Pension Reform

Oral Answers to Questions — Work and Pensions – in the House of Commons at 2:30 pm on 31st October 2005.

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Photo of David Blunkett David Blunkett The Secretary of State for Work and Pensions

As the hon. Lady will know, the Turner commission will report on 30 November. Ministers will then have the chance to respond and to continue the dialogue that is taking place across the country to gain a consensus—between political parties, I hope, as well as across the nation—on the way forward. The Prime Minister indicated at the beginning of October that we would make decisions during the next 12 months about the progression of the Government from that point, and at that stage we will of course make a statement to the House.

Photo of Lynne Featherstone Lynne Featherstone Shadow Spokesperson (Home Affairs), Liberal Democrat Spokesperson (Home Affairs)

Given that the Minister's judgment has been so publicly brought into question in recent times, does he believe that he remains in a position to secure the consensus that he mentioned in a divided Cabinet over the urgent need radically to reform the pensions system?

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For an MP's eye view of this question.

Submitted by Chris Lintott

Photo of David Blunkett David Blunkett The Secretary of State for Work and Pensions

All new Members can be forgiven for misunderstanding what Question Time is about. The reception that my Ministers and I—I am sure that this is also true of the main Opposition party—have received when we have gone round the country discussing pensions is very simple. People want us to take the matter seriously and to have stable and secure solutions for the future. Above all, they do not want a party political knockabout. If the hon. Lady learns that lesson, she will have learned something worth while for the future.

Photo of David Drew David Drew Labour, Stroud

My right hon. Friend will know that some of us are very grateful to the Government for the financial assistance scheme, which is the responsibility of his Department and the Department of Trade and Industry. I am grateful for the help that has been given in my constituency to people with the Lister Petter pension scheme. However, we now need to look forward in order to assist those who are not in line for the immediate first tranche of help. About 20 people have been helped already, but hundreds more need to know that the Government are committed to bringing forward proper procedures to help them, as it is through no fault of their own that their company pension schemes have been liquidated. Can my right hon. Friend give an opinion on that?

Photo of David Blunkett David Blunkett The Secretary of State for Work and Pensions

I appreciate the nature of the question. It is a terrible thing for those who have been so badly affected by the collapse of these schemes. We now have the operation up and running. The unit has received the necessary material from 17 of the schemes, and we sincerely hope that we will be able to make the first payments before Christmas. However, there is also a long-term issue. My Ministers and I have been receiving representations from Members and from those representing previous work forces across the country. We are deeply sympathetic to trying to find a way forward in future.

Photo of George Young George Young Chair, Standards and Privileges Committee

On pensions reform, is it the Government's view that the regime for local government employees should be broadly the same as that for civil servants?

Photo of David Blunkett David Blunkett The Secretary of State for Work and Pensions

My right hon. Friend the Deputy Prime Minister has been chairing the tripartite forum to endeavour to find a solution that meets the statutory requirements to balance the books and deals with the separate issue of how this equates to public service pensions more generally, which is being dealt with by my right hon. Friend the Secretary of State for Trade and Industry. It is important that people have choices about their retirement. It is also important that they are aware of the consequences of the particular age at which they retire and the longevity that they can expect. All of us, whether in the public or private sector, have to take that on board personally.

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"It is also important that they are aware of the consequences of the particular age at which they retire and the longevity that they can expect. All of us, whether in the public or private sector, have to take that on board personally." A very honourable statement mr Blunkett, considering the MP pension scheme was fixed by yourselves a couple of years ago, when you dug a moat around it and filled it with...

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Photo of Joan Humble Joan Humble Labour, Blackpool North and Fleetwood

Whatever comes out of the Turner report and the programme for pensions reform, will my right hon. Friend ensure that there is a detailed programme of education and information so that members of the public can make the informed choices that he mentioned, and especially so that young people can plan for their future and decide which of the many different savings vehicles and pension plans is the right one for them?

Photo of David Blunkett David Blunkett The Secretary of State for Work and Pensions

I am absolutely certain that the Pensions Commission will have a lot to say about the nature of such information and the education programme that goes with it. One thing that is clearly shining through—I think that Members will have felt it themselves—is that if we can make the system as simple and understandable as possible, so that people are not faced with impossible choices, we might be able to connect young people with what appears to be a very distant future, and the fact that they may spend nearly as long in retirement as in work.

