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I was more than a little concerned by some of my hon. Friend’s comments about pension credit. We have written on four or five occasions over the course of the last year to people who we think might be entitled to pension credit in order to try to get them to make those claims. We are working enormously hard to increase the numbers of people who are on pension credit. It is a Government priority to ensure that we deal with issues around fuel poverty, particularly for pensioners, and around broader pensioner poverty, too.
Mr. O'Brien: I will give way one last time.
Lynne Jones: I agree with my hon. and learned Friend that the Government have done a great deal for today’s pensioners. Of course, it is too late for them to save for their retirement, so my concern is that we are not doing enough to incentivise future pensioners sufficiently to save. The Minister is absolutely right that it is all about priorities. Last year, for example, the Government chose to spend £1 billion on reducing inheritance tax to benefit some of the more affluent members of our society, so is it not time that the Government gave priority to this now? We could find money from other areas—for example, from the huge proportion of money going in tax relief to higher-rate taxpayers on their contributions to pension schemes.
Mr. O'Brien: As my hon. Friend knows well, we made additional provision for pensioners in the recent Budget in the form of winter fuel payments. That not insignificant contribution will go to every pensioner household in the country with someone over 60. We recognised that pensioners faced increased bills and we made provision for it. Our priorities for helping pensioners are therefore very clear from the last few months.
What we are undertaking, as part of a broad-based social reform, is the biggest thing that has happened in pensions since the creation of the state pension system 100 years ago—
Mr. Deputy Speaker (Sir Michael Lord): Order. I understand that it is very tempting for the Minister to speak to Members, but let me gently remind him that he should address the Chair.
Mr. O'Brien: My apologies, Mr. Deputy Speaker.
We are putting in place the biggest package of pension reforms undertaken in 100 years. All the measures that we have taken and all the alterations that we are making in state provision relating to, for instance, equality for women and carers, the Pension Protection Fund and the Pensions Regulator constitute a major package of change. A keystone of that package is the restoration of the earnings link. We have made the importance of that clear in legislation: we have taken the unprecedented step of establishing in law that the Chancellor is obliged to do it. We have also specified 2012 as the year in which we seek to do it.
I accept that there is a caveat relating to affordability. My hon. Friend the Member for Newcastle upon Tyne, Central is aware of the issues that the Chancellor will
need to consider. I know from my hon. Friend’s background on the Treasury Committee that he has had to examine the detail of those issues, and he knows as well as others that they must be considered in the round. It is easy to be flippant about what could be done if something or other were the case, but the position must be seen as a whole.
There will be winners and losers—there are ways in which the taxpayer will have to fund the change—and we need to act with a degree of care. However, I repeat the point made by my hon. Friend with which I began my speech by endorsing: the restoration of the link is a crucial part of this package. I ask my hon. Friend to let us introduce the package as a whole, because it provides a long-term guarantee that pensioners will be given a better deal, provided not by them but by this Government and what they have done.
Mr. Waterson: I am slightly at a loss. There seems to be a huge degree of unanimity in the House about what should be happening, but we do not seem to be making any progress. The Minister ended where he began, by saying that the Government would make the change in 2012 or 2015, when it was affordable. As I understand it, he has said nothing new. If he thinks he has said something that we have not heard before, I shall be happy to give way to him so that he can explain to me what it is.
The Minister talked of the need for flexibility. That is the point. The Government have insisted on flexibility, for better or worse, but I did not observe any more in what he said tonight than in what he has said before.
Mr. Mike O'Brien: If the hon. Gentleman is seeking a change in the date, he is right to say that I have not announced anything specific or new. What I have done, in responding to the points made by my hon. Friend the Member for Newcastle upon Tyne, Central, is set the key nature of the restoration of the link in the context of our overall package of proposals. It is essential to our policy delivery, and to the action that we wish to take to help older people. It is not an optional extra; it is not something that we might do if the circumstances were just right. It is something that we must do. If we do not do it, the Bill, and many of the provisions in the 2007 Act, will not have the foundation that is necessary for them to deliver for older people.
Mr. Waterson: I am grateful for that clarification. I now need further clarification, on affordability. If, in 2012 or 2015, the Chancellor decides that the change is not affordable, will it happen? Yes or no? Again, I do not think that the Chancellor is saying anything different from what has been said in the past, namely that if it is not affordable it will not happen—or am I, again, missing something?
