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Occupational Pensions

The problem with the means test is that too many people are means-tested, and no party has managed entirely to eradicate means-testing. The link with earnings was broken in 1980. The Chancellor claimed today that he had brought it back. That was another of his little slips with the truth—he never quite gets it. He has not brought that link back; he has said that if it can be afforded it might be brought back in 2012. Ever since I have been involved in parliamentary politics, I have campaigned—as, I am glad to be able to say, has my party—to bring back that link, because it is important that we restore dignity to people in old age. We must minimise the number of people who are forced to rely on means-tested benefits. Because the means-tested benefit has been allowed to grow de facto with earnings and yet the basic state pension has risen merely in line with prices, the number of people who have been drawn into means-tested benefits has increased. The predictions for the period to 2050 are truly horrifying. That is why the House needs to look ahead on a consensual, cross-party basis and find a better way of dealing with our pensions system than we have had in the past, particularly in the past 10 years when this Chancellor has failed. One of the purposes of this debate is that, by bringing the Chancellor’s record to account, we can help outline the reality of the position in which we find ourselves today, and when that is properly observed and understood we can move forward on a cross-party basis and find a solution to our pension problems. ““Fairness? is the last word that Members or anyone else would wish to apply to the Chancellor’s attitude to pensioners. That brings us on to the subject of the Chancellor’s character. What sort of person takes advice from industry, independent experts and his own Treasury specialists that suggests that the pension tax would cause great damage to the country’s economy and the poorest pensioners and then goes ahead with it in any case? Perhaps only someone with breathtaking arrogance would do that. What sort of person would announce such a change in such an underhand way and seek to cover his tracks so assiduously? I will leave the House to decide on the answer to that for fear of breaching parliamentary language. If we cannot expect fairness from our Prime Minister-in-waiting, what can we expect from him? Unfortunately, the answer to that is: more underhand behaviour. Members noted that the Treasury papers came out on 30 March when Parliament was in recess and the Chancellor was in Afghanistan. That chain of events might not have been quite as extreme as another example of a good day to bury bad news, but that clumsy cover-up is symptomatic of the manipulative relationship that the prospective Prime Minister has with Parliament and with pensioners. Fairness and openness have been dismissed as qualities that we can expect from the Chancellor if he succeeds to higher office. He maintained today—as he has done since 1997—that the removal of tax credit from pensions has boosted investment and performance. The suggestion that taking money away from pension funds was somehow going to boost investment has been commented on by many Opposition Members. Many colleagues have referred to the figures, but it is worth giving the precise figures. When Labour came to power in 1997, business investment was 11 per cent. of GDP. Now, according to the 2006 figures from the Office for National Statistics, it is 9.1 per cent. That shoots that particular fox. The other fox that has been set running—I do not suggest that it was done on any organised basis, as I am sure that many Labour Members have been sitting up half the night reading thick tomes on the subject of pensions—is the idea that the Conservatives were cutting that tax relief anyway and would have abolished it themselves. However, we have heard the most compelling evidence today from the former Chancellor, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), and from the former Financial Secretary, my right hon. Friend the Member for Charnwood (Mr. Dorrell), that the Ministers in that Conservative Government considered the issues, listened to the representations from Treasury officials and others and concluded that it would damage pension funds and the economy, and that it would hurt those with least. The members of that Conservative Government decided not to abolish that 20 per cent, advance corporation tax or dividend tax relief—whatever it is called. That shoots the Chancellor’s other fox. We are debating the Chancellor’s handling of occupational pensions. Let us look at what has happened to occupational pensions on the Chancellor’s watch, because that would seem the most obvious thing to do, rather than only obsessing about the tax grab. The truth is that more than 60,000 occupational pension schemes have wound up or begun the process of winding up since Labour took office in 1997. Labour Members have suggested—in the peculiar Brownite way of picking dates that do not sound very natural—that the schemes were all collapsing anyway, but five sixths of the final salary schemes that have closed have done so since 2000. The idea that they were collapsing under the last Conservative Government is entirely false: it has happened on the Chancellor’s watch. The pension schemes have collapsed, they have closed to new members. As my hon. Friend the Member for Putney (Justine Greening) so powerfully set out earlier, we have seen the opportunity of a secure old age through their pensions, hope for the future and confidence in those who govern them removed from young people.