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Lord Higgins: My Lords, the pattern of debates in this House in the past few days has become fairly consistent. The noble Lord, Lord Kingsland, and the noble and learned Lord the Lord Chancellor discuss crucial matters of terrorism, life and death, imprisonment without trial, the Human Rights Act and so on but every so often there is a break—at lunchtime or dinnertime—when the Minister, the noble Lord, Lord Oakeshott, and I come into our own. Indeed, on occasion it has been rather useful because they have managed to work out what on earth is happening about the other Bill. I find the way in which the Government are proceeding in that matter, and the shambles that the procedure has become from time to time, to be of the gravest concern.

Having said that, one must recognise that the orders that we are debating this evening will have an immediate effect on millions of people, whereas the
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other measure, about which I express grave concern, deals with a comparatively small number of people. Clearly, they are both of great importance but one needs to keep what we are debating tonight in perspective, though I regard the implications of the other matter as fundamental to our way of life.

As the Minister has pointed out, this is an annual festival. It is normal for this matter to debated in a wide context, although this evening the Minister has constrained herself within the narrow limits of the orders. Traditionally, the debate has been very broad.

I thought I ought to look up what the Minister said when I first engaged in these annual debates. I think this is the seventh or eighth debate we have had on this matter. But, inadvertently, I found the debate when the Minister was still in opposition. Interestingly, she said:

Well, I suppose one can change one's mind. Certainly, events since then have not been out of line with the approach that that government were taking.

Given that this is a broad-ranging debate, the Minister rather surprisingly did not refer to the Turner report. One of the many interesting comments made by Turner is:

But, tragically, that balance has been wrecked. I think that that is the right way of putting it. In significant measure, that was done by the action taken by pension funds following the Chancellor's action on ACT, in conjunction with the concerns that finance directors then had with regard to FRS17. The result is that membership of final salary schemes has halved since 2000. That balance has been wrecked.

Alongside that, we have had the take-over of matters by the Chancellor and the Treasury, who are obsessed with tax credits, although, as we well know, the take-up of tax credits has been very disappointing. This has taken place against a background of three Secretaries of State who might reasonably be regarded as compliant. I therefore take heart from the fact that the present Secretary of State seems to be adopting a rather more independent line on those matters. One might almost say that the Chancellor of the Exchequer and the Treasury are heretical in these matters. A collection should be made of the various statements made by Mr Alan Johnson in the pensions debate on 13 October.

The noble Baroness held forth about the virtues of pension credit. But on 13 October the present Secretary of State said that there were no such plans to continue it indefinitely. At the ABI conference he said that he would be crazy to say pensions credit does not act as some disincentive to savings to some people. On
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13 October he also said that we should not be talking in euphemisms—it is a means test. The hallmark of the Government's policy has been to move more and more towards means testing.

The noble Baroness quoted some figures for pensions credit. They may be more up to date than the ones I had but no doubt she can correct me if I am out of date. Some 3.75 million people are entitled to pensions credit and 2.65 million appear to have taken it up. So it looks as though 1.63 million of those entitled to it have not taken it up. That is a pretty appalling level of take-up for what is intended to be a comprehensive measure.

The noble Baroness has rightly pointed out that uprating is in line with prices and not earnings. This year we have not had an increase of 75p on the pension as a result of the uprating as we had on a previous occasion. I suspect that that is still in the back of pensioners' minds. The extent of the increase seems to have depended considerably on whether an election was thought to be in the offing or not.

I would like to raise one point on the specific notification to individuals. The notification that is going out to pensioners does not say what the increase is—either as a percentage or a quantity. That is rather strange in a pre-election period.

I have in front of me one such notification which has come my way. It does not say that there is an increase of so much or that this will mean your benefits will increase by so much. Clearly the Government have missed out on an electoral opportunity in doing this. It would be helpful in future if people were told what their benefit is currently and what it will be in the future—assuming that the department computer can cope with this which, given our experience of it, may not be the case.

It would be hard for pensioners to work out whether the statements that are being put through their letterboxes are right or not. For example, at the end of a long list of items it suddenly states, "age addition nil". Most pensioners—particularly elderly ones over 70—would find that hard. The noble Baroness will be able to say that that is the same form which came out under the previous Conservative government and probably the Labour government before that. I was struck by this matter the other day.

I am going on much longer than I intended. The noble Baroness said nothing at all about GMP uprating.

Baroness Hollis of Heigham: I gave the noble Lord four sentences on this matter. But I agree that was a modest amount.

Lord Higgins: We appreciate the four sentences.

I am puzzled about GMP. It only affects accrued rights up to 1997 and not thereafter. Is anybody affected by this GMP uprating? Ahead of 1997, I suspect that most firms who were giving pensions did not give the GMP at that time, they were probably giving significantly above it. Can the noble Baroness tell us whether anyone is affected by this order? Were
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the ones pre-1997 all uprated more than GMP and since 1997—when we do not have a GMP—a number of companies have totally failed to make a guaranteed minimum pension because they have gone bust. It is proposed that we should go towards a more scheme-related system of solvency assessment. But this order may have no impact on anyone in the real world.

I am conscious of the time so I will make only one other point. The Government are sending out letters about the financial assistance scheme. To my surprise, they are still saying that they will provide £400 million with the possibility of further contributions from industry. That £400 million is over 20 years. We discussed the issue of contributions from industry when we debated the Pensions Bill. Can the noble Baroness tell us whether any part of industry has decided to make any further contributions? I suspect that they have not.

The letter which is sent out gives hope to people who anticipate getting some of their pension made up by the financial assistance scheme in cases where their company has gone bust. I have received a number of letters pointing that out. A pensioner who was with the Albert Fisher Group says that the situation constantly blows hot and cold. They hope they are going to get something but it will not be for a long while. There is £400 million available but they have no idea if they are eligible—and what does that figure mean given the large number of people who are expected to be covered by what we have always said is clearly an inadequate amount? I hope that the noble Baroness will give us up to date news on the financial assistance scheme.

Instead of putting forward specific proposals on reform, the Government are waiting for the Turner report. Interestingly, it has always been clear that the second report of the Turner commission—which would recommend what might be done—is not going to happen until after the election.

So the Government appear to have no strategic view. Yet, with the exception of the Chancellor of the Exchequer, a clear consensus is emerging that it is important to raise the basic state pension and reduce the number of people on means-tested benefits. We propose to do that. We think it is the right way to tackle the problem. There is an almost universal view outside this House that that should happen, but it is not implemented by the proposals before us this evening.

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