§ Mr. FlynnI beg to move amendment No. 13, in page 10, line 39, at end insert—
'(3) In sections 3 and 7 of the 1986 Act. for the words "April 1993", wherever they occur, there shall be substituted the words "April 1991".'.I thank the Minister for Social Security and the Under-Secretary of State for generously examining the arguments presented in Committee. A large number of 1122 amendments have been given the proper consideration that they fully deserved and have been adopted. The Bill will not be tolerable as a consequence, but it will be better.
Sadly, there will be no great degree of agreement on this amendment, which concerns a matter of great importance. I refer to a growing scandal which has resulted in a great many people being misled by actions which have flowed from Government legislation.
The effect of amendment No. 13 will be that the 2 per cent. inducement to persuade people to leave SERPS and take out personal pensions will cease in April 1991 instead of continuing for another two years. There are many reasons for wanting to terminate the abuse of which I speak at the earliest possible date.
It is grossly unfair that the majority of national insurance fund contributors should have to bear the cost of a bribe payable to a minority. The fact that the minority is much larger in numbers than the Government bargained for means that the cost of the bribe is also much greater —as is the unfairness to those who have not taken it.
It was expected that the scheme would be in surplus by £5 million for the year, but in fact it is in deficit to the tune of nearly £1 billion. That is because of the greater take-up of the bribe, which has distorted the choice between the state scheme and occupational schemes on the one hand, and so-called personal and money purchase schemes on the other. Instead of making a rational choice based on a sober assessment of the long-term implications for their pension rights, the public have been subjected to unscrupulous advertising campaigns based on the suggestion that one can get something for nothing by signing up for a "personal" pension. The outspoken criticism of those sales methods by the regulatory body LAUTRO has had little effect—as the disgraceful posters displayed in branches of the Midland Bank demonstrate.
I could have cited many advertisements, including one asking, "Are you a SERPS?" However, the Midland Bank has about the most disgraceful record. Its methods are not only misleading but grossly, cynically and deliberately dishonest. In a frantic rush to grab its share of the lucrative personal pensions market, even a body as reputable as a national bank has produced advertisements which are wickedly deceitful. Every branch of the Midland Bank that I have visited displays the following notice prominently:
How often does the Government give you something? Up to £5,250 could be yours, to invest in your Midland Personal Pension Plan. Only if you act by the 5th April 1990. Plus income tax relief to boost your contributions.Its meaning could not be clearer—that the Government will give individuals £5,250 to invest in a personal pension, with added tax relief. Rarely have so many lies been concentrated in so few words. The Government's "gift" includes £1,242 of the individual's own national insurance contributions plus £2,359 employers' contribution, those sums being transferred to the personal pensions scheme instead of earning pension rights in the state scheme.The whole of that large sum comes from the employer and the employee, but it is advertised as a gift. Then there is the extra £1,242 which is paid into the personal plan as a bribe to induce as many people as possible to opt out of the state scheme. That looks like a gift until one realises that the money is taken from the national insurance fund and that the fund is being plundered in order to finance personal pension schemes. The fund is being damaged. The deficit this year is calculated at £1.5 billion. 1123 All the Figures that I have given add up to £4,843, not the £5,250 in the advertisement. Where does the other £407 come from? It consists of the tax relief on the contributions to the personal pension scheme. Let us look at it again. The Midland bank poster says that the Government will give the person £5,250 plus income tax relief. Is not that a con? I put that question to the Midland bank, who said, "No, you can get extra tax relief if you pay additional contributions to the scheme." The poster says nothing about extra tax relief. Of course, there is no extra tax relief for someone taking out a basic, rebate-only personal pension scheme, as most people would.
As for the £5,250 gift itself, that applies only to earnings of at least £350 a week from now until April 1993, and depends on payments being made into a personal pension scheme for the whole of that period. The poster, which is fairly typical of those published by respectable organisations, gives no warning that, even with the Government gifts, the state pension remains a far better buy for most people than a personal pension. If it takes such dishonesty to market a product, however one looks at it, one can be fairly sure that the product is hardly worth buying.
