New
Clause
25
Compliance
notices
‘(1) The Pensions
Regulator (referred to in this Chapter as the
“Regulator”) may issue a compliance notice to an employer
if the Regulator is of the opinion that the employer has contravened
section [Prohibited recruitment
conduct].
(2) A compliance
notice is a notice directing the employer to take, or refrain from
taking, the steps specified in the notice in order
to—
(a) remedy the
contravention, or
(b) prevent
the contravention being
repeated.
(3) A compliance
notice may, in
particular—
(a) state
the period within which any step must be taken or must cease to be
taken;
(b) require the employer
to provide within a specified period specified information relating to
the contravention;
(c) require
the employer to inform the Regulator, within a specified period, how
the employer has complied or is complying with the
notice;
(d) state that, if the
employer fails to comply with the requirements of the notice, the
Regulator may issue a penalty notice under section [Penalty
notices].
(4) A compliance
notice must specify the contravention to which the notice
relates.’.—[Mr.
O'Brien.]
Brought
up, read the First and Second time, and added to the
Bill.
New
Clause
26
Penalty
notices
‘(1) The Regulator
may issue a penalty notice to an employer if the Regulator is of the
opinion that the
employer—
(a) has
contravened section [Prohibited recruitment conduct],
or
(b) has failed to comply
with a compliance notice under section [Compliance
notices].
(2) A penalty notice
is a notice requiring the person to whom it is issued to pay a penalty
within the period specified in the
notice.
(3) The
penalty—
(a) is to be
determined in accordance with regulations,
and
(b) must not exceed
£50,000.
(4) A penalty
notice must—
(a) state
the amount of the penalty;
(b)
state the date, which must be at least 4 weeks after the date on which
the notice is issued, by which the penalty must be
paid;
(c) specify the
contravention or failure to which the notice
relates;
(d) notify the
employer of the review process under section 35 and the right to make a
reference under section 36 (as applied by section [Review of notices
and references to Pensions Regulator
Tribunal]).
(5) Section 34
(penalty notices: recovery) applies to a penalty payable under this
section, and to a notice under this section, as it applies to a penalty
payable under section 32, and to a notice under that
section.’.—[Mr.
O'Brien.]
Brought
up, read the First and Second time, and added to the
Bill.
New Clause
27
Review
of notices and references to Pensions Regulator
Tribunal
‘(1) Section 35
(review of notices) also applies to a compliance notice issued under
section [Compliance notices] and to a penalty notice issued under
section [Penalty notices].
(2)
Section 36 (references to the Pensions Regulator Tribunal) applies in
relation to a penalty notice issued under section [Penalty notices] as
it applies in relation to a notice issued under section 32 or
33.’.—[Mr.
O'Brien.]
Brought
up, read the First and Second time, and added to the
Bill.
New
Clause
3
Restoring
link with earnings
‘Before
the coming into force of this Act, the Secretary of State shall
announce to Parliament his intention as to the timing of the
implementation of Section 5 of the Pensions Act
2007.’.—[Mr.
Waterson.]
Brought
up, and read the First
time.
6.45
pm
Mr.
Waterson:
I beg to move, That the clause be read a Second
time.
This is an
important issue, but I hope that I can take it briefly on the basis
that we are all, apparently, on the same side. It is about restoring
the earnings link. I go up and down the country addressing audiences of
pensioners, and the one issue that I can be sure will come up sooner or
later is the earnings link and the fact that it was broken in 1980. So,
I shall delve into its history. It is important, however, to recognise
that it is the Government’s policy to restore the earnings link,
that it was our policy in our previous election manifesto—it
obviously made all the difference—to do so, and that for all I
know, although there is no representative present from the Liberal
Democrats, they would like to do much the same. In fact, they probably
would have liked to do have done it last week.
All that innocent
little new clause 3 would do is make the Secretary of State announce to
Parliament his intention about the timing of that important decision
and the implementation of section 5 of the Pensions Act 2007 when the
legislation before us comes into force. This is the ultimate probing
amendment, because it tries to get out of the Minister where the
Government are on that promise.
