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House of Commons

Monday 8 May 2006

The House met at half-past Two o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions

Work and Pensions

The Secretary of State was asked—

State Pension

1. Greg Mulholland (Leeds, North-West) (LD): What plans he has to increase the level of and entitlement to the basic state pension. [68265]

The Secretary of State for Work and Pensions (Mr. John Hutton): We are currently considering all the recommendations of the second report of the Pensions Commission and will be publishing a White Paper on pension reform by the end of the month. The action that we have taken since 1997 has seen pensioner income rise across the board with the poorest pensioners benefiting the most.

Greg Mulholland: As the current Prime Minister seems to agree with the broad consensus in the Turner report, including its concerns about means-testing and the disincentive that that provides to saving, should we be worried that the Chancellor appears not to agree? Will we see a change of direction, a rejection of the Turner commission proposals and more proposals for means-testing some time in the next few weeks?

Mr. Hutton: The hon. Gentleman will have to wait and contain himself for the next couple of weeks, and all will be clear about the way forward. The Pensions Commission has identified several problems in relation to the current system that I agree need to be tackled so that we can we reach a consensus on a long-term sustainable pension settlement that will benefit not just today’s pensioners but those in future generations.

Sarah McCarthy-Fry (Portsmouth, North) (Lab): The population is increasingly ageing, so the level of state pension is pertinent to many pensioners in my constituency, and the Department for Work and Pensions is currently undertaking a consultation about it. However, one of my constituents has sent me a copy of an advert asking for information, and the only way of responding to the consultation is via a website. Given that many pensioners do not have internet access, does my right hon. Friend agree that that is discriminatory? What plans are in place to increase uptake on that consultation?

Mr. Hutton: We certainly have not tried to discriminate against anyone or any section of society in conducting the extensive debate on the way forward in pensions reform. A number of undertakings and agreements exist with public libraries across the United Kingdom that will allow people who do not have internet access to take part in consultations. I assure my hon. Friend and the House that we have made great efforts to ensure that the consultation is as wide-ranging as possible, and we have had a positive response to it.

Peter Bottomley (Worthing, West) (Con): Are the Government prepared to consider the 500,000 state pensioners abroad, half of whom do not get inflationary increases while the other half do? Why is it
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necessary to say that one does not get an increase in Vancouver but one does in Seattle, and that one does get an increase in Malibu but not in Melbourne? That seems incomprehensible to most people.

Mr. Hutton: We intend to continue the arrangements of successive Governments in relation to how pensioners living abroad receive their pensions. The arguments that we would put forward in favour of continuing those arrangements are exactly the same as those that the previous Conservative Government put forward.

Mr. Lindsay Hoyle (Chorley) (Lab): Obviously the Government have done a lot to help pensioners, and we know that the poorest of pensioners have had great support. Surely, however, the time has now come to consider the system again, as a third of pensioners who are entitled to pension credit do not take it up. Why not make the payment universal, and use the tax system to claw it back from those who are too wealthy?

Mr. Hutton: I agree with a lot of what my hon. Friend has said, and we certainly must tackle the problem of the growth and extension of means-testing in the pension system. Our proposals in the White Paper will address that. Pension credit in particular has been a huge success in tackling pensioner poverty. It was opposed, I am afraid, by the Liberal Democrats as well as the Conservatives, so there is no change there. My hon. Friend will have to wait until the White Paper is published, and I am sure that he will be pleased with the outcome. In relation to tax matters, those are very much the prerogative of my right hon. Friend the Chancellor, and I do not intend to intrude into that territory.

Mr. Mike Weir (Angus) (SNP): The Minister will know that there is a growing consensus in the country for a better pension provision by means of a citizen’s pension. Why have the Government seemingly set their face so resolutely against even considering reform of the current system of pension tax relief, which could release much of the money required for such a citizen’s pension?

Mr. Hutton: As I said, tax issues in relation to pensioner income are a matter for my right hon. Friend the Chancellor, not for the Department for Work and Pensions. I am sure that there will be a lively debate about that. In relation to the concept of a citizen’s pension, for which the eligibility rules relate to residency rather than contributions, I have made clear that my strong preference is for the continuation of the contributory principle. The principle of something for something has been at the heart of state pension policy in this country for nearly 100 years; it was started by the great David Lloyd George when he was Chancellor of the Exchequer and continued in subsequent years. The challenge now is how to make the contributory principle much fairer to women and carers. The White Paper will certainly take up that challenge.

David Taylor (North-West Leicestershire) (Lab/Co-op): One of the meanest acts of the previous
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Government was to break the link between pensions and pay in the economy. As a result, single pensioners lost £33 a week before the 1997 election, and have lost £19.50 since. Is the Secretary of State aware that, three of four days ago, one of our colleagues on the Treasury Committee asked Lord Turner,

“Yes,” replied Lord Turner:

His set of proposals is not exactly ambitious or costly, is it?

Mr. Hutton: I followed the proceedings in the Treasury Committee closely, as my hon. Friend will know. Affordability, however, is a fundamental issue that must be addressed by not just the present Government but successive Governments when it comes to long-term pensions reform. It would be wrong to assume that there are no affordability issues; Turner himself recognised that in his report.