We have a welter of other information coming in too. Not only has LAUTRO condemned the advertising but an assessment has been made by an independent group of consultants called PIRC, Pension Investment Research Consultants. We were told yesterday by the Secretary of State that 3.6 million people have taken out these schemes. On the previous figure of 3 million, PIRC is convinced that 1 million will lose because they have not taken out pension schemes but saving schemes. According to the independent group, those people will have poor pensions at the end of the day, and they will be deprived of the benefits of the state scheme.
We are concerned about who will advise those people when the loss leader no longer has an effect and they have to come back into the state scheme. It has become increasingly clear that the Financial Services Act 1986, which was intended to guarantee that pension scheme salesmen offered the best advice to customers, has failed to achieve that aim. On the one hand, so-called independent financial advisers have been selling schemes on a commission basis, which makes them anything but independent, while, on the other, tied agents of insurance companies are forbidden to recommend the schemes of any company other than the company which pays them.
Some insurance companies are resorting to indiscriminate mail shots which exclude the possibility of independent advice. There is clearly no case for bribing people to succumb to commercial pressures. The result is that many people are paying into schemes, against their best interests, even when on certain assumptions a personal scheme appears to be a better buy than the state scheme in the short run. The Government's own figures show that within a few years it will pay them to go back into the state scheme.
Yesterday I received a parliamentary answer to a question which I had asked about how much was spent by the Government on advertising SERPS. The answer was predictable: nothing has been spent because it is nobody's responsibility to sell the superior state scheme. The 3.6 million people to whom I have referred are being pushed out of the state scheme because the state does not want the responsibility of dealing with them in future. Because of what it would cost the country, they are being pushed into inferior schemes. The consequences will come home to 1124 roost. A scandal will emerge when many people, many in their 40s and 50s, discover that their pension is hardly worth having.
The decision of whether to continue paying into a personal pension scheme should be taken annually as the balance of advantage changes from year to year. In making the decision, people should not be influenced by the promise of something for nothing which might mean that they continued paying into a scheme when it is no longer in their interests to do so.
The amendment proposes April 1991 for the ending of the bribe for two reasons. First, by the time the Bill becomes law several months of the 1990–91 tax year will already have passed; secondly, the burden falls on the national insurance fund a year in arrears, so the bribe for 1990–91 will be paid in 1991–92. That happy year will be the last year of a Tory Government. From 1992 on, a Labour Government will need to put the finances of the national insurance fund on a proper footing so that we can make a start on the creation of what the country really wants—the new social insurance system set out in Labour's policy review.
§ Mr. HaynesI realise only too well what the Government are about. The right hon. Member for Sutton Coldfield (Sir N. Fowler) fiddled about with SERPS and interfered with the scheme which was running in the interests of the workers who contributed to it. I contributed to it before I came to this place. The right hon. Gentleman would not listen to the points that were made to him, so we have to have the argument all over again.
As I said earlier at Question Time about the defence team, this lot too should be summoned to the Bar and dealt with because of what they have done. The Minister can take that grin off his face; this is a serious matter. If the Minister had been in the United States, he would be in Alcatraz. He would deserve that; there would be no one there but himself unless he had his two colleagues with him.
Yesterday, I asked a question to which I got a very unsatisfactory answer from the Secretary of State. He need not shake his head. Yesterday he responded to my supplementary question by asking a question. He did not answer my question. Mr. Speaker would not let me back in to answer the question that he asked. What the Government are doing is a racket. All they are doing once again is feeding the pockets of the rich. They do so in many other ways, and here they are, doing it again. It is a scandal. I support the amendment, because it is necessary. I will never change my mind about what the Government are doing to pensions.
The Government are robbing people. They talk about protecting the taxpayer, but they are pouring taxpayers' money into the pockets of a few rich people. The Secretary of State was not here earlier; let me tell him that we will put matters right when we are in government. Although I shall not be here after the next general election, I shall be watching on television, and then the Government will be sorry for what they did.
§ Mrs. Gillian ShephardI wish that the hon. Member for Ashfield (Mr. Haynes) would not exhort other hon. Members not to smile when he has a big grin all over his own face. I am sorry to tell him that it is very disarming.
Perhaps I can correct some of the assumptions that were over-colourfully expressed by the hon. Member for 1125 Newport, West (Mr. Flynn). First, he said that the cost of the incentive is being borne by the minority; that is not the case. Only about 30 per cent. of people in full-time employment are not in either an occupational or a personal pension scheme. The majority are taking advantage of the contracted-out rebate.
