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3.45 pm
Baroness Turner of Camden: From the very beginning there has been concern on all sides about the interaction of the scheme with the benefits system. Therefore, I support the intentions behind the amendment but, on the other hand, it does not meet the objectives which I think the noble Lord, Lord Skelmersdale, had in mind in introducing it. In particular, I share the views expressed about proposed new subsection (2) of the amendment. I do not see why the implementation of the scheme under Clause 58 should be postponed for at least 12 months, as the subsection says, while consideration is given to the projected figure of 10 per cent referred to in the amendment. That seems a rather unusual figure to quote. In those circumstances, although I am sure that the Committee is concerned to ensure that interaction with the benefits system should be ironed out somehow or another—indeed, we know that the Government have that under continuing review—I cannot support the current wording of the amendment.
Lord McKenzie of Luton: I ask the Committee to reject the amendment and I thank all noble Lords who have contributed to this short but important debate. As the noble Lord, Lord Oakeshott, said, the issue of savings incentives and the interaction with means-tested benefit has enjoyed lengthy and constructive debate in both Houses, and it is clearly an important issue. Perhaps he did not use the word “constructive”; that is my gloss on his presentation.
I reiterate that under reasonable assumptions the majority of those who enrol can expect to benefit from having saved, and we must not lose sight of that. The noble Lord’s amendment would delay introduction of the personal accounts scheme, but seemingly not auto-enrolment generally, if the number who may not benefit was greater than 10 per cent of the total expected pensioner population.
I hope that we all accept—the noble Baroness, Lady Thomas, touched on this—that no amount of analysis can tell individuals at the point of enrolment exactly how their lives will turn out possibly decades into the future. We know from analysis, for example, that there is around a 10 per cent chance that a 20 year-old man today will not reach state pension age, but no one is suggesting that we should stop advising 20 year-old men to save for their retirement. On this issue, perhaps I may quote the noble Lord, Lord Turner, who said that,
- “if at the end of the year your house has not been burgled, it does not mean that it was bad advice to buy a household insurance that year”.
As I said at the outset, our package of reforms means that most people can expect good outcomes from saving, while those who do not wish to save will
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Again, as the noble Lord, Lord Oakeshott, said, we have already published our projections of entitlement to all income-related benefits for the pensioner population until 2050. Around 40 per cent of pensioner households will be entitled to one or more income-related benefits by 2050. As my noble friend Lady Hollis said, there is no prospect of reducing that figure to 10 per cent. Indeed, as I think we have discussed before, if the basic state pension were doubled in 2012, in 2050 25 per cent of pensioners would still be on one or more income-related benefits.
Through our reforms we are reducing the level of means-testing, not increasing it, because without reform it would have increased to 75 per cent in that period. By 2050, the basic state pension will be worth more than double what it otherwise would have been, ensuring a solid foundation for private saving.
We could debate, as we have done in the past, what an appropriate level might be for pensioner households on means-tested benefits, but I do not apologise for the need to retain a means-testing system. Such a system protects the most vulnerable individuals against poverty within inevitable cost constraints. However, in this debate we must absolutely not lose sight of the fact that both our analysis and that of the Pensions Policy Institute demonstrate that people can be on benefits in retirement and be better off for having saved. Equating those on income-related benefits with those who will not be better off from savings is simply not right. We need to remember that because of our reforms to the state pension system, someone with a good record of working or caring, including those on low earnings, can expect a state pension of around £150 in 2008-09 earnings’ terms by 2050, more than £25 above the pension credit guarantee.
The interaction between means-testing and savings incentives is not a new issue. There are already safeguards in place to improve incentives to save. In 2003, we introduced the savings credit to prevent a pound-for-pound clawback. People can take up to 25 per cent of their pension pot as a tax-free lump sum and those with less than £16,000 can take 100 per cent of their pension pot. Our analysis shows how these are already working to improve incentives for those who have been suggested as the most vulnerable. Older groups with lower earnings, for example, are most likely to be able to trivially commute their savings, gaining a cash sum. Up to £6,000 of that—a significant amount for many, I suggest—can be held without any impact on any pension credit or housing benefit that they may receive.
We would have to think carefully before discouraging such people from saving. Indeed, while the challenges around means-tested benefits are clearly an important matter, the PPI has stated that this,
But, as the PPI has also made clear, this implies that people will need access to clear information. We fully agree with that; indeed, Clause 9 of the Bill recognises the importance of information. We will ensure that
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Anyone who does not think that pension saving is for them, regardless of the reason, will be able to opt out. But that should not be allowed to detract from, or hinder, the fact that we are further improving savings incentives through this Bill. Millions of workers, many for the first time, will see their pension contributions matched pound for pound through the employer contribution and tax relief. It is right that we should protect against unpredictable events and provide a safety net for those who need it most and it is right that we should encourage individuals to save and take personal responsibility for their own retirement income, giving them the security and flexibility of their own savings pot.
