Previous Section Index Home Page

Mr. Burns: Read on.

Mr. Plaskitt: I am reading on. He continues:

That is exactly what we are trying to do, in conjunction with the Post Office.

8 May 2006 : Column 9

Mr. Frank Field (Birkenhead) (Lab): The Post Office card for pensioners has been the outstanding IT success for the Government. Is that why it is being abolished?

Mr. Plaskitt: I refer my right hon. Friend to the contract that we have with the Post Office, which makes it absolutely clear that the Government funding for the account was to run until 2010 and that we are both—the Post Office and the DWP— bound by that contract to help to migrate customers to accounts that are more appropriate to them. That is what we are doing.

Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): If the Minister had listened at all to the views of postmasters in the highlands of Scotland, or to the general public, he would know that there is massive opposition and genuine anger about the decision to end the Post Office card account. Will he tell the House how he is getting on with the Post Office in his negotiations to develop a successor account to the card account after 2010, and can he assure the House that holders of Post Office card accounts will be easily migrated to the new account with no let or hindrance, of the form that people experienced when they tried to sign up to POCAs in the first place?

Mr. Plaskitt: I can assure the hon. Gentleman that we are having constructive discussions about that with the Post Office. I draw his attention to the comments of Alan Cook, the managing director of the Post Office, who referred to the Post Office in a recent interview as a highly trusted brand, which I think that we all accept. He went on:

the Post Office—

The Post Office is starting to introduce new accounts, as I said earlier, and will introduce further accounts. As I have told the hon. Gentleman before, there are already up to 25 Post Office-accessible accounts to which individuals can switch and that have more services than the Post Office card account. If more customers switch to those accounts, the chances are that revenue for sub-postmasters will increase.

Mr. Russell Brown (Dumfries and Galloway) (Lab): Can my hon. Friend give the House an indication of the actual cost to the taxpayer of the use of Post Office card accounts rather than bank accounts? Can he also give an indication of the costs for the new instant saver accounts? The House was led to believe that the Post Office card account would cost significantly less than the old benefit books.

Mr. Plaskitt: I can assure my hon. Friend that the account is less costly than the old benefit books. Indeed, the transition from benefit books to the direct payment method now in use has been very successful, with an approval rate of more than 92 or 93 per cent. in surveys. The cost to the Government of supporting the Post Office card account runs at about £200 million a year. We have undertaken to continue that support, as
8 May 2006 : Column 10
we said at the outset, until 2010. We need now to begin the process of migrating people to other accounts in anticipation of 2010, so that the transition is smooth and successful.

Mr. David Ruffley (Bury St. Edmunds) (Con): Ditching the Post Office card account is causing great concern to many vulnerable people, especially in the absence of a clear announcement of what the successor account will be. According to the managing director of the Post Office, the revenue from the Post Office card account amounts to £200 million a year, which goes into a network that is desperately striving to keep sub-post offices open, so will the Minister get a grip, clear up the confusion and tell us today what account exactly will replace POCA and when he will tell us about it?

Mr. Plaskitt: The accounts that will emerge are primarily a matter for the Post Office. If the hon. Gentleman has been following developments, he will see that the Post Office recently launched a new account and is working on others. It is not for me to say what accounts it will come up with; that is a matter for the Post Office. I remind him that the new managing director of the network, Alan Cook, whom I quotedin an earlier answer and whom I meet reasonably regularly to talk about the situation, is looking for new products that will be attractive to the customer base. As I have also said in answer to previous questions, we are anxious to ensure that all our clients who want to continue accessing their benefit from the Post Office can do so.

I know that the hon. Gentleman likes to make as much fuss as he can and likes to whip up the concern that he was talking about, but the fact is that because of the extra support that the Government are putting into the rural network, the rate of post office closures, about which he purports to be worried, has slowed dramatically in rural areas, compared to the rate under the Conservative Government. On that issue, as on so many others, the hon. Gentleman is audible but not credible.