Photo of Malcolm Rifkind Malcolm Rifkind Shadow Secretary of State for Work and Pensions

The Secretary of State for Work and Pensions was speaking yesterday of the benefit of hindsight. With the benefit of hindsight, does he agree that the Prime Minister made a very foolish mistake in asking the Secretary of State for Trade and Industry, and not the Secretary of State for Work and Pensions, to negotiate the question of pension reform with the public sector unions? Does he agree that that is an example of the crumbling confidence that the Prime Minister appears to have in his efforts? Will he endorse the outcome of the Secretary of State for Trade and Industry's discussions, which have ensured that for millions of people in the public sector it will be 40 years before their 60-year retirement age ends, while people in the private sector are being told that they may have to work for years longer than 65? Will those discussions help him to achieve consensus on pension reform?

Photo of David Blunkett David Blunkett The Secretary of State for Work and Pensions

That is a very good try. The confidence that the shadow Secretary of State appeared to have in me crumbled within 10 seconds. The decision was taken on who should continue to handle public sector pensions, namely the Deputy Prime Minister and the Secretary of State for Trade and Industry, on 6 May, and I do not think that I had taken office when that decision was taken, so nothing has crumbled. I can tell the right hon. and learned Gentleman that 85 per cent. of the due costs will be met by turnover in the public service pension programme, which was announced by my right hon. Friend the Secretary of State for Trade and Industry. Negotiations are continuing within the framework that has been laid down and within the particular sectors affected.

Photo of Denis MacShane Denis MacShane Labour, Rotherham

My right hon. Friend is a very youthful, energetic, virile kind of chap with many years of service on the Front Bench. Will he welcome the German Government's decision to move the retirement age in Germany from 65 to 67? Bismarck chose a retirement age of 65 at a time when the average life expectancy of a German worker was 49, which resulted in a wonderful pension scheme—everybody paid in, and, if they lived, they waited until they were 65 to draw out. We live in a different world, and I urge my right hon. Friend to get away from 60, 65 and any other arbitrary age limit and to bury the idea that there is a time when people must retire or when he must leave the Front Bench.

Photo of David Blunkett David Blunkett The Secretary of State for Work and Pensions

I plead guilty to being energetic—my virility has been over-exaggerated. Bismarck had the foresight—which is a great asset for a politician as well as hindsight—to see how the world was moving. If we have the foresight to see what the 21st century holds, we will get it right not only on the public sector, but for the nation as a whole.

Photo of David Laws David Laws Shadow Secretary of State for Work and Pensions

On pensions reform, will the Secretary of State assure us that nothing will distract him from pursuing that vital agenda? On the public sector pensions deal, at a time when Lord Turner is considering later retirement, is it really sensible to allow a deal to be struck where public sector workers who have not even joined the public sector yet will be allowed to retire at 60 in 2048? Is that really consistent with what Lord Turner is looking at?

Photo of David Blunkett David Blunkett The Secretary of State for Work and Pensions

On the first, rather pathetic point, the answer is no. On the second point, my right hon. Friend the Secretary of State for Trade and Industry has announced that from next year people joining the schemes will have a retirement age of 65. The hon. Gentleman should consider what has been said, rather than the mythology that he has peddled this afternoon.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

With the repeated failures and what now looks like the lingering death of private pension provision, will my right hon. Friend accept that to ensure secure pensions in future we must re-examine the state and start where Barbara Castle left off with the state earnings-related pension scheme?

Photo of David Blunkett David Blunkett The Secretary of State for Work and Pensions

We should look to the state, to the individual and their responsibility and to employers. If we can get a tripartite approach that balances those different elements, we will have a pension scheme that is viable for the future and that provides people with the necessary retirement income to see them through the extra nine-to-12 years that they now live compared with 40 years ago, when Barbara Castle dealt with the issue very well. If we had only been able to see then the longevity that exists now, we might have been able to put a more secure and stable scheme in place.