Governments always need to strike a balance between alleviating poverty and encouraging savings. They must do so in a way that is both affordable and sustainable. Our reform package achieves that. We agree that this is an important matter, but the Government, external stakeholders and, I thought, all political parties are also agreed that there is no magic bullet and that progress of this Bill need not be delayed. Nigel Waterson MP said:
That said, we have listened carefully to the concerns of those in Parliament and outside. Age Concern, Help the Aged and others have asked us to set up a review to look at these issues again and to have an informed debate on the issue. We are now well advanced in that review involving stakeholders and external experts as well as the very best analytical minds and tools at the Department for Work and Pensions. The review will further expand an already extensive evidence base on this issue. It will further improve our understanding of incentives and the impact on behaviour. It will look at how different factors and individual characteristics affect outcomes. Clearly the lessons of this will be vital in developing our information strategy. Importantly, it will assess some of the proposed measures put forward, putting in the public domain an objective assessment of their pros and cons, their costs and the effects on our wider tax and benefit policy.
In all this, we are mindful of the need to strike the right balance between alleviating poverty and personal responsibility for retirement income. We are also mindful of the cost constraints that we face, but we will consider the evidence of the programme and its full implications. I shall briefly touch on some technical issues relating to the drafting—
Lord Oakeshott of Seagrove Bay: Before the Minister does so, perhaps I could say that I was rather surprised to hear what he said in his first reference to the Pensions Policy Institute. He gave the impression that the PPI—I know that it guards its independence very jealously—was in some way endorsing government policy. Although I do not ask him to read it out again now, has he cleared what he said with the PPI and, if not, could he do so please?
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Lord McKenzie of Luton: As it happens, I met the PPI last week; I discussed the programme and the work that it had done and sought its views. The noble Lord is right that it is an independent body, but it was a clear statement; I think that it was in part of the PPI’s response to the consultation and in its report, which indicated that the challenges around identifying those at risk should not cause people not to be auto-enrolled. It meant that people needed very good information, and that is where we agree.
Lord Oakeshott of Seagrove Bay: I asked whether the Minister could send the sentence that he used to the PPI and make sure that it is a fair reflection of its views. That is all that I am asking.
Lord McKenzie of Luton: I am happy to do that, but I asked a question when we met and I believe that what I said was a direct quote from the letter that I was sent. However, I will certainly clarify this with the PPI if it helps the noble Lord.
Let me make clear some of the technical drafting. My noble friend Lady Hollis dealt with people being at risk, which is not defined here. It seems that the noble Lord is equating the numbers on means-tested benefit with those who are at risk. On that basis, the 10 per cent threshold could not be met.
The amendment would prevent the development of personal accounts, which is not the same as auto-enrolment. It would permit auto-enrolment to proceed on the basis of the noble Lord’s formulation but not the development of personal accounts. That cannot be right.
There are some other technical issues, but I do not want to dwell on those, as we are focused on a more substantive debate today. Let us not forget the big prize here. This package will benefit millions of people. We estimate that in 2050 the reforms will lead to a total increase in annual private pensions income of £11 billion to £16 billion at today’s prices. That is a prize worth having.
I am advised that I read out the PPI quote wrongly, missing out a “not”. I will now read it out properly. I said that while this is clearly an important matter, the PPI has previously stated that this,
I thought that that was what I had said but, if not, I am happy to clarify it.
Even if we were to define and identify accurately an 11 per cent risk group, as the noble Lord wants, there would be justifiable fury if we denied the benefits of auto-enrolment to 89 per cent of people who were not at risk, so that millions of low to medium earners would not get the chance of having what many of us have taken for granted throughout our working life. I hope that, on reflection, the noble Lord will feel able to withdraw the amendment.
Lord Skelmersdale: I had no intention whatever of pressing the amendment. I accept straight away the criticism of the noble Baroness, Lady Hollis. I accept, too, that I went way over the top in drafting the amendment, although I hope that I did not go way
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It is inevitable that jobholders will exercise their right to opt out if they feel—and it may not be a particularly sustained feeling—that investing in a personal scheme, especially towards the end of their working life, would so eat into their state benefits, even eliminating them altogether, that they would be no better off than if they had not saved into such a scheme. The advice that they are given, and that we have discussed already, must—simply must—tell them whether it pays for them to save in this way.
I referred in my opening remarks to the work that the Government are still undertaking on this, which the Minister called a review. This, as I understand it, will be completed during the Summer Recess—I hope that I am right. It is on the basis of those results, or what I can discover about the review if it is still going on, that I will decide whether to come back to this matter at a future stage of the Bill, because I am absolutely convinced that it is essential to the future of the whole scheme. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Tunnicliffe: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
NHS: Next-stage Review
4 pm
The Parliamentary Under-Secretary of State, Department of Health (Lord Darzi of Denham): My Lords, with the leave of the House, I will repeat a Statement made by my right honourable friend the Secretary of State for Health in the other place.