I agree with my hon. Friend on one point, however. I believe that if we can find the basis for long-term consensus on pensions reform—in my view, the Turner analysis is broadly right—we shall have an enormous prize within our grasp, and I hope that there will be consensus on the proposals that we shall present shortly.

Mr. David Laws (Yeovil) (LD): I congratulate the Secretary of State on surviving the bloodbath of last week’s reshuffle. We are all very relieved not to have a fifth Secretary of State within a period of just20 months. I also welcome the right hon. Gentleman’s new ministerial colleagues.

The Secretary of State will recall that, a few weeks ago, the Chancellor said that there was 90 to 95 per cent. agreement on the Turner proposals. That is welcome, but can the Secretary of State say more about where the remaining disagreement lies? In particular, can he tell us whether the Treasury has now accepted Lord Turner’s argument about a later state pension age, which the Secretary of State has already indicated that he supports?

Mr. Hutton: I am grateful—I suppose—for the hon. Gentleman’s support for my continuation in this role. Perhaps he would like to put it in writing. That would be very welcome; indeed, it would be the first time anyone had written to me about anything nice.

With great respect to the hon. Gentleman, I must tell him that he will have to wait until the White Paper is published. There is, however, a large measure of agreement across Government on the way forward for pensions reform, and as I keep saying, I hope and trust that when we produce our proposals in the near future, they will command widespread support.

Mr. Philip Hammond (Runnymede and Weybridge) (Con): On pensions reform, is the Secretary of State still—in his own words on 31 January—

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Mr. Hutton: The hon. Gentleman cannot have been listening to what I have said this morning—or this afternoon, or whatever time it is. I think I have made clear on several occasions that that is my continuing ambition. I suspect that the hon. Gentleman’s question was prearranged and he was not able to adjust it, but it is of course my intention to maintain as wide a consensus as possible.

Mr. Hammond: We have now established that the Secretary of State does not know what time it is, but I am glad to hear that he is still committed to the search for cross-party consensus. Pensions policy is a long-term issue, and it is essential, in the national interest, for us to try to forge that consensus. Conservative Members have looked forward to playing their part in that, because, as the Secretary of State has said, pensions policy must be sustainable over time and changes of Government.

With the pensions White Paper just a couple of weeks away, can the Secretary of State tell us why his search for that cross-party consensus has not led him to seek a single meeting with the Opposition parties on this subject, to attempt to establish the extent of agreement on the problems involved in pensions reform, or indeed to explore the scope for resolution of issues on which there is no agreement? In fact, can he tell us what exactly he has done to establish a cross-party consensus on this matter?

Mr. Hutton: As we all know, a week is a long time in politics. The hon. Gentleman should not assume that there will be no such meetings, and I look forward to having a meeting with him to discuss all these matters. If memory serves me right, I have sought to involve him and his party in some of the meetings that we have arranged, and I believe that he attended some of them. I remember him putting some points to the panel of speakers. I hope that he is not reading too much into this. We look forward very much to having discussions with him, and indeed with the hon. Member for Yeovil (Mr. Laws).

Income Support (Overpayment)

2. Mr. Tobias Ellwood (Bournemouth, East) (Con): What assessment he has made of the level of overpayment of income support; and if he will make a statement. [68266]

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. James Plaskitt): Our latest estimate for 2004-05 is that £550 million was overpaid in income support through a combination of fraud, customer error and official error—equivalent to 5.3 per cent. of expenditure on that benefit. That is the lowest level of overpayment recorded to date, and a substantial improvement on the inherited 1997-98 level of 9.2 per cent. It is our firm intention to reduce overpayment levels even further.

Mr. Ellwood: I am grateful for that reply, but it does not disguise the fact that our benefits system is in a mess. Constituents now regularly come to my surgeries brandishing two letters: the first is dated last year and
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from the Inland Revenue, stating that they deserve x amount in benefits; the second is dated this year and from the Government, who are asking for half of it back. When will the Under-Secretary get a hold of this problem and help the very people who need our support?

Mr. Plaskitt: I hope that the hon. Gentleman is making matters clear to his constituents, because he seems to be confusing the Inland Revenue’s responsibilities with those of the Department forWork and Pensions. My and the Department’s responsibilities cover fraud and error in the system. I remind him that we have set ourselves some very tough targets to reduce losses through fraud and error, and we are on course to meet them. We aimed to get such losses down by 33 per cent. by March 2004; in fact, they were down by 37 per cent. Our next target is to reduce them by 50 per cent.; so far, they are down by44 per cent.

Keith Vaz (Leicester, East) (Lab): But as my hon. Friend the Under-Secretary knows, there is a difference between a mistake of law and a mistake of fact.Like the hon. Member for Bournemouth, East(Mr. Ellwood), I have constituents coming to my surgeries saying that they have received demands for their income support to be repaid because of mistakes made by officials. What guidelines do Ministers give to officials to ensure that, where a mistake is made and a demand is issued for the repayment of the whole sum, time is given for those in need of such benefits to pay them back?

