He has been there before and he has the T-shirt.

The Pensions Act 2007 accelerated this flat-rating even further and again, that is all fairly clear. Where things started to unravel was the Budget last year when we had the harmonisation of the national insurance contributions upper earnings limit, the UEL to the initiates, and the threshold at which higher rate income tax becomes payable. The Pensions Policy Institute, God bless it, pointed out that the effect of this would be an increase in the value of the state second pension built up by higher earners running counter to the flat rate in contention.

However somebody in the Treasury failed to spot this consequence until the pre-Budget report in October when they announced that the introduction of the upper accrual point, or UAP, was brought forward to April 2009. With great energy, my hon. Friend the Member for South-West Hertfordshire and my hon. Friend the Member for Putney, in deliberations on the National Insurance Contributions Bill, have been trying to nail down various things—why this was not spotted, why it happened in the first place and how many people lose out as a result.

I think I am right in saying, though I have been unable to find the exact reference today, that in the Red Book there was a figure of £4 billion allocated against this change, which presumably was to be paid by somebody. It is difficult to avoid the conclusion that this is yet another stealth tax on middle England, because people are paying contributions, but will not get anything in return. So by aligning national insurance with income tax in this way, the Government have imposed another stealth tax. Contributions that were once made towards earnings-related benefits now contribute towards precisely nothing, they are just contributions to the Exchequer.

Her Majesty’s Revenue and Customs’ impact assessment pointed out at the time that 2.1 million people with income above the UEL are contracted out of S2P and went on to say,

“These individuals will either see a reduction in their take-home pay, as they will get a lower rebate on their national insurance contributions than would otherwise have been the case, or a reduction in the money that goes into their pension scheme.”

As I say, my hon. Friends working on the other Bill have been trying very hard to establish just how many people are affected in this way.

The key point—I do not want to take overlong on this clause—is that this change was a key component in the overall package post-Turner, following the recommendations of the Pensions Commission. As we have said on other issues in this Committee, any attempts to unpick the basic package, on which there is a broad political consensus, and indeed a consensus outside politics, is a dangerous way to go. The whole package was a complex business of give and take in all sorts of ways, but as my hon. Friend the Member for Putney made clear in the debates in Committee on the National Insurance Contributions Bill,

“Our concerns related to the fact that this was the “take” part of that package, and there was a big question mark over the “give” part, which was the re-establishment of the earnings link.”——[Official Report, National Insurance Contributions Public Bill Committee, 15 January 2008; c. 52.]

That is the most important point here because the Government seem happy to fiddle with the flat rating issue, changing what was in the Turner package. We will have the opportunity later, because I have put down a new clause about it to press the Government again as to when they do expect to restore the link between average earnings and the basic state pension. It may be something the Minister can put us out of our misery on now and tell us what is the current intention of the Government.