“Mr Speaker, as we celebrate the 60th anniversary of the NHS this week, it is befitting that we should acknowledge its successes, secure its strengths and chart a path for its future. Created by fraternity to take the place of fear, the founding principle of the NHS was as clear as it has been enduring: that access to healthcare should be determined by clinical need rather than by the ability to pay.
“The NHS has been a friend to millions, sharing their joy and comforting their sorrow. Today, the service sees or treats a million people every 36 hours, nine out of 10 people see their family doctor every year and a million more operations are performed than just 10 years ago.
“Then, the NHS was suffering from chronic underinvestment. The challenges were too few doctors and nurses, poor equipment and crumbling infrastructure. Patients waited months, if not years, for treatment, waited weeks, not days, to see their GP and measured their time waiting in A&E in
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“This Government resuscitated the NHS and reaffirmed its principles. Today, patients wait no more than four hours in accident and emergency, and by the end of the year they will be able to go from referral by their GP to treatment, with all the diagnostic tests in between, in no more than 18 weeks and normally in nine.
“There have been considerable improvements in the quality of care received by patients and delivered by NHS staff. The improvements for cancer and heart disease alone have saved nearly a quarter of a million lives in the past 11 years. The NHS is now able to deliver the highest quality of care in many medical disciplines and settings.
“The report published today heralds the next stage for the NHS: to deliver the highest quality care for all. It is underpinned by the service’s first constitution, which will empower patients by clearly articulating their many rights, bringing transparency to decision-making and securing its founding principles for generations to come.
“The review has been led by front-line clinicians in every NHS region. Seventy-four local clinical working groups, made up of some 2,000 doctors, nurses and other staff working in health and social care organisations, have developed improved models of care for their communities from maternity and new born to end of life. These are based firmly on the best available clinical evidence and extensive engagement to ensure that they reflect the needs and preferences of local people.
“In common with all health systems around the globe, the NHS faces some significant challenges: ever higher expectations; greater demand driven by demographics; the transformational power of better information; the changing nature of disease and of treatment; and rising expectations of the health workplace. The report puts the NHS on the front foot, seizing the opportunities that these challenges present, rather than simply reacting to their consequences.
“Meeting these challenges demands that the NHS does more to help people to stay healthy and gives them more information, choice and control over their own health and healthcare. Every primary care trust will now commission comprehensive well-being and prevention services to meet the specific needs of their local populations.
“Preventing vascular conditions such as diabetes, stroke and coronary heart disease has the potential to save thousands of lives. Today, about 4.5 million people are afflicted by vascular conditions, accounting for over 170,000 deaths every year. We will launch a new ‘Reduce Your Risk’ campaign to raise awareness and understanding as a precursor to the national vascular screening programme that will begin next year.
“Improving the health of individuals and families will become an increasing focus for GPs. We will work with world-leading professionals and patient groups to improve the quality and outcomes framework
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“As much as the NHS will do more to help people to stay healthy, it will also become a service that responds more rapidly and effectively to the people who use it. Patients will be given more rights and control over their health and care. They will have greater choice of GP practice, with better information to make the best choices for themselves and their families. This will be delivered by a fairer funding system that gives better rewards to GPs who provide responsive, accessible and high-quality services. Choice will not simply be a policy of government but a right secured for all through the first NHS constitution.
“The constitution will guarantee patients access to NICE-approved drugs and treatments. We will give greater support to NICE to increase the speed of its appraisals process so that new guidance is consistently issued more quickly. Primary care trusts will have a new duty to give transparency to their decisions and clear explanations to the public. These measures proclaim an end to the postcode lottery in NICE-approved drugs and treatments.
“These rights will be accompanied by more personal control for patients, harnessing their ingenuity to improve their health and care. Every patient with a long-term condition will be offered a personalised care plan, jointly agreed by the patient and a named professional, so that services are organised around the needs of individuals. For the first time, we will pilot personal health budgets that give individuals and families the fullest control over their care.
“All of the measures announced here today are designed to improve the quality of care that patients receive; it is essential that quality is understood from patients’ perspective. They pay regard to experiences as much as effectiveness, with safety as a given. Patients want to be treated in environments that are safe and clean; they want to be shown respect and regard, compassion and kindness. The highest clinical quality can be undermined by letting the simple things slip.
“We must have an unwavering, unrelenting, unprecedented focus on quality. Our approach will be dedicated and disciplined, putting quality at the heart of everything that the NHS does.
“We will begin by bringing clarity to quality, ending the daunting and frustrating confusion that is caused by the morass of standards. NICE will be transformed to select the best available standards, fill the gaps and establish a new NHS evidence service that will ensure that best practice readily flows to the front line.
“We can be sure to improve only what we can measure; information can unlock local innovation by showing clinical teams where their greatest opportunities lie. We will create a national quality framework, so that every provider of NHS services systematically measures, analyses and improves its performance. Front-line teams will be supported by a new set of graphically illustrated quality measures, known as clinical dashboards, informing the daily decisions that lead to improvement.
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