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Pensions Policy: Green Paper

Volume 590: debated on Tuesday 9 June 1998

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2.56 p.m.

When the Green Paper on pensions policy, promised for June this year, will be published.

The Parliamentary Under-Secretary of State, Department of Social Security
(Baroness Hollis of Heigham)

My Lords, the Green Paper will be published later this year and it will be followed by a period for consultation.

Do not these repeated postponements mean that we shall reach no firm decisions on pensions policy in time for next year's uprating of the basic pension due to be announced in November? Is the Minister aware that Mr. Tom Ross, who has chaired a committee set up by the Prime Minister to inquire into the position of pensioners, has found that they are not sharing in economic growth? Will the Government therefore please at least take one decision immediately, and that is to restore the earnings link in time for the next uprating?

My Lords, as I think my noble friend will know, the Ross Report shows that on average pensioners' incomes overall are predicted to rise over the next 20 years in line with earnings, not prices. But clearly those pensioners who are dependent on state, let alone means-tested benefits, will not share in the same growing prosperity as those who have occupational pensions. That is why as part of our consultation we have been working on proposals for a stakeholder pension because the state pension alone will not, and cannot, guarantee people comfort in old age. We need to have proper, second-tier provision. The stakeholder pension, together with the citizenship pension for the future, and our concern to ensure take-up of income support for pensioners now, will address the real problems that my noble friend has identified.

My Lords, as the deadline for publication of this important document has been postponed from the first half of this year to 30th June and now, apparently, until later in the year, I support what the noble Baroness, Lady Castle, has said. Can the Minister give us a more precise date? Can she also give us an assurance that the Government have no intention of publishing this document during the summer Recess?

My Lords, I wish I could give the noble Lord the information that he requests. I do not know when the report is expected to be published. It will be later this year, but I cannot give the timetable. I take the noble Lord's point; however, there is certainly no intention that I am aware of to bring a document out during the Summer Recess, but again that timetable is not in my hands.

Over the past year since coming to power the Government have had in place from July onwards a pensions review consultative exercise, which has given rise to 2,000 replies. We followed that with a stakeholder consultation paper, which gave rise to 200 replies. That was followed by the Ross report group. Its report has just been published. A pensions education group is about to publish a report. I am sure that the noble Lord will accept that this Government are seeking the widest possible consent and consultation, so that any proposals we bring before the public will be robust and have all-party agreement.

My Lords, why, if this Question has been on the Order Paper for some time, is the noble Baroness quite unable to give a more satisfactory and intelligible, quick, accurate answer?

My Lords, I can give an intelligible, accurate answer. I cannot, however, give the answer that the noble Lord wishes me to give regarding the timetable.

Is it not the truth that the Government and the Cabinet are deeply split on this matter, and that Mr. Frank Field's wilder ideas have proved financially impossible? Is it not a fact that, for nearly two years, some of us have been supplying the material for which the Government say they are now waiting and that they have set up more pilot schemes to inquire into what everybody knows is the position—that pensioners cannot wait any longer?

My Lords, my noble friend will not need me to remind her that there are two problems. There is the problem of the poorest pensioners now. They are mainly single women over 75 who have not built up a pension in the past and are not claiming the income support to which they are entitled. Many are losing £17 a week. That means that they are not heating their homes and not eating the food that they would choose to eat. We have proposals in place for pilot schemes which we hope to roll-out nationwide so that pensioners claim the benefits to which they are entitled. That is the short-term problem.

There is a longer term problem. Given our changing labour market, more self-employment—which has doubled since 1979—more part-time jobs, more women entering the labour market with intermittent earnings, and pensioners living longer, we need to ensure that decent second-tier pensions are in place for all people. We believe that that requires a stakeholder pension. The consultation exercise has been held, and we are working on proposals. As soon as those proposals are ready, we shall come before the House with a Green Paper.

My Lords, does my noble friend agree that we are continually bombarded with evidence that we are sitting on a pensions time bomb? Is it perhaps time to consider returning to our former position; namely, that membership of occupational pensions is a condition of employment? Where that does not exist in employment, should there be some compulsion for every worker to take out a pension scheme?

My Lords, there is already a considerable amount of compulsion in the pension scheme, as my noble friend will appreciate. Anybody presently earning above the lower earnings limit, some £64 a week, who is not in an occupational pension scheme and is an employee will currently pay into SERPS. But of course SERPS does not cover the self-employed, or part-time and low-paid workers. People cannot pay into SERPS when they are not in work, and many women have broken patterns of employment. So although my noble friend's suggestion will not be unfamiliar to my colleagues in other departments, it still does not address the problem. Many people need a decent second-tier pension in old age, and there is no product in the market-place which offers them that.

My Lords, does the Minister agree that this subject is made up of many complicated interlocking parts, of which yesterday's welcome publication on pension splitting in divorce is one? Does she further agree that it matters desperately to get it right as well as to get it done quickly?

My Lords, I thank the noble Earl for that contribution. I am sure that the House, like me, will be delighted that, yesterday, we were able to publish the draft Bill on pension-splitting, which was an all-party move by this House. I am delighted that the noble Earl was generous enough to draw that to the attention of the House today.

The noble Earl is right. Since 1988, in the reforms to SERPS, we have put forward various proposals for changes in second-tier pensions over and beyond those in the Pensions Act 1995. The Opposition, when in government, produced Basic Pension Plus, a scheme that has now been dropped. That scheme found no broad consent. If we are to produce a framework for pension provision that offers security as well as comfort in old age, it is clear that it must have staying power. That can happen only if it is based on widespread consultation, not only with the industry and the pensioners' movements, of which my noble friend is such an important advocate, but in all sections of this House. That is why we have now held four consultation exercises and may still need to consider consultation.

My Lords, I agree that my noble friend is entirely right to take a long view and get this matter sorted out correctly, but does she accept that it is impossible for those pensioners who are alive now, and whose primary source of income is a pension geared only to the RPI, to participate in this country's prosperity unless we move away from indexation by the RPI and back to the policy that we used to advocate of indexing according to the average wage? In other words, there is no conflict as I see it between the position of my noble friend the Minister and that of the noble Baroness, Lady Castle. Surely the two are compatible. What puzzles some of us is why, in relation to my noble friend's request, there is no action in the short term. Some pensioners alive now are rather poor.

My Lords, the short-term action proposed by my noble friend of linking the state pension to earnings rather than prices would raise pensioner incomes this year by 40p. Yet something like 1 million pensioners are going without £17 a week in income support. Comparing 40p with £17 a week, I know what I think is the best way of helping the poorest pensioners.