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Sir Malcolm Rifkind (Kensington and Chelsea) (Con): We thank the Secretary of State for his remarks. Given last week's noises off, he is to be congratulated on even having been invited to make the statement on the Government's behalf. He will also rightly be thanked for, unlike the Chancellor, not having sought to undermine the Turner report even before the public had been made aware of its contents. Does the Secretary of State agree that it was quite unprecedented for the Chancellorperhaps even without consulting the Secretary of Stateto seek to sabotage the report in that way? It must be the first book in the history of publishing to have been rubbished by one of its publishers before it even appeared on the bookshelves.
The Conservatives very much welcome Adair Turner's report. It is a powerful, professional and persuasive document, and, like the Government, we wish to devote considerable time to analysing its recommendations. As the Secretary of State will be aware, the commission was appointed because of a savings crisis in this country. He might like to remind the Minister for Pensions Reform, who claimed again on Monday that there was no crisis, that that will not sound convincing to the 70,000 to 80,000 future pensioners who have already been told that all or most of their pensions simply will not be paid in the years to come. Indeed, to allege that there is no crisis flies in the face of what Lord Turner says in the Pensions Commission report published today. He says that
If that is not evidence of a crisis, it is difficult to understand what is. It is all very well, after eight years, for the Secretary of State to say, "Now is the time for pension reform". One has to ask where the Government have been over the past eight years.
The Conservatives will judge not only the Turner report but the Government's response against three important criteria. First, will they offer to future generations of pensioners the security and standard of living that they are entitled to look forward to? Secondly, will the report and the Government's response deal with the fundamental problem of
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women's pensions in a way that will resolve that difficulty in an acceptable fashion? Thirdly, will the Government's response to the Turner report treat fairly both public and private sector employees? Only on the basis of common treatment based on fair principles are the difficult proposals in the report ever likely to be acceptable to the British public.
Against that background, I have four questions for the Secretary of State. The first relates to the recommendation that the retirement age should in future be around 67 years of age. Does the right hon. Gentleman accept that the Government have made it enormously difficult to persuade the public that they should continue working until the age of 67, when that same Government have simultaneously agreed with the trade unions that, for the next 40 years, their own employees should be able to continue to retire at 60? Does the Secretary of State agree with the Chancellor, who said only a couple of days ago that more work needs to be done on this matter? Does he accept that it is simply not feasible to imagine that, for the next 40 years, a retirement age of 60 will be available to the Government's own employees while the rest of the nation is expected to accept quite different criteria?
My second question is on the proposal that future accruals of the state pension should be based on a universal residence principlea fundamental change in the way in which pensions have been dealt with over the past 60 years, and over time would effectively bring an end to the contributory principle. Whether or not the Secretary of State believes that that is desirable in principle, he should indicate whether the existing information available to Government would enable a residence qualification to be monitored effectively. As the Turner report says, unless that is feasible, the recommendation could not be taken forward in practice.
My third question relates to the proposed national pension savings scheme. We welcome the fact that Lord Turner and his colleagues have drawn back from the original suggestion that it should be made obligatory for employees to pay towards such a scheme. The report contains an extraordinary anomaly, however, because while auto-enrolment will mean that every employee will have the right to decide whether to opt in or out of such payments, employers will be given no such freedom. Does the Secretary of State agree that it is a substantial anomaly, at the very least, that those who will benefit as a result of such a pension scheme can choose whether to participate in it, but those who will not benefit are given no such choice?
My fourth question relates to the other radical proposal in the report. As the Secretary of State will be aware, existing schemes such as stakeholder schemes have a cut-off point so that those with five employees or fewer do not have to participate. Lord Turner recommends that all employees should be part of the national pension savings scheme, and that there should be no amelioration for very small businesses. Does the Secretary of State agree that that will be a matter of great concern to the Federation of Small Businesses? There are serious questions, at least during a transitional period, about whether many small businesses could cope with such a requirement. Will he also take into
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account the fact that the views of charities and voluntary organisation will have to be canvassed in order to ensure that they are not unfairly treated?