Secondly, it is not the case that the national insurance fund has been either bankrupted or plundered. The fund still has a healthy balance, which is twice the recommended level. The great success of personal pensions—[Interruption.] I am sorry that Opposition Members do not support them—is just one reason why the revenue going into the fund has dropped. Another reason is the restructuring of national insurance contributions introduced last October which has been widely welcomed throughout the country. Arrangements are made in the Bill to correct the balance in the national insurance fund, as Opposition Members—
§ It being Nine o'clock, MADAM DEPUTY SPEAKER proceeded, pursuant to the Order [28 March], to put forthwith the Question already proposed from the Chair.
§ The House divided: Ayes 195, Noes 283.
1128| Division No. 156] | [9.00 pm |
| AYES | |
| Abbott, Ms Diane | Cunliffe, Lawrence |
| Adams, Allen (Paisley N) | Dalyell, Tam |
| Allen, Graham | Darling, Alistair |
| Archer, Rt Hon Peter | Davies, Rt Hon Denzil (Llanelli) |
| Armstrong, Hilary | Davies, Ron (Caerphilly) |
| Ashton, Joe | Davis, Terry (B'ham Hodge H'l) |
| Banks, Tony (Newham NW) | Dixon, Don |
| Barnes, Harry (Derbyshire NE) | Dobson, Frank |
| Barron, Kevin | Doran, Frank |
| Battle, John | Duffy, A. E. P. |
| Beckett, Margaret | Dunnachie, Jimmy |
| Beith, A. J. | Dunwoody, Hon Mrs Gwyneth |
| Bell, Stuart | Eadie, Alexander |
| Bennett, A. F. (D'nt'n & R'dish) | Evans, John (St Helens N) |
| Bermingham, Gerald | Ewing, Harry (Falkirk E) |
| Bidwell, Sydney | Ewing, Mrs Margaret (Moray) |
| Blair, Tony | Fatchett, Derek |
| Blunkett, David | Fearn, Ronald |
| Boateng, Paul | Field, Frank (Birkenhead) |
| Boyes, Roland | Fields, Terry (L'pool B G'n) |
| Bradley, Keith | Fisher, Mark |
| Bray, Dr Jeremy | Flannery, Martin |
| Brown, Gordon (D'mline E) | Flynn, Paul |
| Brown, Nicholas (Newcastle E) | Foot, Rt Hon Michael |
| Brown, Ron (Edinburgh Leith) | Foster, Derek |
| Bruce, Malcolm (Gordon) | Foulkes, George |
| Buchan, Norman | Fraser, John |
| Buckley, George J. | Fyfe, Maria |
| Callaghan, Jim | Galloway, George |
| Campbell, Menzies (Fife NE) | Gilbert, Rt Hon Dr John |
| Campbell, Ron (Blyth Valley) | Godman, Dr Norman A. |
| Campbell-Savours, D. N. | Gordon, Mildred |
| Canavan, Dennis | Gould, Bryan |
| Carlile, Alex (Mont'g) | Griffiths, Nigel (Edinburgh S) |
| Clark, Dr David (S Shields) | Griffiths, Win (Bridgend) |
| Clarke, Tom (Monklands W) | Grocott, Bruce |
| Clay, Bob | Hardy, Peter |
| Clelland, David | Harman, Ms Harriet |
| Clwyd, Mrs Ann | Haynes, Frank |
| Cohen, Harry | Heal, Mrs Sylvia |
| Cook, Frank (Stockton N) | Henderson, Doug |
| Cook, Robin (Livingston) | Hinchliffe, David |
| Corbett, Robin | Hoey, Ms Kate (Vauxhall) |
| Cousins, Jim | Hogg, N. (C'nauld & Kilsyth) |
| Crowther, Stan | Home Robertson, John |
| Cryer, Bob | Hood, Jimmy |
| Cummings, John | Howarth, George (Knowsley N) |