It is worth delving into the
history of the issue, as I said. There is a myth that the earnings link
existed for years, decades, perhaps even centuries before 1980, and
then the wicked Conservative Government under Maggie Thatcher got rid
of it. However, it was implemented only in 1974, following the general
election in February of that year, so it lasted barely six years. The
incoming Conservative Government in 1979 inherited an economy in
complete meltdown, with roaring inflation, the public finances in a
very bad
state—
James
Duddridge (Rochford and Southend, East) (Con):
Nationalisation.
Mr.
Waterson:
Nationalisation of course, which stalks the land
again and is very much the flavour of the month, and massively powerful
trade union barons.
Mr.
David S. Borrow (South Ribble) (Lab): Will the hon.
Gentleman pay tribute to Lord Rooker and my former MP, Audrey Wise, for
having the foresight to move the amendment that introduced the link in
the first place?
Mr.
Waterson:
Absolutely. The Rooker-Wise axis has its place,
quite rightly, in the history books, and the hon. Gentleman was right
to remind us of it.
The incoming
Conservative Government were faced with an almighty mess, and they
decided to break the earnings link in 1980. Before Government Members
start winding up their ersatz outrage, it is worth remembering that the
current Prime Minister, previously the Chancellor, built his now
somewhat shaky reputation for financial prudence partly on the fact
that in opposition, he told the Labour party that they could not
restore the link with earnings. So, when Labour came into office, they
had no such promise to make, and they have done absolutely nothing
about it in the years
since.
Interestingly,
if we fast-forward to the Turner pensions commission, in its second and
final report, it recommended that the link between the BSP and average
earnings be restored, starting ideally in 2010 or 2011. If we return to
a point that we have debated in a different context in this Committee,
the commission considered the measure to be part of a package: to fund
the restoration of the link, the state pension age would be increased
to 66 over two years, to 67 and ultimately to 68, starting in
2044.
We have already
legislated, in section 5 of the 2007 Act, to restore the link, so all
we need is a decision from, presumably, the Chancellor, if he can be
torn away from his other, pressing considerations. As I understand it,
the Government intend to restore the link either in 2012, subject to
affordability and the fiscal position, or, at the very latest, by the
end of the next Parliament in 2015. That is lifted directly from
“Security in retirement: towards a new pensions system”,
published in May 2006. Of course, the problem with that is that there
is no certainty. As the National Pensioners Convention pointed out, by
then some 3 million pensioners sadly will have passed
away.
We tabled
amendments to the Pensions Act 2007—this demonstrates how
consistent we are on this issue, as on others—proposing that the
Government announce their decision. At that stage, Ministers were not
prepared to accept such an amendment, but I think that the time is fast
approaching when we should be told what the current plan is. I am not
normally one for quoting the Trades Union Congress extensively, but it
said, in its briefing on this new clause, that
it
“has long campaigned
for a more generous basic State
Pension”,
which is true,
and that it welcomes the commitment in the 2007 Act to restore the
link. It
continues:
“Restoring
the link with earnings is the fairest way to ensure that all pensioners
share in national prosperity. This should take place as soon as
possible and we continue to urge the Government to do this by 2010 at
the latest in order to provide vital assistance to current
pensioners.”
I urge the
Minister to tell us what the plan is.
Danny
Alexander:
I apologise for my brief absence from the
Committee. I would like to speak briefly in support of the new clause.
The hon. Member for Eastbourne made some important points about the
debilitating effect of the current uncertainty over the timing of the
restoration of the link with earnings. The provisions in the Bill
setting up the personal accounts and so on with a fixed timetable, for
introduction in 2012, which we debated earlier, are designed to give a
great degree of certainty on that side of the equation. The purpose of
the new clause is to give a degree of certainty on the state pension
side of the equation.
