week was a good level at which to leave the state pension?

Mr. Osborne: I think that I shall have to read out for the third time the quote from the right hon. Member for Birkenhead. He said that

The hon. Member for Ogmore can go on intervening on me and I will go on quoting the words of the first pensions Minister of this Government.

Mr. Henry Bellingham (North-West Norfolk) (Con): Is my right hon. Friend aware that during the election I met many people in west Norfolk who are members of the Albert Fisher and Dalgety pension schemes, which are now in wind-up? They have lost everything that they paid in, and will not get a pension. Does not my hon. Friend think that a disaster, and does he not also feel that what the Government are proposing is completely inadequate?

Mr. Osborne: I absolutely agree. The amount of money that the Government have set aside does not begin to meet the problem, which is why we propose using the unclaimed assets of banks to deal with it. It is interesting that the Treasury is now looking at that idea, and we will wait and see whether it uses those assets for the desperate situation that my hon. Friend has highlighted.

The Chancellor always thought that he would be out of the Treasury before any of these challenges caught up with him, but it seems that however many times the Prime Minister fools him, he never learns. There he stands in the Treasury, the packing cases ready, the removal van in the drive and his coat on—then the Prime Minister buys him an ice cream, and it is back to square one. At least the first time the Prime Minister did him over he took him to a restaurant and bought him dinner.

The Chancellor is stuck at the Treasury, and he cannot duck the economic challenges facing the country. We need to keep taxes and regulation low so that we can compete, and there he sits—the road block to reform. We need modern public services and a more skilled work force, and there he sits—the road block to reform. We need to solve the pensions crisis and encourage people to save, and there he sits—the road block to reform. It looks increasingly as if this 20th-century Chancellor is running out of answers to the challenges of the 21st century.

1.4 pm

The Chancellor of the Exchequer (Mr. Gordon Brown): Let me start by saying what a pleasure it is to welcome the new shadow Chancellor. I look forward to answering every point that he made. It is always a
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pleasure to welcome a new shadow Chancellor. In fact, since 1997 I have had the pleasure of welcoming seven new shadow Chancellors and six new shadow Chief Secretaries. It is perhaps appropriate that I am welcoming the new shadow Chancellor when we are discussing equipping Britain for the challenges ahead.

Alongside the public sector reform Bills that have been discussed in the previous debates, I want to discuss the even more extensive economic reform that is necessary to achieve prosperity in this country, not for some but for all, and to advance this country towards full employment. Measures that I want to discuss with the House today include those to increase housing supply so that, adding to the 1 million extra home owners since 1997, we can have in total 2 million extra home owners by 2010. There is also our business Bill to deepen the enterprise culture—new help for small and medium-sized businesses which will be worth £250 million. With the welfare reform Bills and other measures, new obligations and new opportunities will be created which, building on 2 million jobs that we have already created since 1997, in this Parliament will help 1 million more people through the new deal.

Turning to the child care and parents Bills in the Queen's speech, through Sure Start and extended schools we will put in place the first national child care strategy in this country. There will be 1 million more child care places and there will be affordable child care for the parents of this country. Those Queen's Speech measures immediately honour our general election commitments to be on the side of this country's hard-working families. The whole House will also want me to outline, in advance of the EU and G7 meetings that will take place a few days from now, our detailed proposals for debt relief, trade justice and overseas aid, to reduce world poverty and meet the millennium development goals on which I hope and believe there will be an all-party consensus.

Having congratulated the new shadow Chancellor and welcomed him to his new position, let me say how much I will miss the contribution to the Treasury debates of the former shadow Chancellor. I see that he has just left the Chamber, but let me say that we all admire the right hon. Member for West Dorset (Mr. Letwin) for his candour. [Hon. Members: "He is here!"] I am glad that he is here; I can now thank him personally because on occasion I have had reason to be grateful for his candour. The right hon. Gentleman departed the Treasury brief with the characteristic candour for which we have learned to feel affection: his statement touchingly made it clear that he was leaving to spend more time with his merchant bank.

I also welcome back to his customary place the shadow Chancellor for the Liberal Democrats. In line with their election slogan to be "relentlessly positive", they have not ditched their shadow Chancellor; they have just ditched every one of his policies. Now they have this new clean slate approach, let our constituents hear no more of these unaffordable and uncosted spending promises, especially when not one of them could be afforded if they replaced their 50 per cent. income tax and local income tax with their new idea, very suitable to the Liberals, of a flat tax.

Let me say what a pleasure it is to have so many senior Conservative Members on the Front Bench for part of this debate—so many people who will be able to tell
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their grandchildren in future years that they used to be the next leader of the Conservative party. Now we know precisely why the shadow Chancellor ruled himself out of the leadership race. As for the shadow Chancellor himself, it may be too early to judge, but it may be time for the Conservative party to skip yet another generation.

The Queen's Speech reaffirms our fundamental and first priority as a Government: economic stability. Even amidst a succession of economic challenges since 1997, including the American downturn and the doubling of oil prices, and now facing the challenges, acknowledged by the shadow Chancellor, of Chinese and Asian competition, changing technology and current account imbalances, our measures, such as Bank of England independence—opposed, by the way, by Conservative Members—our symmetrical inflation target, opposed by Conservative Members, our fiscal rules, opposed by Conservative Members, and the new deal, opposed by Conservative Members, have helped achieve years of continuous growth for this country.

Our stability is for a purpose: to ensure businesses are able to invest and that home owners have a fair deal. That is because all of us—I believe that this is true of Members in all sections of the House—were struck during the election campaign by how many more young people, couples especially but also single people, now want to buy their first home but need, even with our low interest rates and the stamp duty changes that we made, further help to get on to the first rung of the housing ladder. The Deputy Prime Minister and I now propose to match the low interests and changes in stamp duty with help, implementing the next stage of the Barker review, to extend the number of home owners in this country.

English Partnerships has identified 700 sites of public sector land that are now being considered for new building, including Ministry of Defence sites, which will be released for house building, and vacant sites around railway stations in London. Including those announced today, a total of 100 national health service sites are being or have been released for future housing.

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