Pension Reform

5. Richard Ottaway (Croydon, South) (Con): What discussions he has had with the Chancellor of the Exchequer on pension reform; and if he will make a statement. [68271]

The Minister for Pensions Reform (James Purnell): My right hon. Friend the Secretary of State has regular discussions with the Chancellor on matters of mutual concern, and pension reform is one of those matters. We will be setting out the Government’s response to the Pensions Commission’s report in a White Paper by the end of the month.

Richard Ottaway: May I give a warm welcome to the Secretary of State’s statement today that he seeksto control the spread of means-testing? From the Minister’s discussions with the Chancellor, could he elaborate a bit on how that will be achieved?

8 May 2006 : Column 11

James Purnell: Of course the immediate problem that we had to deal with was the pensioner poverty that we inherited from the Conservative Government, and the current policy has been extremely successful in that regard. It has taken 2 million people out of absolute poverty—we make absolutely no apology for that—but the Turner commission has very helpfully proposed a comprehensive case for future reform, which is exactly what we will bring forward proposals on by the end of the month.

Mr. Terry Rooney (Bradford, North) (Lab): My hon. Friend will know that 4.5 million people do not join the occupational pension schemes provided by their employers. Does he envisage that any legislative change might be necessary to encourage those people to take up the offer that is already on the table?

James Purnell: Of course that is one of the key parts of Lord Turner’s proposals. He rightly identifies the fact that people outside those schemes suffer from a problem of inertia, which is what his proposals are intended to address. He does, of course, make proposals on occupational pension schemes, which are often the most attractive ones that people have to choose from, and it is important that we continue to support them.

Mr. James Clappison (Hertsmere) (Con): During the last Conservative Government, when he was the shadow Chancellor of the Exchequer, the present Chancellor of the Exchequer promised the elimination of means-testing. Can the hon. Gentleman tell us today whether the Government want fewer pensioners to be subjected to means-testing than is presently the case?

James Purnell: We have made it absolutely clear—in fact, my right hon. Friend the Secretary of State for Work and Pensions had just done so—that one of the aims of the Lord Turner proposals is to control the spread of means-testing, but the last Conservative Government were, of course, the ones who increased means-testing. I do not think that any party on either side of the House proposes to eliminate means-testing. The key question is how we can target the resources at pensioners in poverty—that is exactly what we have done—and how we can build a consensus around reform for the long term, and we look forward to working with Conservative party and the Liberal Democrats in doing exactly that.

Chris Bryant (Rhondda) (Lab): I welcome my hon. Friend to his new post. He spent a considerable period serving on the Work and Pensions Committee, so he knows many of these issues. May I urge him, contrary to what has been said, to look particularly at the situation for many women who do not achieve a full set of stamps and for whom simply increasing the basic state pension will do absolutely nothing? If we as a Government are not able to tackle that pensioner poverty, particularly for women, we will not be worth carrying on in government at all.

James Purnell: My hon. Friend is quite right that tackling pensioner poverty for women is an urgent
8 May 2006 : Column 12
priority. About 30 per cent. of women reach retirement with a full entitlement to a basic state pension, and my right hon. Friend the Secretary of State has made it clear that that will be one of the key things that we will consider in the White Paper. It is not acceptable that women should not have the same broad level of support as the rest of the population.

Miss Anne McIntosh (Vale of York) (Con): Speaking for the women, may I congratulate the Minister on his new position and his promotion? It will not have escaped his attention that, by 2010, with the retirement age for women being increased to 65, there will be a net saving for the Government of £10.1 billion a year. Do he and the Labour party agree with the Turner commission that that money should be ring-fenced and spent on pensions?

James Purnell: The hon. Lady is quite right of course that the proposals must be affordable. That is one of the key tests that we have set for the package of proposals. I am not going to give a running commentary on our proposals; we will bring them forward, as we said, by the end of the month, so she does not have long to wait, but I thank her, and my hon. Friend the Member for Rhondda (Chris Bryant), for their welcome. The Select Committee said in its report on pensions that it is important to develop a national consensus, and I now look forward to being able to play my part in implementing that.

