Before we nod the clause through, I thought that I would ask the Government what they intend to do with it. The clause is entitled ''Promoting and facilitating financial planning for retirement''. The explanatory notes do not tell us much more than the clause, which, sadly, is often the case with explanatory notes. However, the very good Library briefing states that it is about establishing a web-based retirement planning facility. Will the Minister say what exactly is envisaged and how the web-based planner will work? Presumably, the problem that the Government seek to address—or address in part—is the huge savings gap, estimated by the Association of British Insurers to be £27 billion.
The Government's solution seems to be to say, ''Obviously, people do not know enough about their pensions and they are not making enough provision''. There is not a hint of the idea that that could be because of something that the Government have been doing—for example, through the pensions tax, which they introduced soon after coming to office.
However, let us put that debate to one side and focus on the clause. How will the web-based planner work? Will it have information on everyone's pension—everyone's state entitlement, but also any private pension entitlement that they have? Will all such information be held online? Will I, as a citizen, be
able to log on, enter my name and address and have that information pop up in front of me? If not, will I be required to log on and will the Government have to get the information and come back to me by sending an e-mail?
How will the Government be sure that they send the information to the right person, and that my worst enemy is not logging on—[Hon. Members: ''Who is that?'']—that my Liberal Democrat opponent in my constituency is not logging on, wanting to find out information about the MPs' pension scheme and other things that I might be entitled to? How will the security work, and not just in the obvious sense of how the Government would know that the right person was logging on? Is the Minister satisfied that this system, which will contain detailed information on a large number of our citizens, is secure and cannot be easily hacked into? One reads in the papers that the US Defence Department computer is regularly hacked into. Presumably it has secure firewalls. Has the Department for Work and Pensions given that any thought?
What will be the cost of providing the planner? About a year ago, perhaps longer, I was at a Public Accounts Committee hearing with the e-envoy, and it turned out that the Government had spent more than £1 billion on websites. The Government are pretty free with their money on web-based things. It would be interesting to know how much it will cost to set up, keep running and update the web-based planner. I suspect that it is a complicated piece of software. Also, how many people will use it? We are going to spend all this money and legislate to create this wonderful device; have the Government made any estimates of how many people will use it?
Before the hon. Member for Northavon gets there, I want to ask about people who are not so well off, may not be so computer literate and may not have access to the internet. How will they access many of the facilities that the web-based planner provides, but which they do not have the means of logging on to? It may be the case—I am making a guess here; perhaps the Minister will confirm this—that those least informed about their future are also least likely to log on to a website to find out about it. People on top of their pension provision who constantly check the financial pages of the newspapers will use the device. Those with very little idea of what they are entitled to may not be aware that the service exists.
What are the rules on the accuracy of the information provided? Presumably there will be some disclaimer that states, ''By the way, we are not remotely responsible if we give you all sorts of duff advice''. However, people will obviously make important life decisions on the basis of the information that the Government will provide them with on the web-based planner. How will the Under-Secretary ensure that the information is accurate and that people are aware of the many variables that can quickly change their likely pension entitlement? I am referring to movements in the stock market and in interest rates, and changes to pensions law and tax law—the type of measures that are introduced in Budgets such as the one that will be announced
tomorrow. How will the Under-Secretary ensure that people do not log on, obtain some information and say, ''Fine; I can sit back and not bother to do anything about my provision,'' even though in future significant changes may occur in the financial markets or in the legislative and tax framework for pensions? Such changes may alter people's pension provision, yet they may be unaware of that.
If, for example, the Chancellor announced a Budget in which he made changes to pensions taxation, would the web-based system e-mail everyone who had previously contacted it and say that they should be aware that the Government have announced significant changes, which either improve or reduce their pension entitlement? As the Government are taking upon themselves the option of providing people with information, how will they ensure that people are informed of changes, many of which will be within the Government's hands?
I would broadly echo, and therefore will not repeat, what the hon. Gentleman has said. He has raised a number of important issues. I am heartened to hear him being the voice of the poor and the marginalised, and I hope that we can carry on goading him into that.
