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National Insurance Contributions Bill

The hon. Gentleman will obviously support some of our tax proposals, and I look forward to seeing him do so in due course. The Bill will raise £1.5 billion, which is not an insignificant sum. When taken in conjunction with the tax proposals in next year's Finance Bill, this will mean that some people will get a maximum gain of £325 a year, and that there will be a maximum loss of £223. We are not talking about huge sums of money, but, as the Financial Secretary said, that money will go towards increasing the amount of disregard for pensioners and taking more children out of poverty. My view, however, is that the Government are not going to meet their target for eliminating child poverty. The proposals so far have been put forward in a piecemeal way. Whether we are talking about this Bill or the Child Maintenance and Other Payments Bill, it means hundreds of thousands of children being taken out of poverty, yet there are more than 2 million affected by child poverty, which the Government should be tackling if they want to meet their target of halving child poverty by 2010. Notwithstanding that difficulty, we accept the point of the first part of the Bill, which we believe is sensible in setting out what it is trying to do, transparent and produces a clear link. As the previous Chancellor said, it provides two thresholds and two points of payment, which is acceptable. We have more problems with the second part of the Bill, particularly the proposals to introduce the upper accruals point. We do not say—and nor am I about to say—that we wholly disagree with consensus on pensions. We believe that it is very important, especially for longer-term issues, to achieve a broad consensus about the direction of pensions policy. People need certainty; they need to be able to plan. We accept the principle of having the state second pension as a flat rate pension and we understand why the Government are making the change to introduce the upper accruals point at this point—in order to keep that alignment. That change nevertheless raises £290 million extra a year rising to £450 million a year—an extra tax take. Earlier, I asked the Financial Secretary what that money would be used for, because my understanding from reading the papers was that the proposals were broadly cost neutral when taken together. We are disappointed with the proposed change because, although we are moving forward the date for the introduction of the upper accruals point, we are doing nothing to tackle pensioner poverty. The difference between the Liberal Democrats and Labour has been the Labour Government's insistence on using pension credit as a means of tackling pensioner poverty. If we compare child tax credit with pension credit, we find that the former is claimed almost universally by those who are eligible for it. It is a flat rate payment; it is not means-tested. We have had a long-standing aim—we want it to be met earlier than the Government do—initially to restore the link between earnings and pensions and secondly to introduce a citizen's pension. We believe that the Government are taking far too long to achieve that and that far too many existing pensioners are in poverty. We would have liked the additional sums of between £290 million and £450 million to be used precisely to achieve that. In 1950, the pension was worth 18.4 per cent. of the average wage. Today, the pension is worth only 15.9 per cent., which means that today's pensioners who rely solely on the state pension—and we should recall that up to 40 per cent. of those entitled to pension credit do not claim it—are worse off.