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Baroness Hollis of Heigham: No.

Lord Higgins: My Lords, I am grateful for that immediate intervention. There will be two separate Bills. We shall have a chance to debate the Pension Credit Bill in greater depth later on.

The crucial point is whether the proposal will be understood by the people it is designed to help. Part of the problem arises because around 750,000 people do not at present take up the minimum income guarantee to which they are entitled. It is even less likely that they will understand this issue. Indeed, I have to confess that I have had some difficulty in understanding it

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myself. It is also somewhat doubtful whether the Government's officials understand it. The briefing for today's debate states:

    "The Pension Credit Bill is a key part of this Government's commitment to help pensioners by ensuring that those who have saved for their old age for the first time are rewarded for thrift".

That is a quite incorrect statement. Many people have gained from their thrift because they happen not to be below the income support level. The briefing goes on to state:

    "The Bill will guarantee a level of income below which no pensioner should fall. The Bill would also ensure that saving is rewarded by ensuring an extra cash addition for pensioners with modest savings or occupational pensions".

My goodness, for real spin, the expression,

    "an extra cash addition for pensioners",

is quite extraordinary. If I understand the position correctly, the Government are really saying that for every pound of income a pensioner has from outside they will not deduct another pound from his income support. That is then described as an extra cash addition. Thus, when the Government do not deduct something that was previously deducted to the full extent, that is said to be a cash addition.

This matter is extremely difficult to understand, but I think that I am right in saying that, so far as concerns the Government providing extra money, they will in fact provide more money for people below the income support level who do not have savings than they will for those who do. That seems to be a strange situation. If one looks at the outside commentary on this issue--I apologise for speaking a little longer because of our diversion on Europe--the position is clear. Age Concern has stated that:

    "The very older people who feel penalised because their modest savings exclude them from income support may equally resent having to negotiate yet another means test".

I could quote from many sources. For example, Scottish Life has stated that,

    "It's far from simple for people to understand. And it is not all that generous. It effectively means you are allowed to keep only 60 per cent of the pension which you scrimped and saved for during your working life".

The reaction of groups such as Age Concern and other interested bodies demonstrates that this proposal is open to considerable objection. I think that we shall be able to deal with it in greater detail when the Bill comes before the House.

What is crucial here is that it represents yet another increase in means testing which, as my noble friend Lord Saatchi pointed out, has been the hallmark of this Government. We believe that this is the wrong approach. The Government are creating, and these proposals will increase, the extent to which we have a dependency culture. That is not the way we on this side of the House believe that we should proceed.

7.42 p.m.

Lord McIntosh of Haringey: My Lords, this is a peculiarly difficult debate to wind up, partly because so many noble Lords have spoken on different subjects--and why not?--they are fully entitled to do so. However, it is also partly because the boundaries of

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today's part of the debate on the gracious Speech are not entirely clear. Because quite reasonably they wanted to discuss public services, many noble Lords have sought to talk about education and health. Clearly I cannot respond on those matters. Other Ministers will do that.

Similarly, many noble Lords have talked about the euro and, until I listened to the words of the noble Lord, Lord Higgins, I had assumed that this was a proper consideration for our debate today. I was confirmed in that view by the fact that the Opposition Treasury spokesman studiously avoided any reference to the euro. I thought that that was wise of him and I was surprised that the noble Lord, Lord Higgins, sought to leap in on the subject where he did not need to so. It is safe for the Back Benchers of any party to express their views, but I should have thought that, given the present state of Conservative Party thinking, it was particularly unsafe for those purporting to speak on behalf of the party to express any view, whether sensible or less sensible.

However, I think that we can begin with a degree, if not of consensus--that is evident--of agreement as to what has happened over the past four years. Over that period the Government made high and stable levels of growth and employment the priorities of economic policy. If I make points that noble Lords have heard before, they will understand. These are matters on which it is unwise for anyone to speculate or to seek what Sir Ernest Gowers would have called "elegant variation". The noble Lord, Lord Roll, reminded us of how, in interviews with Government Ministers in the period just before the election, if they departed even by a dot or a comma from the position on the euro, or appeared to depart or were interpreted as having departed, that led to a run on the pound. That has been commented on in our debate not only by the noble Lord, Lord Roll, but also by the noble Lord, Lord Newby, and others. It is a particularly important lesson to me that I should continue to do what I have always done over the past four years--and say nothing new. If I find myself saying something new, I shall give noble Lords the same assurance that I have given before: I did not mean it and I was wrong to say anything new. That is because I am not going to do so.

