---

Occupational Pensions

I do not share the hon. Lady’s concerns because I believe that her analysis is incorrect. We cannot have it both ways. Either we analyse what happened in 1997 or compare it with how successful our economy is now. Pension fund assets rose by £270 billion between 1996 and 1999. Dividends, employer contributions, employees contributions and total income all rose in 1997 and all were higher in 1999 than in 1996. It was disingenuous of the shadow Chancellor not to acknowledge that, or the fact that pensions were hit by a series of problems after 2000—not least the stock market fall that year, which accounted for a reduction of £250 billion in the market value of occupational pension scheme assets between 1999 and 2002. Increasing life expectancy, referred to by my hon. Friend the Member for Amber Valley (Judy Mallaber), should also be mentioned. Rising life expectancy obviously means that pensions are in payment for more years, thus increasing a fund’s liabilities. Many firms made the decision during the 1980s and 90s, despite rising liabilities, to take contribution holidays—they were encouraged to do so—in the belief that a bullish equity market was a long-term trend. Many funds continued with those holidays after 1997. Indeed, as I mentioned earlier, the Pensions Commission concluded that employers should have increased contributions in the 1980s and 90s, but in fact reduced them. I think that the most interesting thing we have heard this afternoon is that, despite having called this debate, the Opposition are not committed to reversing the changes. Time and again, when given the opportunity, they have declined to say they are going to reverse them. Given their record on pensions, even if they said they would, I am not sure whether anyone would believe them. After all, the Opposition have very little credibility on pensions. They presided over the pensions mis-selling scandal, which caused misery to millions, destroyed confidence and seriously damaged the pensions industry in the process. The Opposition also presided over a growing gap between poor and better-off pensioners. From 1979 to 1997, the incomes of the best-off pensioners rose by 80 per cent., whereas the incomes of the poorest fifth grew by only 30 per cent. They left 2 million pensioners living in poverty and expected a pensioner in 1997 to live on just £68 a week. Many pensioners could not afford to keep warm in winter, and we all remember the phrase ““heat or eat.? Just as the Opposition’s record means that they have no credibility, their values mean that they cannot really come up with a coherent plan for their future, or our future for that matter. As a matter of ideology, based on their values, they cannot be trusted to do what is needed to deliver social justice and opportunity. They say they want to tackle poverty and do more for pensioners, but they condemn the increases in public spending needed to do that and call them financially irresponsible. Their so-called proceeds of growth rule commits them to cutting public spending every single year. Their leader himself said:"““As that money comes in let’s share that between additional public spending and reductions in taxes. That is a dramatic difference. It would be dramatically different after five years of a Conservative Government.?" If that rule were in place now, spending would be £21 billion lower than the Government plan, and lower still in the future. It is impossible to make those savings without hitting pensioners hard. For all the Opposition’s supposed outrage on behalf our pensioners, there is no suggestion that they are going to restore the dividend tax credit—let alone match our spending on pensions—yet they have been allowed to get away with their own policy vacuum. The closure of occupational schemes was not caused by the decision to cut dividend tax credit. However, we all have constituents who have been affected. That is why I would like to welcome the measures announced by the Chancellor in last month’s Budget and referred to earlier. The Chancellor announced that the Government will greatly increase the money available to the financial assistance schemes, to £8 billion in cash terms. The increase will ensure that pensions of all eligible members of affected pension schemes are topped up to a level broadly equivalent to 80 per cent. of their core pension rights accrued in their scheme. The cap on maximum assistance was increased from £12,000 to £26,000. As a result, the number of people helped will be trebled. The Government are also committed to keeping the financial assistance scheme under regular review. I am pleased that more help is going to be provided for people who have lost their occupational pension scheme as part of their company’s insolvency. That action shows that the Government have listened to the arguments of campaigners and to Members on both sides of the House, and have complied with the order in the recent High Court judgment, and that is another reason why pensioners—when looking at the policies put forward by the Government and the Opposition—will see through the crocodile tears and, despite the Opposition’s posturing on this issue, will see that they have no plans to reinstate the dividend tax credit, nor to support our measures that have made a positive contribution to pensioners’ lives over the last 10 years.