| Howell, Rt Hon D. (S'heath) | Powell, Ray (Ogmore) |
| Howells, Geraint | Prescott, John |
| Howells, Dr. Kim (Pontypridd) | Primarolo, Dawn |
| Hoyle, Doug | Quin, Ms Joyce |
| Hughes, John (Coventry NE) | Radice, Giles |
| Hughes, Robert (Aberdeen N) | Randall, Stuart |
| Ingram, Adam | Redmond, Martin |
| Johnston, Sir Russell | Rees, Rt Hon Merlyn |
| Jones, Barry (Alyn & Deeside) | Reid, Dr John |
| Jones, leuan (Ynys Môn) | Richardson, Jo |
| Jones, Martyn (Clwyd S W) | Rooker, Jeff |
| Kaufman, Rt Hon Gerald | Ross, Ernie (Dundee W) |
| Kennedy, Charles | Rowlands, Ted |
| Kilfedder, James | Ruddock, Joan |
| Kirkwood, Archy | Sedgemore, Brian |
| Lambie, David | Sheerman, Barry |
| Lamond, James | Sheldon, Rt Hon Robert |
| Leighton, Ron | Shore, Rt Hon Peter |
| Litherland, Robert | Short, Clare |
| Lofthouse, Geoffrey | Skinner, Dennis |
| Loyden, Eddie | Smith, Andrew (Oxford E) |
| McAllion, John | Smith, C. (Isl'ton & F'bury) |
| McAvoy, Thomas | Smith, Rt Hon J. (Monk'ds E) |
| McCartney, Ian | Smith, J.P. (Vale of Glam) |
| McKay, Allen (Barnsley West) | Snape, Peter |
| McKelvey, William | Soley, Clive |
| McLeish, Henry | Spearing, Nigel |
| Maclennan, Robert | Steinberg, Gerry |
| McNamara, Kevin | Stott, Roger |
| Madden, Max | Strang, Gavin |
| Marek, Dr John | Straw, Jack |
| Marshall, Jim (Leicester S) | Taylor, Mrs Ann (Dewsbury) |
| Martin, Michael J. (Springburn) | Thompson, Jack (Wansbeck) |
| Martlew, Eric | Turner, Dennis |
| Maxton, John | Vaz, Keith |
| Meacher, Michael | Walley, Joan |
| Meale, Alan | Wardell, Gareth (Gower) |
| Michael, Alun | Wareing, Robert N. |
| Michie, Bill (Sheffield Heeley) | Watson, Mike (Glasgow, C) |
| Michie, Mrs Ray (Arg'l & Bute) | Welsh, Michael (Doncaster N) |
| Moonie, Dr Lewis | Wigley, Dafydd |
| Morgan, Rhodri | Williams, Rt Hon Alan |
| Morley, Elliot | Williams, Alan W. (Carm'then) |
| Morris, Rt Hon A. (W'shawe) | Wilson, Brian |
| Morris, Rt Hon J. (Aberavon) | Winnick, David |
| Mowlam, Marjorie | Wise, Mrs Audrey |
| Mullin, Chris | Wray, Jimmy |
| Nellist, Dave | Young, David (Bolton SE) |
| O'Brien, William | |
| O'Neill, Martin | Tellers for the Ayes: |
| Orme, Rt Hon Stanley | Mrs. Llin Golding and |
| Pendry, Tom | Mr. Ken Eastham |
| Pike, Peter L. |
| NOES | |
| Adley, Robert | Blaker, Rt Hon Sir Peter |
| Aitken, Jonathan | Body, Sir Richard |
| Alexander, Richard | Bonsor, Sir Nicholas |
| Alison, Rt Hon Michael | Boscawen, Hon Robert |
| Allason, Rupert | Boswell, Tim |
| Amery, Rt Hon Julian | Bowden, A (Brighton K'pto'n) |
| Amess, David | Bowden, Gerald (Dulwich) |
| Amos, Alan | Bowis, John |
| Arbuthnot, James | Braine, Rt Hon Sir Bernard |
| Arnold, Jacques (Gravesham) | Brandon-Bravo, Martin |
| Arnold, Tom (Hazel Grove) | Brazier, Julian |
| Ashby, David | Bright, Graham |
| Aspinwall, Jack | Brown, Michael (Brigg & Cl't's) |
| Atkinson, David | Bruce, Ian (Dorset South) |
| Baker, Rt Hon K. (Mole Valley) | Buchanan-Smith, Rt Hon Alick |