Under clause 191, the potential of websites where all the information for an individual is gathered together and they can consider hypothetical questions—such as what the gap is if they want a particular standard of living and what they might do about it—is, in principle, tremendous. The practice, however, worries me a great deal. There is a vicious rumour that when the Secretary of State tried to demonstrate the website to assembled journalists, it broke. I do not know whether that is true and the Under-Secretary can confirm it.
That is the technical term no doubt.
There are serious issues, because people might have had multiple employers in the public and private sector and might have spent periods in the basic state pension scheme and various second-tier state pension schemes. They might have their own stakeholder pensions and so on. I am sceptical that it will be possible to obtain a reliable picture from a device such as the one that we are discussing, unless the individual brings with them a great deal of the necessary information—and the sort of person who has all the information and complete documentation and knows where they stand is probably the last person who needs such a device. My worry is that the Government talk a good game on combined pension forecasts, which we shall discuss later, but delivery has been almost non-existent and it has taken years just to inch forward.
Can the hon. Gentleman see a parallel with the 20-minute standard period set aside for a telephone conversation about pension credit, which is just one narrow aspect of pension provision? If elderly people are meant to spend 20 minutes on that alone, how long are people meant to spend on a website doing the information gathering and exercises involving the passing on of information that the hon. Gentleman describes?
That is a good point. The mention of means-tested benefits is crucial to the discussion of the clause and to the information that the website will provide. Let us consider someone who, at the age of 40, has accrued rights in a state scheme, has state second-tier provision and a bit of private provision, and has had a couple of different employers and so on. They will already be trying to bring together many different types of information. Let us say that I have a stakeholder pension. Will the website be able to predict for me, at the age of 40, what pension I will receive from an accrued stakeholder pension 25 years down the track? It simply could not do so. It could perhaps do so only when I was a year or two away from retirement, but at that point it is too late to do anything. There is a paradox with pensions: the further away someone is from retirement, the more uncertain the situation is, but it is only when someone is far away from retirement that they are realistically able to make a big change to what they will receive when they retire.
It is not clear—I hope that the Under-Secretary will enlighten us—how far the website will be able to make predictions. Will it make predictions, for example, on a range of assumptions? Certainly when someone is sold a pension, they are given a range of assumptions. Let us say that I go along to the website and say that I have a stakeholder pension. The first question is: will the website know how much I have in that pension? Will Big Brother know? If the website does not know and I tell it how much I already have, will it give me an estimated pension based on a projection of not only rates of return, but presumably life expectancy? If I act on the strength of the information on the website and everything goes horribly wrong because it was duff information, will the Government just say, ''That's your tough luck''? The clause raises a raft of issues, even though it sounds innocuous: who could be against information?
Yes, if the information is incomplete, inaccurate or speculative.
To draw an illuminating analogy, let us consider endowments. Millions of people were told by salespeople that endowments were a good deal, but did not understand them that well. The projections that were made turned out to be wildly inaccurate, and many may now be trying to get compensation.
The hon. Gentleman is expanding on the points that I made. Does he agree that with final salary schemes, one of the great unknowns is what the final salary will be? People will be asked to enter their expected final salary into the web-based system, but what would an MP put in? I suppose it depends whether they have a marginal seat or not.
The point about endowment policies was valid, but does the hon. Gentleman not accept that the difference is that people were using exaggerated projections, encouraged by the fetish for laissez-faire in the Government of the time, to sell people an endowment policy? In this case, the Government are trying to provide people with
parameters within which they can judge whether they are providing adequately for their retirement.
That is an interesting point. However, every financial adviser will presumably have the Government's web-based system on their screen and will tell people, ''Look, the Government say that you need to save more.'' Where will that leave us? There is a can of worms behind this apparently innocuous clause, and I look forward to the Minister putting a lid on it.