Occupational Pensions

8. James Duddridge (Rochford and Southend, East) (Con): What recent discussions he has had with Treasury Ministers on occupational pension funds; and if he will make a statement. [68274]

The Parliamentary Under-Secretary of State for Work and Pensions (Mrs. Anne McGuire): The Secretary of State has regular meetings with ministerial colleagues in the Treasury to discuss a range of pensions issues, including occupational pension funds.

James Duddridge: Will the Minister confirm that more than 60,000 occupational pension schemeshave been wound up or are in the process of being wound up, involving more than 1 million people? Furthermore, will she comment on press stories over the weekend that scheme members are being offered so-called bribes, so that schemes can close early?

Mrs. McGuire: I am not aware of the speculation that was in the press at the weekend about people being offered bribes. In response to the generality of the hon. Gentleman’s question, the Government have taken significant measures to try to improve confidence in the pensions system and to give confidence to individuals to save for their retirement.

Mr. Jim Devine (Livingston) (Lab): Has my hon. Friend given any thought to taking action againstthe companies and local authorities that, when the
8 May 2006 : Column 13
Conservative party was in power, took pension holidays and created many of the problems that we have today?

Mrs. McGuire: My hon. Friend speaks some words of wisdom and I know that they are based on the many years that he spent as a trade union officer dealingwith public authorities under the Conservative Administration. What he says is quite right. The Finance Act 1986 almost actively encouraged employers to take pension holidays, which, in the long term, have proved disastrous for many pension schemes.

Sir Nicholas Winterton (Macclesfield) (Con): I thoroughly support the Minister in what she has just said about the stupidity of taking pension holidays, because there are good times for pension funds and there are bad times, and the good times will pay for the bad times. However, the original question was about discussions with Treasury Ministers on occupational pension funds. The Minister has already said, in answer to that question, that she wishes to encourage people to save for their retirement. In the discussions that she has had, has there been any talk about those who have saved for their retirement having their pension income taxed at a lower level than the standard rate of tax and the other marginal rates of tax?

Mrs. McGuire: I thank the hon. Gentleman for his candid comments about some of the pension holidays that were encouraged by the Conservative Administration. I hope that he will also appreciate that this Government have done a lot to support those pensioners who have saved for their retirement—by the introduction of the pension credit and the savings credit. For the first time ever, people are getting some value for the savings that they have made during their working lives.

Pensions (Maladministration)

9. Mr. Peter Bone (Wellingborough) (Con): If he will make a statement on the Government's response to the conclusion on pensions of the parliamentary ombudsman that she had found injustice in consequence of maladministration which the Government did not propose to remedy. [68275]

The Minister for Pensions Reform (James Purnell): In his statement to this House on 16 March, my right hon. Friend the Secretary of State undertook to publish a full response to the ombudsman's report. He also confirmed that the response, which we expect to publish shortly, would include an explanation of the Government's estimate of the cost of implementing the ombudsman’s proposals. In addition, we have made it clear that we shall expedite our review of the financial assistance scheme.

Mr. Bone: An ombudsman is set up to protect people from large and powerful organisations. When maladministration is found, is it not fair, and a duty of that organisation, to compensate those who were wronged? Why have the Government not done that in the case of occupational pensions?

8 May 2006 : Column 14

James Purnell: We have great respect for the work of the ombudsman and we sympathise very much with people who have lost out, which is exactly why the financial assistance scheme has been set up. However, we looked at the ombudsman’s proposals in great detail and we reject her findings of maladministration and also find that she has not produced any causal link between what the Department did and the winding up of the schemes. Commentators would recognise that those schemes are affected by far bigger factors—in particular, the economic and demographic changes that have taken place.

