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Pensions Bill

The Secretary of State is of course right to point out the history of the debate, which goes back—as he mentioned in his speech—to the days of Lloyd George. The more recent history shows that this consensus has taken some development, although the proposal in the Bill is different in some respects from that made by Adair Turner—and rightly so, because the position has evolved with arguments from industry, political parties and so on. However, the Secretary of State also effectively accused those Liberal Democrats and Conservatives who are highlighting the genuine concerns about means-testing of scare tactics. That suggests an attitude that is not especially open to new ideas. It does not suggest that the Government are willing to put their shoulder to the wheel to find new ideas to resolve the problem. It is not a question of scare tactics, but of a debate between people who want to try to find a way to make the scheme work. I warn the Secretary of State that the slightly shrill tone that he adopted in parts of his speech was unfortunate, because it will give some people outside the House the impression that the Government are trying to hide something. We should avoid that impression. The key question is whether the scheme will work for the target audience. As the Secretary of State outlined in his speech, the benefits are potentially huge. Estimates vary, but between 6 million and 9 million—even up to 10 million—people could benefit from a properly constructed personal account scheme. So the prize is significant. I draw the Secretary of State's attention to some groups that will not be able to take part in personal accounts, such as the very low paid, for perhaps obvious reasons, as well as those who may have several jobs that are paid below the minimum threshold. In my constituency, for example, many people work in the tourist industry on a seasonal basis, with one job in the summer and another in the winter in the ski industry—for as long as climate change allows that to continue. Each job may pay less than £5,000, but the total earnings over the year may take them well above the threshold. The way in which the scheme is set up—I understand the reasons behind that, such as cost minimisation—means that such people would not be able to benefit from a personal account. The tourism sector might be one in which the benefits will not be as widely felt as perhaps they should. The key issue is means-testing. Since 1997, means-testing for pensioners has substantially increased. The Pensions Policy Institute estimates that overall levels of eligibility for any means-tested benefit are likely to be 50 per cent. in 2050, although they could be as high as 65 per cent. Its estimate suggests that 40 per cent. will be in receipt of pension credit, but other means-tested benefits at stake include council tax benefit and housing benefit. I realise that making predictions about the benefit system in 2050 is hard, but we have to base our approach on where we are at the moment. In addition to the potential problems for personal accounts, the means-testing strategy has wider problems. Many people do not claim means-tested benefits because of their complexity. For example, more than 1.5 million pensioners eligible for pension credit do not claim it. In recent years, council tax bills have gone up substantially, but only 53 per cent. of pensioners claim the council tax benefit to which they are entitled. Means-testing also erodes the returns from saving and reduces incentives to save.