§ 11. Mr. Simon Hughes (Southwark, North and Bermondsey)How many responses he received by 31 March to his consultation paper on pensions. [79738]
§ The Minister of State, Department of Social Security (Mr. Stephen Timms)We had received more than 550 responses by 31 March, and several more have arrived since. Wide support has been expressed for the objectives set out in the Green Paper and for our approach, which is based on the three interlinked pillars of the minimum income guarantee, the state second pension and the stakeholder pension scheme.
§ Mr. HughesWill the Minister accept that there has been strong representation, not least by Age Concern, about the fact that the Green Paper says nothing about raising the basic pension? Age Concern, on behalf of pensioners, takes the clear view, as do all the pensioners in my constituency who have spoken to me, that at the very least older pensioners must be given a higher basic state pension—we had that debate last month—or all 563 pensioners should have a higher basic state pension. Is there any point in Age Concern or any pensioners' organisation putting those views to the Government, or are Ministers saying that there will be absolutely no increase in the state pension and that it will be topped up only if pensioners' other income makes it necessary for them to have an additional, means-tested benefit? Will people receive an increase only if they go through the means test?
§ Mr. TimmsAbout 170 of the responses that we have received commented on the level of the basic state pension. Our pledge neither to means-test nor to privatise the basic state pension has wide support, but as the hon. Gentleman rightly says, many people would like the state pension to be linked with earnings. Our commitment is to uprate the basic state pension at least in line with prices; we have honoured that commitment, and pensions will continue to increase according to that method.
The cost of increasing pensions in line with earnings would be an additional £750 million every year, and within 10 years it would cost an additional £8 billion a year. That is not economically realistic. Rather than give the impression that the link with earnings might be restored, it is better to be honest with people and instead devise a credible strategy, as we have done, for improving pensioner incomes.
§ Mr. Howard Flight (Arundel and South Downs)With reference to consultation, what advice do the Government give to employers, employees and those providing pension fund schemes on the arrangements to be made in the next two years before the new stakeholder arrangements come on-stream? The Government have demonstrated their moral disapproval of personal pension schemes, even though many of them now offer full transparency. People will progress upwards in the work force, so if they do not want a personal pension, what are they to do in the next two years?
§ Mr. TimmsPeople should be saving in a pension. That is why the Financial Services Authority has issued advice about the terms under which personal pensions should be sold in the next couple of years. Stakeholder schemes will be available from April 2001, and if people then choose to switch into a stakeholder pension, they will suffer no penalty. We welcome that advice. The assurance about what will happen in two years means that it is entirely appropriate for people to start saving in a personal pension scheme now.