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Barbara Keeley (Worsley) (Lab): My right hon. Friend said earlier that our complex pensions system produces unfair outcomes for women and carers, and many of us would agree. Will he assure the House that the Government's approach to pension reform will start to address those unfair outcomes and increase people's ability to accrue full state pensions through their caring?
Mr. Hutton: Yes, I can give my hon. Friend that assurance. We take the view that we should look carefully into those issues in relation to Lord Turner's report, and we hope to introduce measures at the appropriate time that will deal with my hon. Friend's concerns.
Mr. Nigel Dodds (Belfast, North) (DUP):
I welcome the publication of Lord Turner's report, which must be the catalyst for real changes that will help today's as well
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as tomorrow's pensioners. Does the Secretary of State agree that forcing more and more older people on to means-testing and into the means-testing system is, for all the reasons that have already been set out by hon. Members, neither sustainable in the long term nor desirable? Does he also agree that one of the basic elements of the way forward must be the provision of a basic state pension, set at a level that raises people out poverty, which is not based on contributions and which is linked to rises in earnings? Is that not the best way to deal with pensioner poverty, especially among women?
Mr. Hutton: I am grateful to the hon. Gentleman for his positive words of welcome for the Pensions Commission report. As to his further specific comments, he is inviting me to say whether we agree with every dot and comma of the report, but we simply cannot do that today; indeed, it would be wrong to do so. Clearly, we will have to address the issues that the hon. Gentleman has alluded to, particularly the future of means-testing; such factors will be an intrinsic part of the solution and the long-term settlement. We should not forget the very significant difference that the pension credit and the savings credit in particular have made to many millions of poor pensioner households. In the rush to condemn, there is a real risk that we forget to acknowledge those genuine achievements.
Mr. Michael Meacher (Oldham, West and Royton) (Lab): Does my right hon. Friend fully accept that, as other Members have said, means-tested topping up of the basic state pension is not a long-term viable option? I realise that he cannot give full answers today, but will he give a commitment to examining very closely the only real way out of this situation, which is to raise the basic pension to the pension credit level and to link it to national average earnings? Lord Turner makes it clear in his report that that is affordable. How, moreover, will my right hon. Friend deal with the very real problem of the many women who are entitled to derive benefits not on their own account, but simply because they are married and opted for reduced contributions before 1977?
Mr. Hutton: With due respect to my right hon. Friend, I tried to make it clear in my statement that in our view, the broad analysis and framework in the Pensions Commission report is right, but we will have to look very carefully at its implications for public spending and affordability over the medium to long term. It would be remiss of me not to point that out, and such considerations will be a central part of our response to Lord Turner's report. That report also makes it clear that Lord Turner acknowledges the contribution made by targeted support for the poorest pensioners. I realise that I am sounding like a broken record on this issue, but it is very important that my right hon. and hon. Friends do not forget the contribution made by such measures and investment.
Mrs. Jacqui Lait (Beckenham) (Con):
Will the Secretary of State confirm that he will consult on whether the new state second pension will be a fully funded, properly invested scheme, and will such consultation address the question of whether the Government or the private sector will do the investing?
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Will the terms of such a scheme be drawn up under private sector trustee laws, or will the Government direct such investment?
Mr. Hutton: I am not sure that I can answer the hon. Lady's latter questions; I might need to take some specific advice first. We intend to conduct the national pension debate that I referred to in my statement on the basis of Lord Turner's recommendations, and of other recommendations made on the future of the state second pension and any other part of the pension system. Lord Turner is making a number of important recommendations on the future of the state second pensionfor example, he proposes a broad convergence between the basic state pension and the state second pension, so that both are flat-rated by approximately 2030and we need to consider them very carefully. He also proposes that funding continue to be provided by way of national insurance contributions. There are some big policy issues for us to consider, but I can assure the hon. Lady that all serious suggestions on the future of the state second pension, and any other part of our state pension system, will be looked at seriously during the national pension debate.
Vera Baird (Redcar) (Lab): I thank my right hon. Friend for confirming that he accepts the inequities of the current system for women and I ask him to digest very carefully the recommendation that future accruals of basic state pension be done on an individual basis. It is essential that we abolish the outmoded, totally unacceptable and inequitable basis on which women get a pension: dependency on their spouseif, indeed, there is a spouse. I also ask my right hon. Friend to note, when considering the recommendation that pensions ultimately become universal, the potentially great benefits for women. Does he further acknowledge that if universality offers the way ahead for the young, there is none the less a present and urgent need to reconfigure national insurance credits, so that women who are part-way through their careers do not suffer from these now well acknowledged inequities when they retire?
Mr. Hutton: I am grateful to my hon. and learned Friend for that, and I pay tribute to the work that she and many other Labour Members have done in drawing attention to such problems. I can confirm that we will examine all those proposals in detail in the next few months. I accept the urgency of the situation and the need for reform in this very important area.
John Penrose (Weston-super-Mare) (Con): Does the Secretary of State accept that if the Government decide to go ahead with the Turner report's recommendation for a national pension savings scheme, it will be essential to have sufficient safeguards in place to prevent future occupants of No. 11 Downing street from mounting a smash-and-grab raid on what we hope will be a mounting pot of individual savings over many years? To pick up on the point made by my hon. Friend the Member for Beckenham (Mrs. Lait), it will be essential to avoid any kind of political interference in the management of that money.
Does the Secretary of State also acknowledge that if he accepts the Turner commission's recommendation to increase the retirement age, he will have to adjust the
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current age discrimination laws, which allow people above the age of 65 to be dismissed on age-related grounds? If we are going to ask people to work until 67 or 68, we will clearly need to adjust those laws.
Mr. Hutton: The hon. Gentleman's last point is right, and we will need to revisit that issue if we accept any part of Lord Turner's proposal. At the risk of jeopardising the spirit of consensus and good will, all that I can say of his point about my right hon. Friend the Chancellor is: for heaven's sake, grow up.
Mr. Ian Davidson (Glasgow, South-West) (Lab/Co-op): Will the Government's proposals take account of inequality in our society? Is the Secretary of State aware, for example, that average life expectancy in my constituency is 68, and that enthusiasm there for an increase in the retirement age is therefore less than total? How does he intend to take account of these social factors?
Mr. Hutton: I agree that we have to look very seriously at this issue. To be fair to Lord Turner, his report does provide a number of options that might help to ameliorate the problem that my hon. Friend refers to, and we need to study them very carefully. They include triggering entitlement to the pension credit at 67, 66 or even earlier. It is important, however, to correct a notorious headline in The Daily Telegraph of a few weeks ago, which said that if we pursued the policy that Lord Turner was likely to recommenda stepped and gradual increase in the state pension age20 per cent. of men would never get to the age of 67. That is completely untrue. It is likely that, with a pension age of between 65 and 67, a further 3 per cent. of men would not make it to 67. That is obviously a matter of regret, but the situation is not quite as bad as when Lloyd George introduced the basic state pension in 1908. Then, the pension age was 70 and average male life expectancy was 45. With hindsight, that looks like something of a fiscal con-trick.
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