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Madam Deputy Speaker (Sylvia Heal): Order.
10.39 pm
Mr. Peter Bone (Wellingborough) (Con): I congratulate my hon. Friend the Member for Ludlow (Mr. Dunne) on a powerful speech, especially his discussion of means-testing, which I shall touch on later. I came along to the debate tonight hoping that we would have a serious and constructive debate, and to a certain extent we have, but there was some tetchiness on the part of Government Members, perhaps because they lost two votes tonight.
Perhaps the Secretary of State attacked the previous Conservative Government because he is a little concerned about the pensions crisis that this Government have created. They came to power in 1997, and it is now 2006. Having had their head in the sand for nearly 10 years, they have only just pulled it out and realised that there is a pensions crisis. However, I will try to keep my comments constructive. I know that the Minister is very fair. He replied graciously to a Westminster Hall debate on pensions income in Wellingborough that the Speaker kindly granted me.
In 2001, I set up the Listening to Wellingborough and Rushden campaign because I believed that politicians of all parties had become a little arrogant, in that they were happy to preach at people and tell them what they thought, but reluctant to listen to what people were saying. I decided that through that campaign we would listen to what people had to say and then campaign for change based on their comments. My remarks will therefore relate to what people have been saying about pensions. There are more questions than conclusions.
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Let me start with last Saturday's surgery, when three firemen came to see me about public sector pensions, particularly their own pensions. Ultimately, their point was that there is not much joined-up government on that issue. The police, for example, have their pension scheme protected by the Government. As a member of the Select Committee on Trade and Industry, I remember that when we looked into the Post Office, which has a £4 billion deficit on its pension scheme, its response was, "Don't worry—we're a monopoly, so we can put the price of stamps up to recover it." There was no suggestion of altering its pension scheme in any way. However, the Government have changed the scheme for firemen so that certain firemen will have to work for an extra five years before they get their pension. The firemen who came to see me were not saying that there should be no change, but that the Government's approach is not even-handed.
One of those gentlemen is caught in a trap. His pension retirement date is just a few days after what the Government have deemed to be the date of the change, so he will have to work for virtually five years longer than he had expected before he gets his pension. He has been paying 11.75 per cent. of his salary into pension contributions, which he regarded as a binding contract and part of his emoluments. He feels let down by the Government. He believes that they are being rather mean and that it is possibly to do with their trying to get back at the firemen for going on strike a few years ago. Can the Minister refute that by confirming that there is a joined-up approach to the way in which public sector pensions as a whole are being dealt with? People in the public sector would not mind if the approach was even-handed. They realise that there have to be changes to their pensions because people in the private sector are suffering a great deal.
A few years ago, I was visited by a Mr. Martin Sterrow—a pensioner in Wellingborough who had never before been involved in politics. He was outraged that his state pension was going up so little in comparison with his council tax. Hon. Members must be aware that Wellingborough has experienced the biggest increase in council tax since it was introduced. However, Mr. Sterrow could show that the increase in his council tax was more than that in his state pension. That cannot be right.
I said that if there was a genuine problem perhaps we should hold a public meeting. We therefore arranged it, and I expected 10 or perhaps 20 people to attend—I know how difficult it is to get people to public meetings. However, 100 people attended and they were outraged that their pension had not increased enough even to pay their council tax. That is not a criticism, but a fact that we must tackle.
Mr. Sterrow organised petitions, a shadow Cabinet member came to the constituency and the shadow Cabinet received feedback. We also conducted a listening survey in which we contacted every home in Wellingborough. We asked people to specify the issues that affected them and we received thousands of responses. I thought that health or perhaps law and order would come top, but the main issues were council tax and pensions. I even asked for the results to be recounted because I was so surprised.
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That group of pensioners had never previously been involved in a political campaign. They were not Conservative or Labour but genuine constituents who were worried about the state of affairs. Of course, they did not want their council tax to increase by 20 per cent. or 25 per cent. year after year. However, the most striking point was that they wanted a decent basic state pension. They did not want freebies—they did not necessarily want a winter fuel allowance—[Interruption.] I repeat that they wanted a decent state pension so that they could decide how to spend their money. They did not want freebies and the Government telling them how to spend their money. I do not know what the answer is, but that was what they wanted.