Julie Morgan (Cardiff, North) (Lab): My constituents who worked at Allied Steel and Wire in Cardiff were very disappointed by the Government’s response to the ombudsman’s report. Is my hon. Friend aware that only 17 people out of a potential 2,000 pensioners from Allied Steel and Wire have benefited from the financial assistance scheme and what can he do about that if he rejects the ombudsman’s recommendations?

James Purnell: My hon. Friend has a long record of campaigning on behalf of that group. We have great sympathy with them, as we have with other groups. That is why we not only set up the financial assistance scheme, but are currently reviewing it. It is important that we learn the lessons and look at the administration of the financial assistance scheme to make it easier for people to claim more quickly, which is exactly what we are going to do.

Tony Baldry (Banbury) (Con): Does the Minister accept that he and the Government are setting a dangerous precedent? When Parliament set up the ombudsman scheme, it was for the ombudsman to determine, as a finding of fact, whether there had been maladministration. The Government are now creating a completely new ministerial doctrine and saying that maladministration happened only if Ministers accept that it happened. That is something that affects us all, and every single one of our constituents, in relation to every future recommendation by the ombudsman. Will the Government please go away and rethink the matter? If they continue down this line and say, “Maladministration happens only if we agree with the ombudsman that there was maladministration,” there will be no point in having an ombudsman at all.

James Purnell: With great respect, I am afraid that the hon. Gentleman has got the precedents wrong. There are several precedents, including, under the previous Government, the Barlow Clowes affair and the channel tunnel rail link. In both cases, the Government at the time rejected findings of maladministration. It is also worth saying that this Government have put in place the financial assistance scheme, and we will continue to work with his party and others on developing the right proposals. I think that people would agree that it would not be appropriate for the Government to write out a guarantee to underpin private sector saving in this
8 May 2006 : Column 15
country, which is primarily the responsibility of the trustees of schemes and the individuals involved in the schemes. The information that we put out made it quite clear that it is their legal responsibility to do that.

Miss Anne Begg (Aberdeen, South) (Lab): My hon. Friend might be interested to know that my hon. Friend the Member for Aberdeen, North (Mr. Doran) and I recently held a meeting in Aberdeen to which70 pensioners who had lost their pensions as a result of the collapse of the Richards pension scheme turned up to discuss the findings of the ombudsman’s report. They said that they were looking not for compensation for hurt feelings, but for the money that they had lost. When the Minister examines the financial assistance scheme with fresh eyes—I welcome him to his post—will he find out whether it is possible to ensure that the scheme is at least at the level of the Pension Protection Fund, if not better? Ultimately, it does not matter who is to blame. Individuals have lost money that they thought was rightfully theirs and there is a responsibility for someone somewhere to ensure that they get the money that they were expecting in their old age.

James Purnell: My hon. Friend is quite right to raise the issue. It is devastating for anyone who saved all their life in good faith through an employer suddenly to find that the money is not there. That is exactly what the financial assistance scheme and the Pension Protection Fund are there for. It is worth saying that neither of those measures existed under the previous Government. We will, of course, consider the points that she makes during the review of the scheme that we have announced.

Mr. Nigel Waterson (Eastbourne) (Con): In welcoming the Minister to his new position, may I ask whether he accepts the principle that it is the ombudsman’s job to decide what constitutes maladministration, not the Government’s? Will he now agree to compensate the 85,000 people who have lost their pensions? Will he take this opportunity to disavow the absurd and misleading figure of £15 billion that has been bandied about as the cost of that compensation?

James Purnell: That is a real figure. It was used by my right hon. Friend the Secretary of State, and it was made clear all the way through that it was a cash figure. We have also made it absolutely clear that when we publish our formal and final response, we will set out the method for calculating it. However, we will not take any lectures from Conservative Members because they have no policy to make good on compensation. They cannot meet the promise, so we cannot take them seriously on the issue.

Next Section Index Home Page