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Guaranteed Minimum Pensions Increase Order 2008

I seem to remember that it was this Government’s policy to introduce paternity leave, following the successful previous policy of maternity leave. Time flies. I cannot remember whether it was four years ago or longer, but no doubt the Minister will be able to tell us in answer to the noble Lord, Lord Jones. I do not intend to follow the comments of the noble Lord, Lord Kirkwood, except to say that I think that we are all determined that as many people as are fit enough should be in the world of work, but—it is a big but; I go along with the noble Lord, Lord Kirkwood, on this—they will not even try unless the recompense in wages or salary is more than the benefit that they got in the first place. For families with children that is comparatively easy, because of the families’ tax credit. For others, it becomes a lot more difficult, and is a lot more of a challenge for those of us making policy who have that objective. Having said that, on behalf of my party, I am pleased to support the orders, which increase the main social security benefits and pensions by 3.9 per cent. Inflation is creeping up. I note that last year’s increase was 3.6 per cent, and both those amounts relate to the retail prices index, which is rising. Given, as was pointed out in another place and today by the noble Lord, Lord Kirkwood, that the average RPI is not representative of ““individual”” household bills—at least in the short term—the increase is not seen to be sufficient for many. However, as there is an annual fixed point for recording inflation, and therefore using that amount to uprate year by year, people gain when household expenditure falls relative to the RPI. The question is whether the gains equate with the minuses. I do not know whether any work has been done on this on the 20-year period of the noble Lord, Lord Kirkwood, but at some stage it would be extremely useful if the Minister could set his mind to write to us on exactly that subject. The other income-related benefits are to be increased by the Rossi index, as the Minister said. That of course excludes rent, mortgage interest, council tax and—for some unknown reason—depreciation. I have never understood that; perhaps someone could take me quietly aside at some point and explain. Over the past year, this has been 2.3 per cent, which again will not be popular in some quarters through ignoring the point of the swings and roundabouts that I have just mentioned. It tends to be pensioners, through their lobby groups, who complain most about this. It would be helpful to know the Government’s view. Talking to pensioners brings me to the order that we are discussing in parallel, the guaranteed minimum pensions order. As the Minister said, where inflation is more than 3 per cent, the guaranteed minimum pensions indexation is capped at 3 per cent. Unlike my noble friend Lady Noakes—she will be returning to the House tomorrow—I am not a pensions guru, although I struggle hard to make some useful points. Therefore, with regard to a point just made, what effect does guaranteed minimum pension have on defined benefit pension schemes year by year? I can understand that in the past it has had some effect by dragging up the level of the minimum pension payable, but is that still the case, especially in the, alas, very rare defined benefit schemes? It would be useful to know that. Accompanying these orders is the report of the Government Actuary—or, rather, the acting one, Mr Johnston. I have not been able to check whether last year’s Government Actuary’s Department report said the same thing as we find in paragraph 4 of the conclusion; namely, the obvious fact that if economic conditions depart from the assumptions in paragraph 4.1, which I shall come to in a minute, then the balance of the National Insurance Fund, as of 31 March, will be different from the £56.974 billion anticipated at the end of the financial year 2008-09. That may or may not be meant to sound a cautionary note but it is rather stating the obvious. One of these imponderables must surely be the unemployment level, which is mentioned as a contributing factor in paragraph 4.1. The others in that paragraph are the employment level—as opposed to the unemployment level—which is expected to rise from 27.6 million in 2007-08 to 27.7 million in 2008-09. That is a modest increase indeed. The question arises as to where people are to come from to fill those extra 100,000 jobs. Does the Minister expect the Prime Minister’s wish to be realised when he talks of British jobs for British workers, which, with the number of immigrants coming into this country, is what I would describe as patent nonsense? Those immigrants, of course, mainly come from EU countries, and there is nothing that this Government or indeed any other can do to stop them. The pass was sold years ago, although with the new accession countries, as they are called, it was under this Government’s watch. Another assumption that the acting Government Actuary makes is that the number of people unemployed and claiming benefit will be 840,000 on average in 2007-08, rising to 870,000 in 2008-09. We all know that the economy is slowing down but I am confused by these assumptions, because the most recent figures for unemployment that I have, which come from the Labour Force Survey, are 1,606,000 unemployed and 7.9 million defined as ““economically inactive””. For the purposes of clearing up my confusion, what has happened to 810,000 people? Surely they cannot all be so self-sacrificing as not to claim benefit. Finally, it used to be recognised that the prudent balance in the National Insurance Fund was one-sixth of expected expenditure. Mr Johnston reports that the surplus in the fund is likely to be well in excess of this at £56,947,000 by the end of 2008-09. It is perhaps hardly surprising that the National Pensioners Convention has recognised this, commenting that the surplus has been rising by more than 2.45 times in the increase of expenditure. It has therefore called for a substantial increase in the state pension, and there was a report to that effect in a tiny paragraph in Saturday’s Financial Times. There are two points here on which I should like the Minister to respond. The first is that the fund covers a lot more than pensions; it includes jobseeker’s allowance and incapacity benefits as well as pensions. The new pensions benefits, which are expected to be £8.108 billion in 2008-09, are much more volatile than pensions and depend on assumptions which may or may not be realised. I cannot discover what allowance has been made for longevity, although I note that total expenditure is increasing at a higher rate than the extra payments would warrant as a result of the uprating. This is the subject of the next order, so perhaps my remarks are out of place here. Nevertheless, I would be grateful for the Minister’s response to the national convention, which I believe would be the first time that any Minister would be able to put such a response on the record. Not only I would be grateful, but I am sure that the convention would, too. With these questions, I approve the orders.