Pensions Bill

Part of Orders of the Day – in the House of Commons at 9:30 pm on 7th January 2008.

Alert me about debates like this

Photo of Nigel Waterson Nigel Waterson Shadow Minister, Work & Pensions 9:30 pm, 7th January 2008

It is always a pleasure to follow Harry Cohen, who always speaks with total conviction on these matters. This has been a wide-ranging debate and I thank all hon. Members on both sides of the House who have taken part.

As we enter a new year, we see that the Government have learned nothing new. The age of spin is still alive and well. In his press release about the Bill, issued this morning, the Secretary of State seemed to be in total denial about the real and current problems in pensions. In it, he talked about the

"nightmare of a future pensions crisis".

Does he not know that the crisis is here and now, and has been for some time? Does he not realise that savings in this country are at their lowest since the 1960s—a point touched on by Alan Simpson? Does he not remember that just before Christmas he and his colleagues were finally forced into a humiliating U-turn over the 130,000 pensions victims? I do, however, join my hon. Friend Chris Grayling in paying tribute to the Secretary of State's role in persuading the forces of darkness in the Government to relent on the issue.

Does the Secretary of State not know that nearly 2 million pensioners are living in poverty and that the worst-off pensioners are getting poorer in real terms? He has talked about restoring the earnings link for the basic state pension, but he still will not tell us when that is going to happen— [Interruption.] If the Secretary of State wants to intervene, I shall be happy to give way. He talks about taking action, but his Government have been in power for 10 long years, having presided over the pensions crisis and been responsible in some measure for it.

In his press release, the Secretary of State also holds to the line that personal accounts will come into effect from 2012. Is he really still in a position to make that remark in the light of the comments of the new chief executive of the personal accounts delivery authority on Radio 4? When that point was put to the Minister for Pensions Reform, he was good enough to say that he had told the chief executive in no uncertain fashion that he, the chief executive, would introduce them in 2012. That is the equivalent of the military saying, "Take this objective or do not come back alive." It would be interesting to hear in the Minister's winding-up speech what response he got from the new chief executive.

We shall have more to say in Committee on the role of PADA, the principles that should drive it and the criteria for its success. Simply to increase the number of savers without substantially increasing the overall amount of savings in this country would clearly constitute failure— [Interruption.] I welcome a former and distinguished Pensions Minister, now the Minister for Energy, to our debate.

One of our main concerns is about so-called levelling down, which was mentioned by Miss Begg and my hon. Friend Bob Spink. Let me be clear about where we stand on the issue. We do not wish to see anything in this legislation that might give extra encouragement to an employer already making more generous contributions than those envisaged in personal accounts to close an existing scheme. PADA must focus on its target group—predominantly those on low incomes with no or inadequate pension savings. That is a real concern, not one dreamt up by the Opposition.

The Pensions Policy Institute has set out various scenarios in a recent report, rather snappily entitled "Will Personal Accounts increase pensions saving?" One of the models that it comes up with is very sobering, but it considers a range of possible scenarios, the most pessimistic of which could result in only 4 million to 5 million new savers in work-based pension schemes. It notes that there is a lot of uncertainty about how employers will respond to the reforms, and goes on to say:

"This poses the question of whether the reforms would be considered successful if they did not increase annual total pension contributions but did increase the number of people saving and made the distribution of saving more equal."

Soberingly, under its pessimistic scenario, the overall size of pension saving would shrink, despite a healthy amount of personal accounts, because of the levelling-down effect on existing provision. Ministers need to think long and hard about how we do what we can to ensure that that scenario does not come to pass.

After five years of a rearguard action, the Government have finally agreed that the 130,000 pension victims should get proper compensation. Ministers seem to think that they deserve three cheers for that, but it has taken far too long to face up to doing the decent thing. Let me remind the House that in the meantime some of the victims have died, others have had to work beyond normal retirement age, sometimes with serious medical conditions, and all have faced the prospect of penury.

Embed this video

Copy and paste this code on your website