HC Deb 08 June 1998 vol 313 cc702-3
12. Mr. Bob Russell (Colchester)

When she expects to publish the pensions review. [42939]

The Parliamentary Under-Secretary of State for Social Security (Mr. John Denham)

As set out in the Green Paper, "New Ambitions for our Country: A New Contract for Welfare", we will publish a Green Paper on pensions later this year. There will then be a period of further consultation before final, detailed proposals are developed.

Mr. Russell

That would be counted by every pensioner as a disappointing response, especially bearing in mind the Minister's reply to the hon. Member for Waveney (Mr. Blizzard), in which he referred to the growing inequality and widespread insecurity among pensioners in this country. Does he agree that today's pensioners are more interested in today's pensions than in yesterday's Government or tomorrow's pensioners? Does he also agree that the manifesto pledge to assist pensioners has been somewhat forgotten?

Mr. Denham

I do not agree that the Government have forgotten today's pensioners. No previous Government have introduced winter fuel payments—spending £200 million last winter and another £200 million next winter is an act of support for today's pensioners that would not have been made by the Conservative party, had it won the last election. Nor would the Conservatives have cut VAT on fuel to 5 per cent.—indeed, as we know, they wanted, more or less, to double the rate of VAT on fuel. In our first year, we have achieved a great deal for pensioners, we have invested more in the national health service and in public transport and we are tackling the problems of crime and disorder through the Crime and Disorder Bill.

The pensions review is of great importance for today's pensioners and for tomorrow's, but it is essential that we get it right, because we have seen the mistakes made under the previous Administration, who made pensions changes that led to millions of people leaving occupational pension schemes and millions of people suffering from pensions mis-selling. We are determined to make sure that the decisions we take, for today and for the future, are right.

Mr. Paul Flynn (Newport, West)

In the review, will my hon. Friend bear it in mind that between 1990 and 1994, the value of annuities fell in real terms by 34 per cent., which means that those with a personal pension lost one third of it? That is in addition to the problems caused by the mis-selling of pensions and by between one quarter and one half of contributions being taken in charges. It has been proved that those who mis-sold pensions provided pensions of poor value that were a gamble, with the lottery of money purchase at the other end. Can my hon. Friend give an assurance that when the new stakeholder pensions, which are very necessary, are introduced, they will not be run by the same people who robbed millions of people in the personal pensions scandal?

Mr. Denham

I am sure that my hon. Friend will welcome the action being taken by my hon. Friend the Economic Secretary to clear up the problems of pensions mis-selling that we inherited from the previous Administration. He raises the question of annuities and I can confirm that ways of translating pension savings into retirement income are an important issue for the pensions review and one that we are examining. In developing stakeholder pension schemes, we have said that we wish those to be collective schemes which reach high minimum benchmark standards and that, through trusteeship or a similar mechanism, we shall ensure that they are run in the interests of their members.

Mr. Julian Brazier (Canterbury)

Will the Minister take this opportunity to rule out, once and for all, compulsory saving as a basis for the new pensions era? Does he accept that, were a pension scheme—perhaps a properly run one—to go bust for one reason or another, the state would be, in honour, obliged to step in if people had been forced to save into the scheme? Because it would be most likely to occur at the worst possible moment in the economic cycle, that would represent a huge increased risk to the public purse, as well as an unfair extra hidden tax on many people on modest incomes.

Mr. Denham

There are already compulsory contributions to the basic state pension for all those earning above a minimum income and to a second pension for other employees, so employees are in either the state earnings-related pension scheme or a funded, invested second pension. We made it clear in the welfare reform Green Paper that there had been many representations calling for an extension of compulsion, either to raise the level of pension benefits or to extend their coverage. We said in that Green Paper that we shall seriously consider those proposals. In a number of speeches and seminars I have called for a better-focused debate on whether there should be an extension of compulsion and we shall report our conclusions on that in the Green Paper later this year.