It strikes me that the world in which the hon. Member for Northavon lives is so crowded with complexities that it is almost impossible for him to move. My hon. Friend the Minister for Pensions shared with me the observation that it was a wonder that the hon. Gentleman's Liberal predecessor, Lloyd George, ever got round to boiling a kettle, let alone introducing a national pension scheme. We assume that he boiled a kettle, although he may have been concerned about whether he had the right voltage in the electricity or the right amount of oxygen in the gas.
As the hon. Member for Tatton (Mr. Osborne) said, there is a savings gap. As the Committee knows, it affects 3 million of our citizens who are estimated to be seriously under-saving for their retirement, and 5 million to 10 million people who should make further provision to meet their expectations of their standard of living in retirement. The clause is part of the Government's attempt to ensure that we can provide assistance to those people in their financial planning, and I will come to specific concerns raised by the hon. Members for Northavon and for Tatton.
The clause is about encouraging people to plan proactively for retirement and supporting them in doing so. It is about the online retirement planner, which we outlined in the Green Paper and confirmed in ''Simplicity, Security and Choice: Working and saving for retirement—Action on occupational pensions'' in June. The hon. Member for Northavon was concerned that the planner might not work. I extend to him and other members of the Committee an offer to have a go on it. We would be happy to give them a run-through on the demonstrator, so that they can see how the planner might work. Some of them might get a bit of a shock to see the provision that they are making for the future.
At the moment, the onus is on the individual to seek out information, bring it together in a meaningful way and understand it. With the new power for the Secretary of State, and the Department for Social Development in Northern Ireland, to assist people in financial planning, we can encourage people to look at their projected total retirement income in the round, and to consider taking steps to reduce any undesired savings gap.
The clause gives examples of the types of activity that might be involved in such planning. They include helping people calculate what resources they might need in retirement, helping them estimate the total pension income that they are likely to receive, and
helping them to think about what they might do to close any possible gap. The web-based retirement planner will enable people to view their total composite projected pension income, including occupational and personal pensions. It will enable people to estimate the income that they think they might need in retirement, calculate the savings shortfall, and review the options for addressing that shortfall.
The planner will use current information about individuals to forecast their future income in retirement. We have to, and will, make it clear that circumstances will change for individuals over time; the planner will not be a snapshot set in tablets of stone for ever. People will have to continue to refer to the information that is available and the mechanism of the planner to ensure that they are doing what is necessary to provide the sort of standard of living that they want for themselves and their family in retirement.
However, the planner is not about the Government providing financial advice. We will make it very clear that we are not selling financial products; I know that that will worry the hon. Member for Northavon. We are there to facilitate the bringing together of the information that people need to make judgments for themselves. During the short break for the Division, I heard that the directors of Heinz, the food corporation, have been listening to our proceedings, and are considering whether it is wise to continue to offer a full 57 varieties of their products, or whether they should be telling people which varieties they should be buying and eating. The purpose of the planner is to give people the information that they need, and to allow them to make informed choices on that basis.
The hon. Member for Tatton rightly asked about the security of the system. Of course, that issue is a challenge that faces all those who provide information online, whether that be for online banking or online shopping. I reassure him that the usual security checks will be in place. The system will use the Government gateway to secure access, and will involve using a unique identifier, so it will be as secure as we can possibly make it.
The hon. Gentleman also asked about the information that would be available on the planner. As I have suggested, people will be able to access pension information on both state and private pension rights online. There will be the usual security checks.
Where would the Government get information on private pensions from? Will they have information on every citizen's private pension provision, so that anyone can log in at any time and get that information? Or do people have to provide that information first, and feed it into the web planner? How exactly will it work?
In our debates on other clauses this afternoon we will talk about the exchange of information between the Government and various bodies, including third-party pension agents, as well as those running company pension schemes and stakeholder pension schemes. The purpose is to
make sure that we bring together all the information we can from those different sources.
On disclosure of information, we need to ensure that legal gateways are in place to enable us not only to obtain that information and to allow people to give it to us, but to establish that we can use it for this purpose when some of the information has been given to us for other purposes.
