16 January 2007 :
Speech
Pensions Bill
9.16 pm Mark Pritchard (The Wrekin) (Con): I am grateful to be called in this debate. I want to start with the comments made by the hon. Member for Angus (Mr. Weir) about a citizen’s pension. Although his aim in trying to give an uplift to the standard of living for Scottish pensioners may be worthy, I wondered how that could be delivered in the context of an independent Scotland and where the revenues to pay for such pensions would come from, given that much of the revenue for Scotland at the moment comes from other parts of the United Kingdom. Although worthy in its aspirations and aims, that policy would be ruinous for the United Kingdom, for pensioners in Scotland and, more importantly, for already hard-pressed taxpayers in Scotland, suffering under a Lib-Lab Administration. I give a broad welcome to the Bill, although we have been waiting for some time for the Government to try to put right most of the wrongs that they have created—not least with the abolition of the dividend tax credit and the Chancellor’s raid on pensions. My hon. Friend the Member for Ludlow (Mr. Dunne) rightly pointed to the key issue of trust. How can anybody trust the Chancellor again on pensions? Should he become Prime Minister, I will take that key message to my constituents. I think that it will be received with open ears, based on experience of the Chancellor’s record. That raid on pensions stands at £5 billion and the figure is growing annually. That is a significant amount of money. Perhaps Members on the Government Front Bench will not really be interested in what I am saying, or believe it, so let me quote the right hon. Member for Birkenhead (Mr. Field), who is a well respected Member of the House and a renowned expert on pensions. He said: “when Labour came to power we had one of the strongest pension provisions in Europe and now probably we have some of the weakest”. So, even Labour Members of Parliament have recognised that fact, and it is not just one Labour Member of Parliament. Others have expressed concerns in the House today. Indeed, the hon. Member for Birmingham, Selly Oak (Lynne Jones) has expressed grave concerns about certain elements of the Bill. I am sure that her criticism of the Government is not based on the fact that she is not re-standing under a Labour flag, but is genuine and sincere—there is no reason why I or her constituents should question that. Pension credit has been discussed in detail and I do not wish to repeat the points that hon. Members have made. However, I earlier raised the important question of Europe and the 2 million economic migrants who have come to the United Kingdom since Labour has been in office. We welcome those people, who, in the majority of cases, have made a great contribution to the economy and the social fabric of our nation. However, it must be said that their pensions might represent another ticking time bomb, even though there are arrangements in place with other members of the European Union about the transfer of pensions. I noted that the Secretary of State’s response to my question on the matter indicated that people who had not accrued 30 years’ contributions towards their basic state pension would nevertheless receive a pension credit on top of anything that they had paid in for that pension. Anyone who has worked hard, saved and paid contributions for 30 years will have a basic state pension that reflects their individual efforts, while those who, for reasons of portability, geography, or the timing of their entry into the United Kingdom—whether they be European nationals, or people who have decided to become UK nationals—have not made such contributions will receive a top-up from the British taxpayer. That is a worrying indicator for the future, and given that the scale of economic migration is unlikely to curtail over the next few years as the European Union is joined by new members, such as Croatia, Serbia and Turkey, it is likely that UK taxpayers will be picking up the bill even for the pensions of the foreign nationals who come and settle here. People in some parts of the country are fed up with picking up the bill for all sorts of things at the moment, so I would be interested to hear what the Minister has to say about that. I am not making some sort of xenophobic or scaremongering comment, but asking a reasonable and rational question in the national interest: is this affordable, given the scale of migration? Hon. Members on both sides of the House have come across the Motherwell Bridge pension fund, and I am aware that Ministers have made several comments vis-à-vis the financial assistance scheme and that fund. However, the FAS does not pay out 100 per cent. compensation. Many of my constituents are much aggrieved that, although they have worked hard and made provision for their retirement, the financial rug has been pulled out from beneath their feet. What protection will there be in the future for people who have made such provision, albeit through different financial vehicles? I suppose that savings are the starting point of the whole debate. I believe that Help the Aged has said that means-testing is pernicious, and the trouble with the Bill is that it does not go far enough to try to end means-testing. Means-testing is a clear disincentive to saving. Many hon. Members will have constituents who have made provision for their retirement, yet who see people who have not made such provision receiving equal benefits—or even sometimes better benefits—to those who have made the effort to save. Of course, not everyone has been in a financial position in which they have been able to make provision for their retirement, so clearly there are many exceptions. However, the principle of rewarding people who save is not taken forward far enough in the Bill. I hope that the Government will flesh out in a little more detail how they will incentivise people to save and reward those who make the effort to save. I have other points to make, but I want to be kind to my hon. Friend the Member for East Antrim (Sammy Wilson). I know that he will make relevant points about the Bill and about the emperor from Neath, the Secretary of State for Northern Ireland, who is again seeking to introduce measures through orders, rather than through the hopefully revived devolved Assembly of Northern Ireland. Lastly, I would like to mention the local government pension scheme. Many of my constituents think that