| Baker, Nicholas (Dorset N) | Budgen, Nicholas |
| Baldry, Tony | Burns, Simon |
| Banks, Robert (Harrogate) | Burt, Alistair |
| Batiste, Spencer | Butcher, John |
| Beaumont-Dark, Anthony | Butler, Chris |
| Bellingham, Henry | Butterfill, John |
| Bendall, Vivian | Carlisle, John, (Luton N) |
| Benyon, W. | Carlisle, Kenneth (Lincoln) |
| Bevan, David Gilroy | Carrington, Matthew |
| Biffen, Rt Hon John | Carttiss, Michael |
| Cash, William | Howarth, G. (Cannock & B'wd) |
| Chapman, Sydney | Howe, Rt Hon Sir Geoffrey |
| Chope, Christopher | Hughes, Robert G. (Harrow W) |
| Clark, Hon Alan (Plym'th S'n) | Hunt, David (Wirral W) |
| Clark, Dr Michael (Rochford) | Hunter, Andrew |
| Clark, Sir W. (Croydon S) | Irvine, Michael |
| Clarke, Rt Hon K. (Rushcliffe) | Irvine, Sir Charles |
| Colvin, Michael | Jack, Michael |
| Conway, Derek | Janman, Tim |
| Coombs, Anthony (Wyre F'rest) | Jessel, Toby |
| Coombs, Simon (Swindon) | Johnson Smith, Sir Geoffrey |
| Cope, Rt Hon John | Jones, Gwilym (Cardiff N) |
| Cormack, Patrick | Jones, Robert B (Herts W) |
| Couchman, James | Jopling, Rt Hon Michael |
| Gran, James | Kellett-Bowman, Dame Elaine |
| Critchley, Julian | Key, Robert |
| Currie, Mrs Edwina | King, Rt Hon Tom (Bridgwater) |
| Curry, David | Kirkhope, Timothy |
| Davies, Q. (Stamf'd & Spald'g) | Knapman, Roger |
| Davis, David (Boothferry) | Knight, Greg (Derby North) |
| Day, Stephen | Knight, Dame Jill (Edgbaston) |
| Devlin, Tim | Lang, Ian |
| Dickens, Geoffrey | Latham, Michael |
| Dorrell, Stephen | Lawrence, Ivan |
| Douglas-Hamilton, Lord James | Leigh, Edward (Gainsbor'gh) |
| Dover, Den | Lennox-Boyd, Hon Mark |
| Evans, David (Welwyn Hatf'd) | Lester, Jim (Broxtowe) |
| Evennett, David | Lloyd, Sir Ian (Havant) |
| Fallon, Michael | Lloyd, Peter (Fareham) |
| Favell, Tony | Luce, Rt Hon Richard |
| Fenner, Dame Peggy | McCrindle, Robert |
| Field, Barry (Isle of Wight) | Macfarlane, Sir Neil |
| Fishburn, John Dudley | MacGregor, Rt Hon John |
| Fookes, Dame Janet | MacKay, Andrew (E Berkshire) |
| Forsyth, Michael (Stirling) | Maclean, David |
| Forth, Eric | McLoughlin, Patrick |
| Fox, Sir Marcus | McNair-Wilson, Sir Michael |
| Freeman, Roger | McNair-Wilson, Sir Patrick |
| French, Douglas | Madel, David |
| Gale, Roger | Malins, Humfrey |
| Gardiner, George | mans, Keith |
| Garel-Jones, Tristan | Marland, Paul |
| Gill, Christopher | Marlow, Tony |
| Gilmour, Rt Hon Sir Ian | Marshall, John (Hendon S) |
| Glyn, Dr Sir Alan | Martin, David (Portsmouth S) |
| Goodlad, Alastair | Maude, Hon Francis |
| Goodson-Wickes, Dr Charles | Maxwell-Hyslop, Robin |
| Gorman, Mrs Teresa | Mayhew, Rt Hon Sir Patrick |
| Gow, Ian | Mellor, David |
| Grant, Sir Anthony (CambsSW) | Meyer, sir Anthony |
| Greenway, Harry (Ealing N) | Miller, Sir Hal |
| Greenway, John (Ryedale) | Mills, Iain |
| Gregory, Conal | Mitchell, Andrew (Gedling) |
| Griffiths, Sir Eldon (Bury St E') | Mitchell, sir David |