In terms of the past four years, whether or not we believe that the inheritance from the previous Conservative government was benign, perhaps as we enter the second Parliament of a Labour Government we might now start to let that drop away. Would that be acceptable to noble Lords? All noble Lords would have to agree about the effects of the economic policy of the past four years. We have had a period of stability and steady growth. We have had low and stable inflation and employment has risen to record levels. We have long-term interest rates at their lowest levels for 35 years. We have seen investment reaching a record share of GDP. As I have said, we have seen unemployment drop down to its lowest level since the 1970s, whether by the claimant count or, more important, by the ILO count.

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The noble Lord, Lord Hodgson, warned of the danger of hubris and accused us of self-congratulation. I cite the contributions of my noble friends Lord Tomlinson, Lord Lea, Lord McCarthy and Lord Brooke. My noble friend Lord Tomlinson went so far in spreading doom and gloom that he was answered on behalf of the Government by the noble Lord, Lord Skidelsky, who rightly pointed out that an adverse balance of payments could be maintained for a considerable number of years. It is not self-congratulatory to point out these unavoidable facts. It is a fact that, because we have been prudent--some think that that word is funny, but I do not agree--we have been able to cut debt and unemployment and to meet our fiscal rules. We are now able to release substantial financial resources for priority public services.

Here again, I have some difficulty as regards definition and inclusion. I want to talk about public services and at the end of what I have to say I shall respond to the points put by the noble Lord, Lord Saatchi. However, I am always conscious of the dangers of treading on the toes of those Ministers who will speak over the subsequent days of this debate. However, surely the platform of stability now has to be taken as read and can be taken for granted. It is on that basis that we should look at the legislative programme announced in the gracious Speech. I shall now move on to talk about some of the items of legislation which were included in that speech.

I shall turn first to the new tax credits Bill, which was described so clearly by my noble friend Lady Hollis. One of the elements of that Bill is the introduction of a new tax credit for families and children, building on the foundations of universal child benefit--and not changing universal child benefit--but providing a secure stream of income to families with children, whether they are in or out of work. That provides an answer to the query put by the noble Lord, Lord Higgins, as to whether this comes within the remit of the Treasury. It is part of that remit. The department of my noble friend Lady Hollis is collaborating. It does not matter what that department is called because it is in good hands.

The right reverend Prelate the Bishop of Southwark made a very interesting series of points about the gap between rich and poor and saying that that gap continues to grow. I do not see the gap between the rich and the poor as being the critical concern here. Surely the right reverend Prelate would agree that our critical concern has to be to deal with poverty, and that we have gone a substantial way to dealing with it. It is more important to deal with the absolute level of the standard of life of the poor in our country. Whether thousands or even tens of thousands of traders in the markets and so forth make obscene amounts of money is of sociological interest, but it is not a proper objective of policy. I am sorry to see from the gestures of the right reverend Prelate that he appears to disagree with me. He quoted from St Thomas Aquinas and said that,

    "Injustice is tolerated for the sake of stability".

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That is precisely what we do not say. We do not tolerate injustice for the sake of stability. We believe that it is our prime duty to relieve and remove injustice, and we will be able to do that through stability. I would love to engage with the right reverend Prelate in a more theological debate on the subject, but I sincerely and profoundly believe that, above all, it is our duty to raise the floor to remove poverty rather than to think about the gap between rich and poor.

We made many changes in the previous Parliament--the increases in child benefit, the real increases in income-related benefits for children, the 10p. starting point for income tax, the introduction of the working families' tax credit and children's tax credit. We have not made changes in housing benefit, and that almost stops me singing in response to the noble Lord, Lord Newby. The noble Lord, Lord Roll, referred to a kiss on the hand but, as the noble Lord, Lord Newby, will remember, that makes you feel good,

    "but it don't pay the rental".

Housing benefit does, and that is how it fits in.

There was little reference to the welfare reform Bill--an enormously important Bill--and all I have to say in addition to the exposition from my noble friend Lady Hollis is in response to the noble Lord, Lord Higgins. It is not a pensions Bill. We have not seen the Long Title of the Bill but I very much doubt whether pension annuities will come into it. The noble Lord is very ingenious, and if he wants to introduce amendments to the Bill he will probably have to seek to amend the Long Title as well, and we shall certainly resist him on that.

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