Clause 50

Part of Pensions Bill – in a Public Bill Committee at 1:00 pm on 31st January 2008.

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Photo of Nigel Waterson Nigel Waterson Shadow Minister, Work & Pensions 1:00 pm, 31st January 2008

The Minister is shaking his head, so I fear that we must argue the case a little more.

From one point of view, the plan is already two years behind schedule. I have dusted off my copy of the final report of the Pensions Commission, chaired by Lord Turner. On page 400, it talks about an implementation time scale for the various reforms and compares international experience. In Sweden, for example, implementation of the new pension system, the premium pension system or PPM, took six years from the report of the working group—presumably the Swedish equivalent of Lord Turner and his colleagues—to the first year of contributions into the funded scheme. That included not only the introduction of the new funded PPM but the re-casting of the state pay-as-you-go system into an NDC system. The report concludes:

“Since we are not recommending such radical changes to the core state system, a more rapid implementation ought to be possible.”

The report then talks about New Zealand, where, even more surprisingly, the report of a working group was followed only nine months later by a budget commitment in principle, with implementation planned for just two years after that. It talks, however, about the possible slippage of that time scale, which I think has been true. The report importantly concludes that

“the Pensions Commission believes that it is reasonable to plan on the assumption that the NPSS could be in place and receiving first contributions by 2010.”

The NPSS was the original proposal that was replaced by personal accounts. We are already two years out from that date.

Being a sad person at heart, I was listening to Radio 4 between Christmas and new year and caught a bit of the “Money Box Live” programme, presented by the estimable Paul Lewis, a great expert who has followed many of our debates closely. He was interviewing Tim Jones, the new chief executive of PADA, who has given evidence to the Committee. He pressed Tim Jones hard on the implementation date for personal accounts. I managed to obtain a transcript of the interview. Paul Lewis said:

“There is an awful lot to do, isn’t there?”

Pausing there, I think we can all agree with that. He went on:

“This scheme is scheduled to start in April 2012, just over four years way. Is that a realistic target?”

Tim Jones replied:

“The honest answer to that is I don’t know yet.”

Paul Lewis then said:

“So there might be a delay?”,

to which Tim Jones replied:

“Well, it’s not a delay because I don’t know yet.”

He then talked about reviewing matters as the incoming CEO:

“I understand the desire for 2012 and so far I’ve not seen anything that says it’s unachievable, but I need to do that review and when I’ve done that review I’ll then be able to have a conversation about what a proper date is.”

The key part of the interview was where Tim Jones said:

“Because this is so hard what’s critically important is not exactly when it starts but that it starts well when it starts.”

In the final exchange, Paul Lewis said:

“So there is a possibility that in a few months time you’ll be going to ministers and saying my view is we cannot start this when you’ve scheduled it—April 2012. It will have to be another date in the future?”

To which Tim Jones replied:

“There is that possibility, yeah”.

Since then, Mr. Jones’ apparent concerns have to some extent been dissipated. In the oral evidence sitting, I asked him about the commencement date. He said:

“The policy intention is that the personal accounts scheme will launch in 2012, and it is my job, and the delivery authority’s job, to meet that intention. We have no evidence at this stage that that is unachievable.”——[Official Report, Pensions Public Bill Committee, 15 January 2008; c. 7, Q11.]

Indeed, when I raised the matter at Question Time only the week before, the Minister said:

“we intend it to begin in 2012, and the chief executive has been informed that that is what we intend.”—[Official Report, 7 January 2008; Vol. 470, c. 6.]