As a Liberal Democrat, I
support very much the view expressed during the passage of the 2007 Act
by my hon. Friend the Member for Yeovil (Mr. Laws) that the
restoration of the link with earnings should be brought forward to as
early a date as possible. At that stage, we proposed 1 April 2008. Time
has elapsed, but there seems no reason in principle why the restoration
should not take place in 2009. The Government have said that 2012 is
the likely date, but it could be as late as 2015, depending on the
timing of the general election and the extent of the subsequent
Parliament. That provides for a great degree of uncertainty. In the
time that elapses between now and 2012 or 2015 the value of the basic
state pension, in relation to average earnings, will erode
substantially further.
Already, the value of our basic
state pension, as a proportion of average earnings—I accept that
the latter has increased substantially—is lower now that it was
in 1950, I think. We need to set the basic state pension on a different
path so that it can keep up with earnings, which is why the restoration
of the link is so important. It has been campaigned for widely outside
this House. We should get on with it as soon as we can. By agreeing to
this new clause, we would at least require a degree of certainty from
the Government, which they have not so far been willing to give us.
Perhaps the Minister is about to do
so.
Mr.
O'Brien:
It takes a certain amount of brass neck to
present the Conservative party in the light of defending pensioners,
particularly after what was done in the 1980s. However, we did not come
into Government in 1997 with a commitment to restore the link. We took
the view that we had to deal with some of the problems in the economy
that we had inherited, and we sought to do so. The Government stated in
their White Paper, “Security in retirement: towards a new
pensions
system”:
“During
the next Parliament, we will re-link the uprating of the basic State
Pension to average earnings. Our objective, subject to affordability
and the fiscal position, is to do this in 2012, but in any event by the
end of the Parliament at the latest. We will make a statement on the
precise date at the beginning of the next Parliament.”
That remains the situation, and I am not
going to make any announcement to change that policy. It is the
Government’s agreed policy, and on that basis I reject the new
clause.
However, with
reference to the comments made by the hon. Member for Inverness, Nairn,
Badenoch and Strathspey, it is important that we do not mislead people
by suggesting that pensions are somehow at the same level as in 1950 or
indeed 1918. Most people today who have retired are not reliant on the
basic state
pension exclusively. Most have further pension entitlements, and if they
do not have a second pension, they are likely to be able to apply for
pension credit. The minimum level of income to which pensions would
fall would be around £119, which differs somewhat from the very
low level of around £69 on which pensioners back in 1997 were
expected to exist. As I said in the Chamber yesterday, even then it
would probably not have bought a bottle of plonk at the Bullingdon
club. The
situation for pensioners has changed, and we want to change it further,
but we need to do so at the right
time.
Mr.
Greenway:
I intervene solely to say that it is entirely
correct that we should be having this discussion under your
chairmanship, Sir Nicholas. If I remember correctly, when the link was
broken, you were the robust Chairman of the then Select Committee on
Social Services, which in those days was against the breaking of the
link.
Mr.
O'Brien:
If I remember correctly, Sir Nicholas, you paid a
price in due course for your robustness. You deserve our respect for
that.
Mr.
Borrow:
Will my hon. and learned Friend put on the record
the fact that although the link has not been restored for the basic
state pension, we look forward to that being done as soon as possible,
and the Government have made progress in restoring the link for the
pension
credit?
Mr.
O'Brien:
We have indeed moved pension credit upwards, and
the poorest pensioners, who were our priority when we came to
Government, have received the most help. We will continue to do that,
and we made announcements before Christmas. We have introduced schemes
such as winter fuel payment. There is a broader agenda, which we need
not go into in respect of this amendment, save to say that the
Government have made helping the poorest pensioners a priority. We hope
in due course to be able to restore the link that the Conservatives
removed, but we will do so at a time when it is appropriate and
proper.
Mr.
Waterson:
Naturally, I am disappointed that the Minister
is not prepared to go further, as I am sure millions of pensioners will
be. It is worth remembering that if the Conservatives had won the last
election, we would already have implemented that policy. However, it
was not to be, and we must return to the
issue.
If I pressed
the amendment to a Division, the Government would vote it down, so I
beg to ask leave to withdraw the
motion.
Motion and
clause, by leave,
withdrawn.
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