| Griffiths, Peter (Portsmouth N) | Montgomery, Sir Fergus |
| Grist, Ian | Moore, Rt Hon John |
| Ground, Patrick | Morris, M (N'hampton S) |
| Grylls, Michael | Morrison, Sir Charles |
| Gummer, Rt Hon John Selwyn | Morrison, Rt Hon P (Chester) |
| Hague, William | Moss, Malcolm |
| Hamilton, Hon Archie (Epsom) | Moynihan, Hon Colin |
| Hamilton, Neil (Tatton) | Neale, Gerrard |
| Hampson, Dr Keith | Neubert, Michael |
| Hanley, Jeremy | Newton, Rt Hon Tony |
| Hannam, John | Nicholls, Patrick |
| Hargreaves, A. (B'ham H'll Gr') | Nicholson, David (Taunton) |
| Hargreaves, Ken (Hyndburn) | Norris, Steve |
| Harris, David | Onslow, Rt Hon Cranley |
| Haselhurst, Alan | Oppenheim, Phillip |
| Hawkins, Christopher | Paice, James |
| Hayes, Jerry | Patnick, Irvine |
| Heathcoat-Amory, David | Patten, Rt Hon John |
| Hicks, Robert (Cornwall SE) | Pawsey, James |
| Higgins, Rt Hon Terence L. | Peacock, Mrs Elizabeth |
| Hill, James | Porter, Barry (Wirral S) |
| Hind, Kenneth | Porter, David (Waveney) |
| Hogg, Hon Douglas (Gr'th'm) | Portillo, Michael |
| Holt, Richard | Price, Sir David |
| Hordern, Sir Peter | Raffan, Keith |
| Howarth, Alan (Strat'd-on-A) | Raison, Rt Hon Timothy |
| Renton, Rt Hon Tim | Tebbit, Rt Hon Norman |
| Rhodes James, Robert | Temple-Morris, Peter |
| Rifkind, Rt Hon Malcolm | Thompson, D. (Calder Valley) |
| Roberts, Wyn (Conwy) | Thompson, Patrick (Norwich N) |
| Roe, Mrs Marion | Thurnham, Peter |
| Rost, Peter | Townend, John (Bridlington) |
| Rowe, Andrew | Townsend, Cyril D. (B'heath) |
| Rumbold, Mrs Angela | Tracey, Richard |
| Ryder, Richard | Tredinnick, David |
| Sackville, Hon Tom | Trippier, David |
| Scott, Rt Hon Nicholas | Trotter, Neville |
| Shaw, David (Dover) | Twinn, Dr Ian |
| Shaw, Sir Giles (Pudsey) | Viggers, Peter |
| Shaw, Sir Michael (Scarb') | Wakeham, Rt Hon John |
| Shephard, Mrs G. (Norfolk SW) | Waldegrave, Rt Hon William |
| Shersby, Michael | Walker, Bill (T'side North) |
| Sims, Roger | Waller, Gary |
| Skeet, Sir Trevor | Ward, John |
| Smith, Tim (Beaconsfield) | Wardle, Charles (Bexhill) |
| Soames, Hon Nicholas | Warren, Kenneth |
| Speed, Keith | Watts, John |
| Speller, Tony | Wells, Bowen |
| Spicer, Michael (S Worcs) | Wheeler, Sir John |
| Squire, Robin | Whitney, Ray |
| Stanbrook, Ivor | Widdecombe, Ann |
| Stanley, Rt Hon Sir John | Wiggin, Jerry |
| Steen, Anthony | Wilshire, David |
| Stern, Michael | Winterton, Mrs Ann |
| Stevens, Lewis | Winterton, Nicholas |
| Stewart, Allan (Eastwood) | Wolfson, Mark |
| Stewart, Andy (Sherwood) | Wood, Timothy |
| Stokes, Sir John | Woodcock, Dr. Mike |
| Stradling Thomas, Sir John | Yeo, Tim |
| Sumberg, David | Young, Sir George (Acton) |
| Summerson, Hugo | |
| Tapsell, Sir Peter | Tellers for the Noes: |
| Taylor, Ian (Esher) | Mr. Tony Durant and |
| Taylor, John M (Solihull) | Mr. David Lightbown. |
| Taylor, Teddy (S'end E) |
§ Question accordingly negatived.