Mr. Mike O'Brien: It is in the statute.
Mr. Waterson: It may be in the statute, in which case I am delighted, but my understanding is that there is still a “get out of jail free” card in the shape of affordability.
I have a hunch, which relates to something said by the hon. Member for Newcastle upon Tyne, Central (Jim Cousins). The economic climate is rather less encouraging than it was a few months ago. Will that
have an effect on the dates of 2012 and 2015, or are they written in stone? Is there no possibility that the Government will back away from acting within that time scale, whatever the economic situation?
8.15 pm
Mr. Mike O'Brien: The Government have a clear commitment to the policy that I have set out. There is no “get out of jail free” card. We have put in place a package of measures that requires that this measure be put in place. We are not going to jeopardise everything that we have put in place in order not to make this change; that is complete nonsense. The change is a key component of our reforms, it is something that we will deliver, it is something of which Labour will be proud, and it is something that the hon. Gentleman’s party would never have done unless we had committed ourselves to doing it first.
Mr. Waterson: I do not want to reopen old wounds, but had we won the last election we would already be implementing this promise. That is history, however. I am trying to narrow any differences between us, because it seems to me that there are no real differences of principle. In their own ways, the two major parties have reached similar conclusions. All we are talking about is the time scale.
I happen to believe that the Government have tested to destruction the ability of means-testing to deliver help to those who need it most. Those who require any persuasion of that should bear in mind the number of people—up to 1.7 million—who are not claiming the pension credit to which they are entitled. Lest anyone have any illusions, when pension credit was first introduced, the Treasury’s assumption was that 1.4 million people would never claim it. It always assumed that it would have the money in its back pocket whatever happened, because at least 1.4 million would never claim it.
I do, however, agree with the Minister when he describes this measure as part of a package. As I said earlier—as, I think, did the hon. Member for Newcastle upon Tyne, Central—this is all part of the Turner package. We have legislated for the future raising of the state pension age. We are dealing with personal accounts. It is all part of the same package. We are not asking the Minister to do something that he is not proposing to do; far from it. We are merely asking him to tell us when he is going to do what he proposes within this time scale.
Lynne Jones: According to my recollection of the Turner proposals, Lord Turner presented three scenarios, 2010, 2011 and 2012, and demonstrated that any of them could have been afforded by different kinds of manipulation of the system. Potentially, however, the Government are to postpone implementation of the Turner package until 2015, three years after the last date that he gave.
Mr. Waterson: The hon. Lady is right to remind me that there was a series of different scenarios. Indeed, someone—it may have been the hon. Member for Newcastle upon Tyne, Central—pointed out that the beginning of the next Parliament is a fairly movable feast. At one time it looked as though it might have happened by now, but that was not to be.
I am not saying that the Government are bad people, or that pension credit is a bad thing. I am sure that pension credit has helped many people, but, equally, there are many people whom it has not reached and will never reach, and whom it should be reaching. The only reliable way of getting help to those who need it most is to boost the basic state pension. Apart from being the right thing to do, as we concluded before the last election and as the Government have obviously concluded, it is the best way of getting help to people who do not want to fill up forms and who do not think that they are entitled to it.
Take-up of some means-tested benefits has actually been falling. Council tax benefit is an example. Many ladies in my constituency—widows—do not apply for it, believing that because they own their homes they could not possibly be entitled to it, although for that reason they are living in a kind of genteel poverty.
We all agree that this should happen, and we all agree about the parameters of the time scale, but why will the Government not narrow the time scale and tell us now rather than later, especially at a time when pensioner poverty is a political priority for everyone?
I intend to ask leave of the House to withdraw new clause 7, but I am still keen to support new clause 16, tabled by the hon. Member for Newcastle upon Tyne, Central and others, and urge my colleagues to do the same. I very much hope that the hon. Gentleman will press his new clause to a Division at the appropriate time in our deliberations. If he does not, I have every intention of trying to catch your eye to do so myself, Mr. Deputy Speaker.
I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.
Jim Cousins: If I may, Mr. Deputy Speaker, I would very much like to have the opportunity to explain whether I shall call for a Division on new clause 16.
Mr. Deputy Speaker: Now is not the appropriate time to do that; we have dealt with the lead new clause in the current group. The hon. Gentleman might have an opportunity later to do what he asks for, but we now need to move on to the next group of amendments.
