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Address in Reply to Her Majesty’s Most Gracious Speech

My Lords, the whole House will have been moved by the obvious sincerity and compassion with which the noble Earl, Lord Listowel, speaks. I welcome my old friend the new noble Lord, Lord Adonis, to our House. He has a distinguished record as an academic and author. The titles of his books have a strangely prophetic ring. A   Class Act was written in 1997, and he is certainly that. I enjoyed reading there that he is one of the few of us who are avid readers of that splendid publication Liberal Democrat News. If, by any chance, his subscription has run out, I will be delighted to renew it for him. Then we had Making Aristocracy Work: The Peerage and the Political System in Britain in 1993. The noble Lord certainly got into training for this place early. I hope that he will not have to write a second edition of his acclaimed 1994 work from first-hand experience. The title was Failure in British Government. The noble Lord, Lord Adonis, will also find that this is a good place to buttonhole people whom he needs to interview for his biography of Roy Jenkins. When he first told me that he was writing it, he said, ““It’s all right, Matthew. I will not interview you for a year or two because I want to get around the people who will die first””. I hope that the noble Lord is in no hurry for our interview. There has been a lot of public talk about it, but it must be right to have the noble Lord here as Minister, defending the Government’s policy from the Front Bench and giving Parliament the chance to scrutinise, question and, if necessary, oppose it. That is far better for democracy than for policy to be made by advisers in the shadow of a Prime Minister with too much personal power in our overcentralised system. It is all change on the work and pensions front, not just in the Commons where David Blunkett is our fifth Secretary of State since 1997. We have even broken the Department for Education record of four Secretaries of State. Would we want to send our children to a school where the head had changed four times in the past eight years? We wish David Blunkett well, although we will miss Alan Johnson and Malcolm Wicks, who showed signs of genuinely open minds on the pensions crisis and were taking our proposal for a citizen’s pension seriously. In this House, I will miss both of my opposite numbers who have left their Front Bench. We got to know each other fairly well during our marathon sessions on the Pensions Bill, but the noble Baroness, Lady Hollis, whom I am delighted to see in her place, and the noble Lord, Lord Higgins, go back much further than that in their long and distinguished records of service. The ““Patricia and Terence show””—if I can call it that—played for eight years here to a discerning and appreciative House. They are invariably courteous and dauntingly well informed. Neither misses a trick in debate. Shadowing them has been a very steep learning curve. I am delighted that the noble Baroness is staying in the thick of the action when she speaks next in this debate. I welcome the noble Lord, Lord Skelmersdale, to his new role and another old friend as a new Minister. The noble Lord, Lord Hunt, and I sat as Oxford city councillors together for three years. I do not remember ever disagreeing with him in that time, which I hope is a good omen for constructive dialogue 30 years on. Consensus is the new buzz word on pensions. We have heard it already today. The Government say that they seek it. Adair Turner is virtually consensus personified. He is a former Conservative; we were most impressed with his contribution on the economic policy committee of the SDP; and he is clearly now trusted by new Labour. The first report of his commission was a masterly and comprehensive analysis of the scale of Britain’s long-term pension problem. He pointed clearly to the inconsistencies and inadequacies of our present pension system. The way in which he outlined the stark choices that we face as a result of rapid increases in longevity encouraged us on these Benches to believe that he would recommend root and branch reforms in our state pension system, in particular in his final report this autumn. We live in hope that he still will. Some 87 per cent of men but only 13 per cent of women in this country are entitled to a full state pension on the basis of their own national insurance contribution record, which is often because of time spent bringing up children or caring for elderly or disabled relatives. On present government policies and projections, 60 per cent of pensioners will end up on means-tested benefits. Those chilling facts make an unanswerable case for us, for many thoughtful Labour people and for leading outside organisations, such as the National Association of Pension Funds and the Pensions Policy Institute, in favour of a non-means-tested citizen’s pension that would be payable as of right and rising in line with national average earnings. Turner rightly describes our pension system as the most complex in the world and the present UK state   pension system