HC Deb 19 April 1999 vol 329 cc551-3
1. Mrs. Jacqui Lait (Beckenham)

What estimate he has made of the proportion of the working population who have provided only for the basic state pension and have incomes between £9,000 and £20,000. [79728]

The Secretary of State for Social Security (Mr. Alistair Darling)

All employees who earn above the lower earnings limit automatically accrue pension rights above the basic state pension level, through the state earnings-related pension scheme or a contracted-out equivalent. So all employees in the earnings range mentioned will have made some provision above the basic state pension.

Second pension provision is not compulsory for the self-employed. About half the self-employed are making secondary provisions and some of the rest may have accrued rights from earlier employment.

Mrs. Lait

I am grateful to the Secretary of State for that reply, but it implies that he is not prepared to set a target for the sale of stakeholder pensions. Given the derision with which individual savings accounts were greeted on their introduction because of their complexity, does he agree that the prime purpose of introducing a new pension system—including stakeholder pensions—is to reduce complexity and not add to it, which is what stakeholder pensions have done?

Mr. Darling

I answered the question that the hon. Lady asked, but she is now asking a different one. The Government believe that some 4 million to 5 million people will benefit from stakeholder pensions. The difficulty is that if an individual is not eligible to join an occupational scheme, which is usually the best possible option, the only alternative is a personal private pension. That is not appropriate for someone on low earnings or, arguably, for many on moderate earnings. It is to those people who do not have adequate cover that the stakeholder pension is geared. The consultation period having now ended, the structure of our pension reforms, and the introduction of the stakeholder pension in particular, have been almost universally welcomed.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

Some 65,000 pensioners are newly eligible for the minimum income guarantee, but they must have an income of less than £75 and capital of less than £8,000. Is the Secretary of State satisfied that the Government are doing enough through the pilot projects in hand to ensure that those who are now newly eligible for the minimum income guarantee will get it?

Mr. Darling

The hon. Gentleman raises a good point. We want to ensure that all pensioners who are entitled to support get it, and that is one of the reasons why we have run pilot projects to encourage take-up, such as the telephone take-up campaign, which has proved very successful. We want to ensure that those who are eligible for the minimum income guarantee of £75 a week for a single pensioner and £116.60 for a couple get that help. I readily accept the hon. Gentleman's point about the capital and income limits, which is why we said that we wanted to consider that issue—which can cause problems—when we published the Green Paper in December. For the sake of completeness, I should add that all pensioner households will get the five fold increase in the winter fuel payment this winter of £100, which will be paid before Christmas.

Mr. Quentin Davies (Grantham and Stamford)

It speaks volumes that not a single Labour Member wishes to take part in the major question about pensions on the Order Paper today. Is not it unbelievable and nauseating that this Government, who affect concern for pensioners, and poorer pensioners in particular, find a way to force poor pensioners to pay tax on their savings income, even if their total income is below the income tax threshold? Not content with that, the Government have also found a way to prevent pensioners with savings income from benefiting from the 10p rate.

Mr. Darling

The hon. Gentleman should be aware that my hon. Friends support the Government's actions on pensions and are only too happy on this occasion to leave the field clear for Conservative Members to ask their questions. That is what Question Time is all about. I repeat the point, which I made a few moments ago to the hon. Member for Beckenham (Mrs. Lait), that the structure of the pension reforms that we have introduced, including the minimum income guarantee for the poorest pensioners, has been widely welcomed. We are spending some £2 billion more on the poorest pensioners—money that was not there under the Conservative Government—through the minimum income guarantee and the increase in the winter fuel payment, which will greatly help many of them. The l0p starting rate of tax will affect all taxpayers, which will be widely welcomed by pensioners and others. The Government are happy to be judged on what they are doing for today's pensioners and for ensuring that, in the long term, pensions are at long last based on a sound and stable footing.