The hon. Member for Tatton asked about cost. Funding for the ongoing development of the programme will be considered as part of the spending review 2004 process, which will conclude this summer. At the moment, indicative costs for establishing and running the web-based retirement planning service are likely to be less than £10 million as a one-off investment and less than £5 million in annual running costs.
If I had been asked to guess those figures, I would have added two extra zeros to each of them—perhaps that shows that since I was elected, I have lost the ability to count. However, the Department is notoriously appalling with regard to computers and information. It does not know where people live. Its new computer systems cost hundreds of millions of pounds, but every time there is a new one there is a new shambles. This system will bring together in one place everyone in the country and all their pensions. How can that possibly be done for £5 million a year, which is less than 10p per citizen? I cannot believe those figures.
I am advised that that is the working cost assumption that we have for running such a website. As for the exchange of information, I must emphasise that we are not going out to buy the information. Much of it is already available. The Committee is giving the Government the power to use for this purpose much of the information that they already have.
Is this not a triumph of hope over experience? The Under-Secretary will remember that the Secretary of State gave frank evidence to a Sub-Committee of a Select Committee of which I am a member about the dreadful saga of the Child Support Agency and its computer systems. It had massive problems with migrating old cases on to the new system—in fact, there were massive problems in getting the new system to work, let alone in migrating old cases. I should add that the dreaded EDS was involved, which I think has 40 per cent. of all Government IT contracts. The Secretary of State made the frank admission that it was still an option for the Department to scrap the whole thing and start again. Where does the Under-Secretary get his eternal optimism from?
Not from the experience of the CSA migration of cases from the old to the new system—but we must get this in perspective. It is a massive task to establish a new child support system; millions of cases were involved, many of them migrating from one
system to another and many of them linked, and there were two systems that unfortunately did not automatically speak to each other. I am looking at you, Mr. Cran, to see whether I am taking us too far away from the subject under discussion.
In this case, we are talking about a much more modest venture, which is simply to make sure that we have an interactive website that brings together the available information. Making calculations of people's entitlement to child support is much larger than the activity that will be undertaken in this case. If hon. Members would like further information on costs, I shall be happy to provide it.
The hon. Members for Tatton and for Northavon asked whether the facility will be accessible to the people who need the advice the most. Use of the internet has increased dramatically in a very short period. Between 1998 and March 2003, the proportion of UK households with internet access increased from 10 to 47 per cent. Almost 95 per cent. of businesses are on line. People will have access to the service not only in their own homes, but through public libraries, their workplaces and voluntary organisations such as Citizens Advice. We therefore expect the service to be available to a large number of people.
We are not pretending that the service will be the solution to the savings gap experienced by the 3 million people who are seriously under-saving, but it is a valuable additional instrument that we can make available to people, which brings together their different sources of pensions income predicted for the future in such a way as will allow them to make informed choices. The choice will be theirs; we cannot make it for them. We cannot tell them which of the options is the most sensible, but giving people information and access to this sort of interactive technology will assist them in making the right choices on their own behalf.
I had not intended to reply, but I am staggered by what the Minister has just said. I cannot believe that we should now authorise the spending of public money on that. I take the fact that the clause is printed in italics to mean that it relates to privilege, and therefore to the spending of money.
There are two possibilities. One is that the website will be simple—that a person will be able to fill in their information and ask, ''What if?'' and the website will then do the some sums for them. I can believe that that might cost £5 million. However, that is not how it is being sold to us. We are being told that the Government are going to assemble everybody's information about everything, which is, of course, always changing. This will not be a one-off exercise. For example, if I became a widower, all my entitlements would have to be calculated under all sorts of different rules, and that information would have to be assembled. That could cost a fortune, and this could be another departmental computer shambles. The Minister has said that there are problems when computers do not talk to each other, but for goodness' sake, everybody's pension information is all over the place on all sorts of computers. Getting that into common formats will be a mammoth task. We cannot allow the clause to stand
part of the Bill, because we are being asked to sign a blank cheque, and it would be irresponsible to agree to it.
Question put, That the clause stand part of the Bill:—
The Committee divided: Ayes 13, Noes 3.