as one of the least generous in the   developed world. But analysis is simpler than prescription. My colleagues, Steve Webb and David   Laws, and I welcome the private meetings that we have with Adair Turner to exchange and test our respective ideas. However, I wonder whether he is well advised at the moment in the very public way in which he seems to be almost trying to engage in pre-emptive consensus building—if I can call it that—around a report that has not yet been published or finalised, particularly as David Blunkett is only weeks into his job and the Government’s own view—understandably—is still in a state of flux. Adair Turner and his commission have a unique opportunity to get their heads down and produce an intellectually challenging and coherent report. If they make the case for their chosen reforms compelling enough, the time is right for all three main parties and the pensions world to come together and find substantial common ground. But the report will lose its impact if it is watered down in the hope of meeting less political resistance or because of funding fears. At a very interesting seminar organised by the Pensions Policy Institute yesterday—at which I was very pleased to see the noble Lord, Lord Hunt—the Labour MP, John Denham, drew a very telling contrast between the National Health Service, which people are prepared to see properly funded from general taxation because they trust it and believe that it delivers for them, and pensions, which people broadly do not trust and do not believe work for them at present. A key question, as the noble Lord, Lord De Mauley, in his thoughtful and well argued maiden speech pointed out, will obviously be whether we should compel people to save for a pension over and above the inevitable element of compulsion involved in national insurance contributions, which are, let us be frank, just another form of general taxation to pay for the state pension. Our view is simple. If there is a non-means-tested state pension for all, which is set at a level on which people can live, further compulsion is unnecessary. By all means encourage people to join workplace pension schemes, educate and inform them and make low-cost, reliable, safe pension saving products available through National Savings & Investments. But should there be compulsion beyond paying for the citizen’s pension for all? No. If we stick with our present system of mass means-testing of state pension benefits, compelling middle and lower income people to save for an extra pension is wrong. It is not in their interests and could in many cases be tantamount to pension mis-selling. The key to improving incentives for private saving is a non-means-tested state pension, so that people know that they will keep every pound that they save. David Blunkett has said that welfare payments—he may not have been talking about pensions, but it is a good analogy—should be not a safety net but a trampoline or an escalator. As far as pensioners are concerned, they do not want a trampoline. They need a much stronger safety net from the state with far fewer holes in it for them to fall through. There will obviously be no early pensions Bill in the House. The ink is hardly dry on the last one. The warnings that we gave about the financial strains on the Pension Protection Fund and the inadequacy of the £20 million a year financial assistance scheme are sadly proving only too justified. Major pension funds such as MG Rover, Allders and Courts are queuing up to knock on the PPF’s door before they have paid a penny of insurance premiums into the fund. But I pay tribute to the vigorous and businesslike way in which David Norgrove, the new Pensions Regulator, and Lawrence Churchill and Myra Kinghorn at the Pension Protection Fund have started their work. We look forward to seeing the details of the PPF risk-based levies soon, so that well funded pension schemes, backed by responsible employers, are not penalised by having to subsidise those who play fast and loose with their pension responsibilities. With every day that passes, we see more evidence of companies that are doing that—not least in the venture capital-backed sector. We will see Bills on housing and incapacity benefit in this Session. We welcome the practical and constructive tone struck by the noble Lord, Lord Adonis, and by DWP Ministers so far. As long as that approach continues, with no deviation towards knee-jerk populism, we will support the Government in their efforts to give timely, targeted help to get people off benefit and into work. In the regional pattern of invalidity benefit claims, there is a strong correlation between buoyant local labour markets offering a good range of jobs and low numbers on incapacity benefit. Work is good for people, if it is in the right place and is tailored to their needs, but people who cannot work must be properly protected, not badgered or targeted. We look forward to a busy Session on work and pensions and to this House giving freely of its time and expertise—both of which are, I am sorry to say, in short supply in the Commons sometimes—as we improve the Bills that come before us.