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Pensions

My Lords, it is a signal pleasure to follow the noble Baroness. As the former chairman of the Work and Pensions Select Committee I can testify probably better than anyone else in this House to the effectiveness with which, over a period of 20 years, she has been an effective voice for carers. Her speech will repay careful study and it is a pleasure to follow her. Like the noble Lord, Lord Fowler, I should declare an interest. I am also a member of the contributory House of Commons pension scheme. I served my apprenticeship on the Standing Committee of the Social Security Bill 1986. The noble Lord, Lord Fowler, was a very big cheese in those days. He was in charge of the honourable Member for Braintree, who is now of course the distinguished and noble Lord, Lord Newton. He was also in charge of a new Whip who joined the committee at a later stage who was the honourable Member for Huntingdon, and look what happened to him. The noble Lord, Lord Fowler was a big cheese then and he is a big cheese now. I start on a carping note, but I hope that it will be the only one in the next seven minutes. I am very disappointed that the Labour Administration ran away from a proper public debate on pensions at the last election. I believe—and I stand to be corrected—that the Turner commission was set up as a device to park the whole subject so that it would not embarrass Ministers. There is a political argument that says that pensions is such a complicated issue that perhaps the heat and tension of the hustings is not the best place to discuss such a subtly nuanced subject. However, it was a mistake not to deal with such a serious and fundamentally important subject, recognising the amount of ignorance—in the best sense of the word; I do not use it pejoratively—that people have about saving for their retirement. It was a sadly missed opportunity. I cannot help but say that and I feel better now that I have got it off my chest. There are now important reasons for ensuring that Ministers do not miss this opportunity. All the demographic and economic trends and requirements for simplification are coming to a head. The moment for decisions is coming. Early next year, the Government will be faced with a signal opportunity to put some of these things right once and for all. If they do not take that opportunity and make proper use of it, we will all pay a price. As the Turner commission makes clear, if we do not get all of this right, we will end up with pensioners, on average, being poorer in future. That would be a tragedy. The Turner commission did a valuable service. People think that a lot of new stuff was produced. It brought a lot of good information together and refreshed some of the evidence, but there is huge expertise and a body of knowledge in the industry in this country which was already aware of all these problems. The noble Lord, Lord Turner, brought that to the fore and brought it all together in a helpful way, but no one should think that any of the information was discovered for the first time as a result of his work. Noble Lords who have the time should look at page 173 of the noble Lord’s report—that is to show noble Lords that I got as far as page 173 in the first report. Table 5.1 is a wonderful table headed ““total personal sector balance sheet””. It relates to total housing assets. The rubric at the bottom of the table says that the figures are correct to the nearest £50 billion—the noble Lord, Lord Turner, is no cheapskate. I would love to add my name to a report that had a table of that kind. More seriously, one thing about the noble Lord’s report that worries me and should worry us all is what has now become known as the funnel of uncertainty in terms of demographic change. He makes it quite clear—he is right—that official figures in the past have been substantially wrong about subsequent developments. The trends are based on best evidence and best judgment—nobody is criticising the GAD and other people who have done the figures—but there is still the real possibility that we could be underestimating the extent of this problem, and it is bad enough as it is. The noble Lord, Lord Fowler, is quite right to say that the issue is technically complicated in the delivery and mechanisms, but it boils down to four simple things—pensioners, on average, will be poorer unless taxes go up, retirement ages rise or people save more money. Quintessentially, that is what this issue is all about. Therefore, it would be sensible to do bits of all three to avoid the fourth. In effect, that is what the Turner commission is actively considering. I would be happy to support the idea in the Financial Times leak today—if it is accurate—although I would be much happier if we did not go for realigning S2P and went for a single much more straightforward system of having a basic state pension which was clearly designed not only to be at a level that would guarantee against poverty but also to be a base on which second and third-tier pension provision could be built. More than anything else in this debate, if the Minister were my fairy godmother and granted me a single wish, it would be that reform is now essential. No time is left for getting this wrong. The time is right. The system is too complicated. Simplification must be part of the proposal and education and information must also play a part. The long-term goal is clear—we need a higher, simpler, less means-tested pension for us all, which offers a base on which other things can be built. The Government should strive to achieve consensus and consensus is out there now—it has been emerging for some time. There is certainly consensus on the broad, outline policy, but it will be harder to get detailed changes and everybody in the same tent on that basis. It is a goal that the Minister should work for as hard as he can. I have two other things to say before I sit down. One priority must be the position of women. This reform will fail if it does not address the problem facing women. That is an established view now outside this place, and I hope that the Government will respond to that. Also, we must all start thinking much more positively about retirement after 65. There are ways that the Government can help with that too, but we should use this debate and the opportunities coming in the next weeks and months to promote the idea positively. Finally, I believe that the Prime Minister in his Brighton conference speech was right when he said that on some of the reforms that he had made he wished he had gone further. I only hope that in the fullness of time he does not look back on pensions reform and think that he got that wrong by not going far enough when taking the big decisions on pensions later next year.