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the Government have been disingenuous in trying to open up so-called negotiations and “reasonable” dialogue on the local government pension scheme. There are several thousand dedicated and skilled local authority workers in my constituency, and they are right to expect transparency and honesty from the Government. 9.25 pm ... EARLIER INTERVENTIONS IN THE DEBATE Mark Pritchard (The Wrekin) (Con): What thought has been given to economic migrants—we know that there were more than 500,000 of them last year, from various countries—who settle in the UK and may become UK citizens, if they are unable to accrue 30 years-worth of contributions while they are settled in the UK? That does not appear in the Bill. Secondly, what discussions has the Secretary of State had with his counterparts in other European Union countries about the transfer of economic migrants’ basic state pension contributions from their home country to the UK pension fund? Mr. Hutton: Entitlement to the basic state pension or the state second pension will be based on the number of qualifying years in which the person paid into it, as well as on where they live and what other rights they have when they retire. If they do not have 30 years-worth of contributions, but retire and are settled in the United Kingdom, they will be entitled to as much of the state pension as they have paid for, and potentially to a pension credit top-up, too. Those rights are portable, and it is important to remember, in the context of the European Union, that we have an obligation to pay pensions under the terms of various regulations, particularly the 1408 regulations. The system is relatively clear, and I am not really entirely sure what point of substance the hon. Gentleman was raising— Mark Pritchard rose—
Mr. Hutton: No, I do not want to give way to the hon. Gentleman again. If I have not dealt with his point, my hon. Friend the Minister for Pensions Reform can deal with it in Committee. ... Mark Pritchard: I share my hon. Friend’s perhaps faint praise for the Government’s acceptance of the Conservatives’ policy of raising the basic state pension in line with average earnings. Does he share my concern, however, that the Government are not so enthusiastic about extending the abolition of means-testing? That might call into question the success of personal accounts. Mr. Hammond: My hon. Friend makes an important point. Means-testing is at the heart of the debate, and if he will allow me, I will deal with that matter in a moment. ... Mark Pritchard: Does my hon. Friend agree that in order for trust in the Government on pensions to be rebuilt, the pledge to restore the link must change from an aspiration to a commitment, with a defined timetable? In that way, people can know ahead of the general election whether it is real or just another empty and false Labour promise. Sir John Butterfill: My hon. Friend is right. It would reassure many people if we had more certainty on this issue. It would also reassure many people if the calculation of average earnings was done for the time being by some independent authority, rather than the Secretary of State. Otherwise, it would be open to future manipulation and we know that that has happened under Governments of all complexions. An independent calculation of average earnings would therefore reassure us all. ... Mark Pritchard: Someone aged 50 or 60 in a construction job may rightly think that they cannot continue to undertake heavy manual labour until they are 70, so they will try to retrain. However, as a result of the Government’s cuts in further and higher education funding for elderly people, they cannot do so, and thus cannot escape the trap highlighted by my hon. Friend. Mike Penning: My hon. Friend makes a valid point. There is a difference between longevity—we all know that people are living much longer—and physical capability and ailments that prevent someone from working. I am almost 50 and—perhaps because I was part of the Airborne and because I was a fireman—I am starting to suffer from arthritis. If I was doing a physical job in the construction industry and my condition worsened, I would not be able to carry on. I would be faced with a decision. Would the doctor sign me off, because I was not physically capable of doing my job? Would I attempt to retrain or would I take a job stacking shelves? All those options need to be modelled by the Government if we wish to extend the retirement age—and I accept the reasons for doing so—as that extension is not just about the age at which people die but whether they are fit and capable of working. We must not subject them to degrading treatment as they grow older. ... Mark Pritchard: Given the hon. Lady’s point on the 30-year rule, what is Liberal Democrat policy on that? Will the period be 29 years or 31 years, or will it be some other period?
Lorely Burt: We will propose amendments to help those who fall short of the cliff edge to qualify. We will submit them in Committee, but let me say that the example given by the hon. Member for Colne Valley about people with part-time jobs will be taken into account. Mark Pritchard: In the spirit of consensus and wanting to be helpful, it would be helpful if Members knew in advance, if possible, of such Liberal Democrat proposals to enable us to deliberate on their detail, especially if the proposals warrant the support of the whole House. Do the Liberal Democrats propose that the period should be below or above 30 years? Lorely Burt: We will table our amendments this evening, so the hon. Gentleman will know of our proposals as early as tomorrow. [Interruption.] Yes, as my hon. Friend the Member for Yeovil (Mr. Laws) says, “If you show us yours, we’ll show you ours.” ... Mark Pritchard: I am grateful to the hon. Lady for giving way. Given her clear and evident reservations about the introduction of the average earnings link by 2012—she suggests that it is perhaps more likely to be 2015—and in the spirit of transparency and openness, come the next general election, will she be suggesting that pensioners in her constituency should expect that link not in 2012, but in 2015? Lynne Jones: Well, I will not actually be standing at the next election, but I will be campaigning, and I hope to do so on as good a pensions package as possible. I do not anticipate that the change will be delayed until 2015—it is just that the Government have not specified whether it will be 2012 or 2015. I certainly hope that it will be well before 2015. | 