Previous Section Back to Table of Contents Lords Hansard Home Page

Noble Lords: Hear, hear!

Baroness Hollis of Heigham: My Lords, this does not imply acceptance of any specific proposal but it means that in due course the Government will propose further amendments. They accept the fact that this Bill should make some provision for dealing with the problem which we inherited. As the noble Lord, Lord Rix, again very eloquently said in Committee, it will allow us to address the issue. The public should know that we are taking on board their concerns; that we are addressing the problem; and to that degree seek to reduce some of their anxiety that the clock is ticking and nothing will be done. I cannot as a result accept the subsequent and specific amendments in this group. However, the noble Lord, Lord Rix, has offered in his new clause a truly statesmanlike way forward in the true spirit of a Cross-Bencher. I am glad he felt able to do so and it is very clear today that he was speaking for the entire House. Therefore, on behalf of the Government, I have great pleasure in accepting his first amendment.

Noble Lords: Hear, hear!

Lord Rix: My Lords, I am certain I speak for all parts of your Lordships' House when I say how delighted--indeed staggered, but certainly delighted--I am that the Minister and the Government have seen fit to accept my amendment. I assure the Minister that many, many elderly husbands and wives, putative widows and widowers all, will sleep more easily in their beds tonight knowing that their spouses will be better protected when bereavement eventually strikes. I am of course an interested party in this matter. Therefore, on behalf of my wife and myself and tens of thousands of other husbands and wives: thank you.

On Question, amendment agreed to.

Baroness Castle of Blackburn moved Amendment No. 2: Before Clause 1, insert the following new clause--


(“ . Part I of this Act shall not have effect until comprehensive legislation embodying the pensions proposals outlined in “A new contract for welfare: Partnership In Pensions" (Command 4179) has been introduced.").

The noble Baroness said: The purpose of the amendment is to ensure that Part I, which deals with the stakeholder pensions, shall not be proceeded with until we have the whole picture of the Government's pension provision in legislative form.

The Minister had great fun with me in Committee because I inadvertently quoted the wrong Green Paper. I have corrected that in this amendment, by referring to the December 1998 Green Paper Partnership in Pensions. The Minister rubbed my nose in it, saying that if only I had read that document, I would have understood and seen the whole picture of

11 Oct 1999 : Column 34

government policy. She said that there was indeed a debate on the scheme in which I had taken part--so how could I claim that the Government had not presented the whole picture?

In the first place, there has never been a debate on that Green Paper in this House. A Statement made in another place was repeated in this House by the Minister, which is the custom. It is also the custom in this House to ask questions on a Statement, not to debate it. When I tried to put in my pennyworth, I was slapped over the knuckles by my noble friend Lord McIntosh of Haringey on the Front Bench, who pointed out that I had taken four minutes of the 20 minutes allowed to Back-Benchers to question Ministers on a Statement. I hope that the Minister will correct the misleading impression she gave that we all had plenty of opportunity to discuss the Green Paper and should therefore be familiar with it.

The concession that the Minister has just made to Lord Rix shows that she is today in a giving mood and that we shall get other concessions as we go along. Some of us laboured very hard in Committee to put forward reasoned arguments for important changes. We did not get much response. Amendment No. 2 is an example of a reasoned argument for important change.

The tenor of our complaint, as embodied in the amendment, is that it is disrespectful to Parliament to bring forward a Bill one section of which deals with the stakeholder pension, on which we are asked to vote and which will become law, whereas we are left in the dark about what the Government really intend over the pensions picture as a whole. I must in all gentleness point out to the Minister that the fact that certain proposals have been put forward in one of the Government's famous glossies called a “Green Paper"--although I believe it was actually yellow and blue--is not enough evidence for us to go on. Is it not true that until one gets to the stern moment of legislative decision, one does not get anything really clear-cut?

I remind the Minister that in another glossy--our manifesto in the last general election--we made a pledge to retain SERPS for those who wished to remain in it. The Minister queried me on that as well. I beg her to read that that manifesto most carefully, as I have done, in which it is indicated, although not in the Bill, that SERPS is to be abolished and replaced by a combination of the state second pension and the stakeholder pension. What is the Government's comprehensive aim on pensions? I urge the House to take this seriously. This is not just a would-be clever debating point.

We are told that the Government's aim with the sort of structure hinted at--but which is not before us in the Bill--will result in moving all pensioners out of dependence on means-testing, yet the Government have admitted that even with the combination of stakeholder pension and state second pension, by 2050 one in four pensioners in this country will still be dependent on means-tested aid. How could that possibly be accepted by the House? Ought we not to examine how that disastrous situation is reached?

11 Oct 1999 : Column 35

Poverty is not just about the lack of certain material things. It is also about being deprived of one's dignity and independence. If the Government envisage that in the middle of the next century one in four pensioners will still be dependent on the uncertain charity of the taxpayer, that is a confession that the Government's structure is inadequate--and should affect their policy on restoring the earnings link, for example.