We believe that it is enormously importantin this respect, I share the Secretary of State's viewto try to achieve a national consensus, if that is possible, on the issue of pensions. People's security and future sense of stability will be assisted if such a national consensus can be achieved. The Secretary of State should recognise that the origins of the Turner commission lie in the savings crisis. Does he agree with the Institute of Chartered Accountants, which has said that the single most important contribution[Interruption.]
Does the Secretary of State agree with the Institute of Chartered Accountants that the single most important cause of the crisis in savings was the decision that the Chancellor of the Exchequer took eight years ago to remove the tax relief on the dividends of pension funds? Is not it indefensible that the Chancellor, who is the prime cause of the savings crisis, should now try to sabotage those who are trying to resolve the problem, which is largely of his making?
Mr. Hutton: There was some evidence in the right hon. and learned Gentleman's remarks that he is prepared to study seriously Lord Turner's proposals, and I welcome that. I also welcome his suggestion that he supports the search for a national consensus. I conclude from his remarks, however, that there is quite a lot more work to be done if we are to secure it. I will not get into the tittle-tattle that he raised at the beginning of his remarks, because this is a serious debate, and I will not demean it by peddling rumours and all the nonsense to which he alluded. We do not do ourselves credit if we do that.
The right hon. and learned Gentleman asked what we have been doing for the past eight years. We have been putting right the Tory mistakes, and tackling the problem of pensioner poverty, which, as Lord Turner acknowledges, has been a significant advance in our pensions system. Why will not the right hon. and learned Gentleman acknowledge that? I agree about the importance of tackling the inequalities in relation to women in the pension system, and Lord Turner proposes a number of ways of doing that. We will study all those proposals carefully.
I made that point in my remarks. We must tackle these matters seriously, and there will be a problem if we do not take action today. Surely, at the very least, that should be common ground in the House.
The right hon. and learned Gentleman raised four specific points. He alluded to his concerns about public sector pensions. We stand by the deal that we have secured. He and his hon. Friends have been confusing several totally separate issues. Nearly half of all occupational pension schemes in the private sector provide a retirement age of 60 for current scheme members. Many employers in the private sector have been closing defined benefit schemes to new entrants, which is the policy decision that this Government have taken. I am surprised, as I said to him last week, that he wanted to raise the issue, as his party had a chance to make its position clear at the last election on whether it would extend new retirement ages to existing civil servants. The Conservative party made that clear:
"People are right to raise concerns over the Government's planned reforms to civil service pensions . . . We appreciate, for example, that there is genuine concern over extending the public sector retirement age, especially in high-risk and physical public service occupations, and we will listen to any practical concerns people have."
As I understand it, he is saying today that we should have imposed a higher retirement age on civil servants, which is flatly contradicted by his party's stance during the general election. We can therefore discount completely his remarks in that regard.
On the right hon. and learned Gentleman's second question about universal residence-based criteria for entitlement to the basic state pension, it is true that that is what the Turner commission proposes. That, too, needs to be considered seriously. As I understand it, it proposes to keep a contributory basis for the state second pension, which would continue to be national insurance based. Obviously, we must consider all those proposals carefully. I have made it clear to the House that we are not making any announcements about any of those details today. I will have to say something similar in relation to his previous points about the national pension savings scheme, and his point about stakeholder pensions and the difference between NPSS and stakeholder pensions.
It is true that Lord Turner proposes that once an employee has exercised the right to stay in a new low-cost pension scheme, the employer would be mandated to pay a 3 per cent. contribution towards that savings plan. Again, we will have to consider that proposal seriously, and we need to be mindful of the variety of different views that, I am sure, will be expressed.
In relation to stakeholder pensions, as the right hon. and learned Gentleman knows, there is a cut-off for small employers. The Pensions Commission proposes that there should be no similar exemption for small employers in relation to the new low-cost savings scheme that it proposes. That, too, will need to be considered very seriously, as we reflect on what Lord Turner has to say and what emerges from the national pensions debate.
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