Clause 5's list of opportunities for people to draw down is rather limited and needs to be looked at again. As has been said, other issues and events occur in people's lives that might cause them to want to access their savings. The Canadian model of the retirement
28 Oct 2005 : Column 568
income fund, which has been referred to, covers only one third of the Canadian work force and concentrates on those with above-average earnings. We must be mindful of that point.
I welcome the opportunity to participate in this debate. However, the Bill is very premature and I hope that Members will agree that we need to return to the proposed provisions at a later date, in the light of the Turner recommendations.
Mr. Tobias Ellwood (Bournemouth, East) (Con): I am very grateful to my right hon. and learned Friend the Member for Kensington and Chelsea (Sir Malcolm Rifkind) for bringing this Bill to the House. We have had a very interesting debate and Members in all parts of the House have put forward their views on pensions. I hope that the Minister has taken stock of the passionate views that have been expressed, and that he recognises that, whatever our views on Britain's pension situation, it cannot stay as it is and it needs to be resolved.
We heard a lot about pensions during the general election, including the Government's big announcement to pensioners: a one-off payment of £200 towards the council tax. I hope that the Minister will provide something a little more concrete for pensioners. Some six months after the general election, we have still yet to hear anything concrete, and it has taken a private Member's Bill for us to have a proper debate on these issues.
Many references have been made to the previous Tory Government, the events of the early 1990s and the achievements of the Labour Government, but we cannot get away from the fact that in 1997, we had a pension system that was the envy of Europe. Today, that is not the case. More than 1 million pensioners are not receiving the benefits that they deserve, because the system is too complicated.
The burden that we now face is that the younger generationmy generationdo not consider sorting out their pensions to be a priority. That is fundamentally wrong. For the people of my generation, as we have heard, property is a far greater concern. We are concerned with getting on to the housing ladder, not looking to sorting out our pensions. The Bill challenges and provides a way of rectifying the problem.
Property and education are important. I reiterate a point made earlierthat adults who want to change direction in life and do something different no longer receive money from the Learning and Skills Council to help them. The Government have stripped that support away, so people can achieve that objective only by using their own savings.
Labour Members frequently make the point that money put into a pension system must be used when people retire, but what is wrong with saying, "Yes, of course I need to save for when I retire, but I also need some money right now to invest in a property or spend on education"? Will the Minister deal with that issue, because education and property are as important as a pension is in the future?
Comments about stocks and shares also need to be qualified. It is often implied that they are the bastion of the middle class and are used only by people who have
28 Oct 2005 : Column 569
lots of money. No matter how much someone wants to savewhether it be £5 in a basic savings account, much larger sums or even an ISAwe need to ask what the banks and building societies do with the money. They put it into stocks and shares; that is exactly where it goes. Anyone who has a mortgage needs to know what the bank or building society does with the money: it goes into stocks and shares. If the Government change national insurance contributions or raid pension funds to the tune of about £5 billion every year, it has a ripple effect right across the pensions system. That is one of the reasons why we are where we are today.
I agree with my hon. Friend the Member for Ruislip-Northwood (Mr. Hurd) that it is false to believe that the Bill is about looking after only one slice of the electorate or the middle class. That is completely wrong. If hon. Members read the Bill carefully, they will see that it does not replace one bit of pensions legislation, but adds to it and develops further pension options, simplifying the system to provide a clearer and more transparent way of saving. What is wrong with that? The Bill provides a simpler way to save, grouping things together and drawing in the employer as well.
If we are to have a full debate about the issues, we need to expand. Labour Members are looking to crush the Bill, but I hope that the Minister will give it further time. We need to debate further issues that came up in the general election campaign, which we do not hear much about nowfor example, a review of capital gains tax or the phasing out of means-testing, linking pensions to earnings or introducing free care for the elderly. The biggest burden facing pensioners is, actually, council tax. We need a proper review of that tax and its effect on pensioners, which is greater than all the other things that we have mentioned today.
Ms Angela C. Smith (Sheffield, Hillsborough) (Lab): We have heard a lot today about people on low incomes. I congratulate the hon. Member for Ruislip-Northwood (Mr. Hurd) on showing some sensitivity on the Conservative Benches in recognising the problems that people on low incomes face when it comes to saving for retirement. It should be placed on record now that people on low incomes or with broken records of employment find it extremely difficult to save on a regular basis.
The hand-to-mouth culture in working-class communities has not disappeared. It is so difficult for working-class people on low incomes to save, and they often discover, as the Liberal Democrats acknowledged, that money is needed at crisis points in life in order to survive. If the Bill were to be placed on the statute book, the danger is that it would encourage people on low incomes to believe that they could save for a pension, only to find that, because they had to draw on the funds to meet those crisis needs, they had no pension to draw on in later life. That is exactly where we are at the moment, which is why the Turner commission provides the right way forward.
28 Oct 2005 : Column 570
The Bill is a buy-now, pay-later option. As my mother would tell me, it is robbing Peter to pay Paul. In her darker moods, she would probably quote Mr. Micawber at me, emphasising the need to equate expenditure and income and to balance happiness and misery. That is often the reality of the lives of working class people, in which the difference between poverty and a reasonable existence is so fine.
On the pensions issue, the hon. Member for Putney (Justine Greening) made more than one reference to the 20 and 30-somethings, the Bridget Jones generation, about which we hear so much. She mentioned that many 30-somethings want the flexibility to organise their finances and their lives as they see fit, but the reason they have the luxury of that flexibility is because this Labour Government have delivered macroeconomic stability and family-friendly policies that allow career breaks. It is the 40 and 50-somethings who do not enjoy that luxury. My generation was seared. We are scarred with the memories of the instability that we faced in the early 1980s, when most of us had cracked or broken records of employment because millions of people were made unemployed at that time. Those of us who came to maturity in the late 1970s and early 1980s still face the black hole in our pensions created by the economic instability of the early 1980s, because we do not have provision built up in our funds.
Mr. Binley: I want to be sure that I know what the hon. Lady means when she talks about the instability of the late 1970s and early 1980s. Is she referring to the situation when Mr. Healey, the then Chancellor of the Exchequer, increased interest rates to 27 per cent. because of the borrowings from the International Monetary Fund?
Ms Smith: I am referring to the many activities in the early days of the Thatcher Government, when we saw 3 million unemployed, high levels of inflation and people in cities such as Sheffield thrown on to the scrap heap because your Government
Mr. Deputy Speaker (Sir Michael Lord): Order. First, it is important that we use the right parliamentary language. Secondly, we are not having a macroeconomic debate this morning, but discussing the rights of savers. The hon. Lady should return to that issue.