There are other aspects of pensions policy that some of us have urged for so long. We shall go on urging them. We will not be silenced. I know that the Government must be feeling immensely pleased with the smoothness with which they are getting away with fragmenting pensions policy into salami slices and slipping them all through this House because most people cannot be expected to understand what is going on. We insist that the Government are honest with us and give a clear overall picture in a form that we can then vote upon before they ask us to vote on one of their salami slices.

I hope that the House will take Amendment No. 2 seriously and support my noble friend Lady Turner of Camden and me when we press it to a vote--unless of course the Minister plans to make another concession early this afternoon. I beg to move.

4.45 p.m.

Lord Higgins: My Lords, in a previous debate on these matters the noble Baroness said that if she and I went on agreeing, people would start talking. I find myself, with some surprise, in agreement with a considerable number of the points she made both in Committee and today. The noble Baroness rightly quotes the Labour Party manifesto, which stated that Labour would retain SERPS for those who wished to remain in it. Perhaps the Minister will say whether or not that is still the Government's position. As I understand it, the Government do not propose to do that which was stated in their manifesto but instead say that people will be better off under the state second pension.

Perhaps I ought to repeat something that I said in Committee: there is some danger in these debates of getting into a semantic difficulty if we do not clearly distinguish between the state second pension--in capital letters, so to speak--and a second pension generally, which may refer to a whole range of different things. If the Government are, indeed, saying that the state second pension is a better substitute for SERPS, that needs to be carefully examined.

On closer inspection, there are three major catches. First, those higher levels of entitlement will only arrive on future earnings from a given implementation date. In other words, there will be no increase in entitlement on the basis of current or past contributions. I imagine that it will be almost a generation before one notices any difference. Secondly, although employees' rights to the new second pension on earnings up to £9,000 will, in the next century, accrue at double the rate of SERPS, nonetheless, that impressive rise will be substantially paid for and compensated by halving the

11 Oct 1999 : Column 36

rate of accrual in the next band of income from £9,000 to £18,500. Perhaps the Minister could confirm that. I am seeking to get at what the second state pension is all about. Thirdly, a number of those in receipt of the state pension will inevitably find that they are receiving it instead of means-tested benefits. That point is not reflected properly in the tables and charts in the Green Paper to which the noble Baroness now rightly refers.

If I understand her correctly, the noble Baroness argues that it is difficult to take a firm view on the question of stakeholder pensions, and so on, if we do not have before us the Government's overall proposals and, as she rightly said, in legislative form. It is the case that one does not discover what is going on until one sees the proposals in the form of a Bill before your Lordships' House.

Much greater clarity is needed as to exactly how the state second pension and the stakeholder pension will fit together. The Green Paper to which the amendment of the noble Baroness refers is a lengthy document which will take some while to implement on a comprehensive basis. Nonetheless, paragraph 31 states:

    “Once stakeholder pension schemes have become established (we expect in about five years time), the State Second Pension will become flat rate, paying all its members at a single rate which will be double [that] ... under SERPS".

However, how we move from one to the other is not at all clear. It will be extremely difficult to appraise the stakeholder pension unless we are much clearer than we are at present on the state second pension. I hope that the Minister, in the sympathetic mode in which she begun the afternoon, will be able to tell us rather more about the way the two fit together. My impression is that that is now quite difficult to ascertain, and the timing even more so. However, apparently, as the stakeholder pension proceeds, so the state second pension is to be transformed. It will help those at the very bottom end of the scale but will cease to help those further up the scale and do nothing for those in occupational schemes which, I believe everyone is now agreed, is the best way for pension provision to be made.

One of the regrettable aspects about this situation is that as I understand it--perhaps the Minister could confirm this--since the present Government came into office there has not been set up a single final salary-related pension scheme. That is perhaps not least because of the action taken by the Chancellor of the Exchequer in his first Budget with regard to changes in the tax system. There is a real danger that unless we are much clearer on the points made by the noble Baroness, people will defer taking decisions on pensions. That is of grave concern. We all know that it is important to contribute early on to a pension. The contributions in the early years produce far more than those made later. However, the uncertainty now being created is likely to lead people to delay in that way.

I fear also that unless we are clearer on such matters and unless this is carried out in a comprehensive way, as requested by the noble Baroness, a number of people will also hesitate to take up their company pensions. I have some experience of that from my own

11 Oct 1999 : Column 37

knowledge. Some people are saying, “If there are stakeholder pensions, we will not yet take up a company pension because we do not know whether the stakeholder pension will be better."

There are now some products about which we are told, “These are, effectively, a pre-cursor to the stakeholder pension. Take out a new pension with this company and we will convert it into a stakeholder one". However, that does not solve the problem.

We have a great deal of business ahead of us. However, it seems to me, particularly with regard to the relationship between the stakeholder pension and the second pension, that considerably more clarity is needed than we have at present. Finally, perhaps the Minister can tell us when she expects legislation on the second state pension to come before the House.

Next Section Back to Table of Contents Lords Hansard Home Page