They were sure that they did not want means-testing, which they hate. Those people have paid all their lives through taxes and insurance premiums, yet when they collect their pension, which they perceive as a right not a benefit, they are asked to fill in forms and declare all their personal income so that they can have a bit more. They hate that and many pensioners will not take up the money because they do not want the indignity of means-testing. The previous Member of Parliament for Wellingborough said that one problem was millions of pounds in unclaimed pension credit. Why cannot that money simply be added to the basic state pension? That would be a start.
Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): Does the hon. Gentleman realise that my constituents have similar feelings about means-testing? The Turner report states that if we continue with the current system, by 2050, 80 per cent. of pensioners will be subjected to means-testing in some form for their state benefits.
Mr. Bone: I am grateful for that intervention. I thought that the figure was 75 per cent., but whether it is 75 per cent. or 80 per cent. it is ridiculous. The Minister for Pensions Reform and the Government probably agree that that is not acceptable.
The pensioners of Wellingborough want a decent pension without means-testing. I appreciate that the Minister might say that the matter comes down to cost. The pensioners had a few ideas about that. Since the Government have been in power for—in my opinion—10 years, we have paid £100 billion through our taxes to the European Union. Some pensioners suggested to me that it might have helped if we had been a little less worried about French farmers and a little more concerned about pensioners. That is a huge amount of money. However, I know that the Minister will say that we cannot do anything about the EU.
Let us therefore consider domestic savings. The TaxPayers Alliance says that £80 billion could be saved each year on Government waste. It gave a few interesting examples. The Government spent £225,000 on informing people not to wear ill-fitting slippers. They spent £40,000 on a 46-word definition of patients' experience in the NHS. That is nearly £1,000 a word. The best one is the £10,000 that the Office of the Deputy Prime Minister wasted on whether fire engines should be red. What a waste of money. Yet £80 billion is wasted in such ways. Let us have a decent pension for our pensioners instead.
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10.50 pm
Mr. Nigel Waterson (Eastbourne) (Con): I begin by declaring an interest, in that I have some private pension provision.
This has been an unusually thoughtful debate on almost all sides of the Chamber. We had a thoughtful contribution from the right hon. Member for Birkenhead (Mr. Field), as one would expect, although I was a tad surprised by his apparent hostility to the Turner report and its central conclusions. The hon. Member for Yeovil (Mr. Laws) was right to talk about the transfer of risk that is taking place in the pensions world. That was something that Lord Turner drew to our attention in both his reports.
The Chairman of the Select Committee, the hon. Member for Bradford, North (Mr. Rooney), made a somewhat eccentric argument against political consensus, which was odd for a Select Committee Chairman, but he developed some other interesting points. My hon. Friend the Member for Grantham and Stamford (Mr. Davies) made a red-blooded contribution to the debate. He had something to say about means-testing and is clearly not a consensus man.
The hon. Member for Coventry, South (Mr. Cunningham) made an interesting and thoughtful contribution to the debate, as he always does. He recognised the importance of pension funds investing in equities. My hon. Friend the Member for Gosport (Peter Viggers), who has great experience in real pensions issues, made some interesting points, particularly about longevity. I know all about that because I have a constituent, Mr. Henry Allingham, who will be 110 this year.
The hon. and learned Member for Redcar (Vera Baird) spoke powerfully, as she always does, about women's pensions. My hon. Friends the Members for South-West Norfolk (Mr. Fraser) and for Wellingborough (Mr. Bone) spoke eloquently about how public sector pensions should be addressed by any responsible Government. My hon. Friend the Member for Ludlow (Mr. Dunne) made a thoughtful speech in which he examined issues relating to the proposed national pensions savings scheme, such as consumer protection and the regulatory framework. He rightly drew our attention to the thought-provoking comments in the Cazalet report, which was published only in the past couple of days.
The Government have presided over the pensions crisis for something like nine years. In that time, they have taxed pensions, undermined savings by increasing means-testing and heaped ever more red tape, cost and bureaucracy on to companies with pension schemes. They came to office with the avowed policy of, rightly, changing the balance between public and private pensions from 60:40 to 40:60. They have failed signally in that ambition. The first pension reform Minister, the right hon. Member for Birkenhead, was appointed to think the unthinkable, then promptly sacked for his trouble. He has said, memorably, that in 1997, the United Kingdom
"had one of the strongest pension provisions in Europe, and now probably we have some of the weakest".