‘The Authority must have regard to the United Nations principles for responsible investment (“UN PRI”) and adherence to those principles will be part of the contractual arrangements with fund managers in respect of—
(a) addressing environmental, social and corporate governance issues in investment policy statements;
(b) assessing the capabilities of internal and external investment managers to incorporate such issues;
(c) asking investment managers to report on their engagement with such issues;
(d) including UN PRI requirements in requests for proposals;
(e) aligning investment mandates, monitoring procedures and performance indicators with the UN PRI.’.— [Mr. Waterson.]
Brought up, and read the First time.
Mr. Waterson: I beg to move, That the clause be read a Second time.
Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 25, in clause 70, page 34, line 34, after ‘the’, insert ‘needs and’.
No. 26, in page 34, line 36, at end insert
‘, provided this can be done at no disproportionate cost to the scheme overall.’.
No. 39, in page 34, line 38, at end insert—
‘(g) the UN Principles for Responsible Investment should be adhered to’.
Mr. Waterson: We now have a complete change of topic. New clause 12 arises from a good debate we had in Committee about investment principles as they apply to PADA—and to the board and trustees in due course. It seems that everyone is talking about ethical investments to which there seems to be a range of different approaches, of which this new clause is only one. It merely seeks to apply to the authority the
“United Nations principles for responsible investment (“UN PRI”) and adherence to those principles will be part of the contractual arrangements with fund managers in respect of”
the variety of matters listed.
The hon. Member for Carmarthen, West and South Pembrokeshire (Nick Ainger) pointed out in Committee that the Co-op ethical fund had had one of the best performances of any all-shares funds in recent times, so it is not as if we are suggesting a measure that is likely to fetter the ability of the personal accounts system to provide a decent return for those saving into it. In fact, in many respects, the opposite is the case. I am delighted that our proposals have received support from a range of different organisations, including FairPensions: The campaign for responsible investment. It makes the point that responsible investment does not necessarily mean disinvesting from so-called unethical industries, but that it does mean taking steps such as to
“proactively engage with companies on environmental, social and governance (ESG) issues”
“working with them to future-proof their profits by limiting the potential of...poor governance, lax safety standards or climate change”.
One of the attractions of the UN principles as opposed to other codes that are sometimes cited in this context is that they are not prescriptive but provide what is called a voluntary and aspirational code of best practice.
FairPensions goes on to say that this House
“should affirm its commitment to safeguarding investments, and to responsible business practices, by amending”
the Bill in the way suggested. It says in conclusion:
“By committing to the UN Principles of Responsible Investment, Parliament will provide a clear mandate to the Personal Accounts Delivery Authority and its fund managers to engage with companies on environmental, social or governance issues.”
The Government’s attitude in Committee was very much that they did not want to bind the hands of PADA—or the trustees in due course. I find that surprising, because the question of ethical investment was foreshadowed even in the impact assessment produced alongside the Bill. We are not trying to be prescriptive;
we are Conservatives, so we understand the need for business not to be fettered by unnecessary red tape or bureaucracy. However, surely PADA and its successor could reasonably be expected to reflect current best practice—the Pension Protection Fund is already signed up to the UN principles, as are various comparable bodies around the world. The new clause would, however, still leave some flexibility to those running the personal accounts system.
Two approaches are possible. We know—because that is the way life is—that the default fund will far and away be the biggest fund, as people will not make a conscious decision to invest in a particular type of fund and therefore by default will end up in that default fund. One option is to apply the UN principles right across the board, and particularly to the default fund. Another option would be a specific fund based on those, or comparable, principles. It seemed to be accepted without debate in Committee that there would be a fund—possibly out of only five or six altogether under personal accounts—that would be subject to sharia law. There is a lot of sense in that; it is important that we make that kind of provision. However, why should we not also have a fund based on ethical principles—perhaps Christian principles? Within a limited number of funds—I think the number should be limited for all the practical reasons debated in Committee—there should be that element of choice.
Following our Committee deliberations, the Minister was good enough to write to Mr. Tim Jones, PADA chief executive—who has featured quite a lot in our debates today—and raise with him the issues discussed in Committee. The Minister shared with us the reply he received on 5 March from Mr. Jones, in which he says:
“I take very seriously the strength of feeling expressed in relation to investments within personal accounts and, in particular, responsible investment.”
He goes on to point out that it is ultimately
“the responsibility of the trustees”
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