Mr. Plaskitt: My hon. Friend will of course know that there is existing social security law on this issue. Where it is clear that such overpayment is the result of an official error, we will not recover it. Where a request for recovery is made, we make it in sympathy with the individual’s circumstances. The Department has no desire to cause any hardship, and arrangements can be made for repayment over time to suit the individual concerned.

Occupational Pensions

3. John Robertson (Glasgow, North-West) (Lab): What assessment his Department has made of the merits of introducing compulsory contributions by employers and employees to occupational pension schemes. [68267]

The Secretary of State for Work and Pensions(Mr. John Hutton): The Pensions Commission recommended the introduction of a new low-cost national pension saving scheme with automatic enrolment and compulsory employer contributions. We are giving careful consideration to those recommendations and we will publish our White Paper by the end of the month.

John Robertson: I realise that the issue of compulsory pensions is a very difficult nettle to grasp, particularly given that the Opposition are not assisting him in this regard, but I draw his attention to an
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amendment to the Turner report, which suggests that a 5 per cent. contribution from each side would cover people’s future needs. Is it not time seriously to look at compulsory pension contributions, for the good of those affected in years to come?

Mr. Hutton: I agree with my hon. Friend; Lord Turner’s analysis is indeed very compelling. But if we are to establish a new national pension savings scheme along the lines suggested, we have to be absolutely sure that it will be safe automatically to enrol people in it, so that they will always be better off inside it than remaining outside it and relying on means-tested support from the state. The judgment that we have to make in deciding whether to proceed with employer contributions is a finely balanced one, and we must be mindful of the impact on the labour market, and particularly on small companies. But I can assure my hon. Friend and the House that we are looking closely at this very important element of Lord Turner’s proposals.

Mark Pritchard (The Wrekin) (Con): My constituent, Mr. James Griffiths, paid into the Triplex Lloyd Components pension scheme for 25 years and expected to receive a pension of £160 per week. Unfortunately, that pension scheme has now been wound up. In the light of the proposals set out by the Secretary of State today, what assurances can he give to my constituents that there will be no more pension wind-ups?

Mr. Hutton: Obviously we do not want to see that happen, and we put in place a range of measures in the Pensions Act 2004 to provide proper protection when it does happen. There is also a financial assistance scheme for scheme wind-ups that predate 2004 and the introduction of those measures. I do not know the details of the hon. Gentleman’s constituent’s problem, but if he writes to me I will look into them.

Mr. Gordon Prentice (Pendle) (Lab): Does my right hon. Friend feel bad about rubbishing the ombudsman’s report on occupational pensions within 24 hours of its publication when she specifically requested that the Government spend at least two months mulling it over? When will he give his final considered response to Ann Abraham’s report?

Mr. Hutton: No, I do not feel bad. The Government’s view is that there was no evidence for her finding of maladministration and I set out in my statement in the House the reasons why I came to that view. I will set out in greater detail the argument that underpins that essential assumption. I can certainly say that we are giving careful consideration to whether we can provide more financial assistance to people who are caught up in those situations. As my right hon. Friend the Prime Minister made clear in the House only a few weeks ago, that review has been expedited and when we publish our full response to the ombudsman’s report in the next couple of weeks, I hope that those matters can all be addressed at the same time.

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Mr. Graham Stuart (Beverley and Holderness) (Con): When pensions reforms are complete, does the Secretary of State want to see means-testing increased, reduced or kept at the same level?

Mr. Hutton: Like his hon. Friend, the hon. Member for Runnymede and Weybridge (Mr. Hammond), the hon. Gentleman must have missed the answer that I gave a few minutes ago, when I said that we have to control the spread of means-testing in the pensions system.

Post Office Card Account

4. Mr. Simon Burns (West Chelmsford) (Con): What recent representations he has received on the future of the Post Office card account; and if he will make a statement. [68268]

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. James Plaskitt): The Post Office card account contract runs from 2003 to 2010. The card account will be funded by the Government until 2010 as always planned. Both my Department and the Post Office are now focusing on our shared contractual commitment to begin migrating customers to alternative accounts, such as the new savings account, just introduced by the Post Office. We will continue to ensure that if customers wish to access benefit payments via the post office they will be able to do so.

Mr. Burns: I am slightly puzzled by that answer, given that my question was about the representations that have been received on the issue. I got no answer to that.People such as Mrs. Knight, the postmistressat Roxwell post office, who presented a petition of 500 signatures that I sent to the Minister, are extremely concerned about the decision and the impact that it will have on clients and on post offices after 1910. Will the Minister, even at this late stage, consider reviewing the decision?

Mr. Plaskitt: The hon. Gentleman may wish to hark back to 1910, but I am interested in the future for the Post Office. We have had other representations, such as one recently from a postmaster in Plymouth who pointed out that since his customers have started migrating from POCAs to other accounts, his business has increased. He will not be the only one saying that.I have certainly received the hon. Gentleman’s representation on the subject, because I have read his article in the Westminster View, which I commend to the House. He wrote:

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