Hansard - United Kingdom Parliament

53 Pensions Bill [Lords]
20 JUNE 2011
Pensions Bill [Lords]
54
I did not give way to the hon. Member for Middlesbrough
South and East Cleveland (Tom Blenkinsop), others
want to speak, and I must conclude.
All the changes should be put in the context of our
recent Green Paper, which set out plans for fundamental
reform of the state pension. They include the option for
a single-tier state pension, set above the level of the
means test, which would provide a decent foundation
income in retirement for many of the next generation,
who might otherwise be forced to live in poverty.
Importantly, that includes many women and self-employed
people who have tended to suffer poorer pension
outcomes in the past, particularly women with caring
responsibilities. The changes will be very beneficial for
them. The Bill is therefore only part of the process,
but it is critical as we take the necessary steps for the
next generation. I believe that those are responsible
choices for Britain, but responsible government is not
always easy government. It involves commitment, tough
decisions and a willingness to stay the course. We will
not change from that—we will stay the course. We must
try to secure our children’s future. The tough decisions
are enshrined in the Bill, which I commend to the
House.
5.9 pm
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab):
The debate is extremely important and I am glad that
the Secretary of State approached his remarks with
such care. It is an important debate because our treatment
of older people in our country is one of the most
important ways in which we judge the health of a
society. Those people have made our country what it is
today, and, in their retirement, we respect and honour a
lifetime’s work.
Frankly, when we came to power in 1997, too few of
our older citizens enjoyed either that honour or that
respect. Nearly 30% of our pensioners were forced to
live in poverty. The state pension had declined from
20% to just 14% of average male earnings. That is why
we set about changing that picture with such speed,
passion and determination. That is why we lifted 1
million pensioners out of poverty; why we lifted gross
income for our pensioners by more than 40%; why we
ensured that no pensioner must live on less than £130 a
week; why we introduced the winter fuel allowance, free
off-peak travel on buses and free TV licences; and why
we increased tax thresholds to ensure that 60% of
pensioners now pay no tax. We are proud of our record.
It is now set out in the Government’s own figures that
pensioner poverty in this country is at its lowest level for
30 years.
In dealing with such long-term issues, the House
could legitimately have hoped that the Government
would have built on those changes in a careful and
consensual way. Instead, they have built nothing but
confusion. Last Monday, the Secretary of State had to
slap down his colleague, the noble Lord Freud, on
whether there should be a cap on benefits; on Wednesday,
we had the spectacle of the Prime Minister not knowing
the consequences of his own Welfare Reform Bill; and
today the Secretary of State has come to the Dispatch
Box when this morning’s newspapers are full of stories
of how his Bill might be shredded not in this House, but
in the very Treasury that pushed him out to walk this
plank in the first place. It is U-turns, confusion and
blunder, and the poor Secretary of State is forced to sit
there in the middle as the House of Commons’s very
own Captain Chaos.
Nadine Dorries (Mid Bedfordshire) (Con): I thank
the shadow Minister for giving way—I almost thanked
“the Minister” in a throwback to another day.
Somebody—I am not sure who—left a note saying
that all the money had been spent. Does the right hon.
Gentleman agree therefore that some measures that we
could not have predicted when the previous Administration
were in power are now necessary, such as the ones
proposed today?
Mr Byrne: Perhaps the hon. Lady would like to
reflect on why, just over 12 months ago, the Government
whom she is so proud to support set out a policy in
direct contradiction to the one proposed in the Bill. I
look forward to seeing which way she votes and how she
justifies that to her constituents.
This afternoon, we must try to bring some order to
that confusion, and establish which clauses we agree on,
and which clauses the Government—and, I might say,
the Treasury—need to rethink. The Secretary of State
began with automatic entitlement, on which there is a
measure of agreement—it is a rock that we should hang
on to in that regard. The proposal for automatic enrolment
of workers into workplace pensions is to be retained,
which is important, because as a country, we under-save
for pensions. In fact, 7 million could be under-saving for
their retirements. Bringing those people into a pension
system and creating a national pension scheme into
which they might opt could lead to a step-change in
savings in this country.
The previous Government were very careful to build
that consensus, which we did patiently, beginning with
the noble Lord Turner’s commission. I am grateful that
the Government have not junked that proposal, but it is
deeply regrettable that they are increasing the salary
threshold to entitle an individual to auto-enrolment. It
is also regrettable that they are introducing a three-month
waiting period before people opt in.
I understand the trade-offs that the Secretary of State
is trying to make, but frankly, he has made the wrong
call. Why? The first reason is that the salary at which
someone is automatically enrolled will be raised from
£5,000 to nearly £7,500. The impact of that will hit
600,000 people—they will be much less likely to opt in
to long-term savings. If the Government raise that
threshold in line with the coalition’s ambition to increase
the income tax threshold to £10,000, nearly 1 million
people will be excluded, three quarters of whom will be
women. Their loss, potentially, is £40 million of employer
pension contributions.
The Government are proceeding in full knowledge of
that. There is no defence of ignorance. Their review
states:
“Many or most very low earners are women, who live in
households with others with higher earnings and/or receive working
tax credits. These may well be exactly the people who should be
automatically enrolled.”
Yet the House has been presented today with proposals
that could exclude more than 1 million people. We
think, therefore, that the earnings threshold should be
looked at again. And if that idea was not bad enough,
the idea of a three-month waiting period makes it worse