Two million pensioners are still living in poverty and figures released only today show that the take-up of pension credit is still extremely disappointing. In the last six months of 2003–04, it was in the range of 58 to 66 per cent. by caseload. That means that a very large number of people, many of whom I presume are women, are failing to claim their entitlement. In spite of more than eight years in power, the Government have done absolutely nothing about the scandal of women's pension entitlement, except—I nearly forgot—to publish an annual report to tell us how bad the problem is.
The Government's flagship Pensions Bill, now the Pensions Act 2004, was introduced with great claims about how it would safeguard and encourage final salary schemes. The opposite has been the case. Final salary schemes are dead or dying. Most are already closed to new entrants; more and more are closing even to existing members. Recent examples include Rentokil and the Co-op. Experts such as the National Association of Pension Funds say that this is just the beginning.
In a powerful article produced in the last few days, Mr. Steve Bee, head of pensions strategy at Scottish Life, put it like this:
"It's simply a question of when and how the end will come, not if it will come . . . Final salary pension schemes in the private sector have got smoke coming out of the back—they're not going to make it back to the airfield."
The clearest and most pressing injustice is to those who lost all or most of their pension when their company schemes wound up with insufficient assets. We are talking about up to 85,000 people. Despite being unveiled as long ago as May 2004, the financial assistance scheme has only just started to make payments to people in trouble, as we heard from my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond). Yesterday, the Minister was good enough to confirm that, so far, a grand total of 15 individuals in only one scheme have received payment. It is a scandal that it is taking so long. That is just adding insult to injury.
Everyone except the Government recognised long ago that the sums devoted to the FAS are hopelessly inadequate. Even if the money holds out for the time being, the FAS is paying significantly lower benefits than the Pension Protection Fund. Those honest and decent people, some of them facing penury, are being treated as second-class citizens. As if the Government have not troubles enough, they are on the receiving end of a case in the European Court of Justice and an ombudsman's investigation.
As the House has heard, we have fairness as one of our guiding principles in pensions reform, as do the Government, but if that is so, how can they possibly begin to justify the sweetheart deal they recently struck with the union bosses? Surely a key aspect of fairness is that the public and private sectors should be treated similarly, yet private sector workers would be lucky to find a final salary scheme to join. Not so public sector workers. That is not only patently unfair, and seen to be so by a lot of people out there, but it has seriously undermined attempts by responsible private sector employers to maintain their pension schemes. Attempts by such employers to agree changes to entitlements with their workers, which would make the schemes more
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sustainable in the long run, will be much more difficult to make, as workers look to the precedent set for public sector employees.
Nor can we be encouraged by the Government's initial reaction to the Turner report. They sought to rubbish it before it was even published. The Chancellor warned Lord Turner that
"'you should not assume' that the current link of the pension credit to earnings 'will continue beyond 2008'."
The report has been drawn into trench warfare within the Government.
It has even been suggested that the Chancellor has already decided to snaffle the £10 billion a year saving on equalising women's pension age for other purposes. Surely—this, perhaps for the first time in our political relationship, is something that the hon. and learned Member for Redcar and I can wholeheartedly agree on—that money should, in all fairness, be earmarked for improving pensions, particularly if, over a relatively short period, we are to ask women to move from a state pension age of 60 to one of 67, 68 or even higher.
Finally, as is so often the case, our underlying principles on pension reform are not very different from the Government's stated objectives. It would be unthinkable, as the Secretary of State has acknowledged, to implement reform based on Turner without a broad measure of social and political consensus. I am delighted that the Secretary of State has made it clear today that he is looking for such consensus. We call on the Government to involve us closely in the process. We have much to contribute. By the time the effects of any reforms, or indeed of a failure to act, are felt, several different Governments will have come and gone, and many different Ministers. As we saw earlier this evening, Governments can lose votes. Governments can lose elections. We are every bit as keen as they are to see a lasting and durable solution to the pensions crisis that will deliver fairness as well as dignity and security in old age for all our citizens.
11 pm
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