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Social Security (Contributions) (Re-rating) Order 2008

I am all for the noble Lord, Lord Kirkwood, putting flesh on my bones, but I hope he does not overdo it, because otherwise I shall have to go on a diet and stop thinking for a bit, which would probably be a good thing for the House but a bad thing for me. The order is rather different in amount from the uprating order that we have just discussed. It is also different in scope. The House as a whole must surely believe, as I do, that Ministers in the department have behaved disgracefully. The Committee will remember that on the last Pensions Bill, the noble Baroness, Lady Hollis, withdrew an amendment about allowing women, in particular, to buy extra years of class 3 contributions to augment their often lamentable state pensions on the basis of the promise that Ministers would find some way of achieving her aims, although not necessarily through buying more class 3 contributions. The noble Baroness asked an Oral Question on 17 December last about what progress the review was making. The noble Lord, Lord McKenzie of Luton, gave her the dismal answer that progress could not be made. He claimed that pensioners had been well served by the Government and pointed out that with the reduction in qualifying years from 44 to 30, by 2010 three-quarters of women would get their full state pension and 90 per cent would qualify by 2025. That is in col. 468 on 17 December 2007. I have been pondering this a little and wonder whether the Minister could give us a little clarity. Will a woman retiring on 1 June 2011, in a little over three years from now, get the full state pension of £90.70, at the 2008-09 rate, having paid only 30 years’ contributions? I have no idea exactly what the rate will be by then and neither does the Minister, so I have to use the figures that we know and are beginning, as a result of this afternoon’s debates, to understand. A person retiring only one day before 5 April 2010 will need 44 years’ contributions, whereas, if the answer to my question is, as I expect, in the affirmative, he or she will have had to pay only 30 years’ contributions if they retire after that date. How many people are we talking about? What does 25 per cent or 90 per cent represent? When the order was debated in another place, the Financial Secretary to the Treasury said of uprating of the class 2 and 3 contributions, the small earnings exception and the lower profits limit: "““All those increases are broadly in line with prices””.—[Official Report, Commons, Eighth Delegated Legislation Committee, 20/2/08; col. 3.]" ““Broadly in line”” is a very elastic term that I do not expect to hear from DWP Ministers. Inflation is 3.9 per cent—or it was in October, when such things are fixed for the following year—whereas, as my honourable friend Mr Gauke pointed out, class 2 contributions are to increase by 4.5 per cent. With the best will in the world, I cannot describe that as broadly in line. I realise that rounding must happen to the nearest 5p, but I do not understand how the increase from £2.20 to £2.30 was arrived at. Another feature of the order is the very large increase in the upper earnings limit, from £34,840 to £40,000, which I calculate to be 19 per cent, as near as damn it. My suspicion is that, since the reason given is to align this figure with the 40 per cent income tax starting point, the Government are about to do something that has been resisted by all Governments since the inception of the National Insurance Fund: to combine NI contributions with tax, possibly even going so far as to do away with the UEL. Am I being too suspicious? There is certainly logic in my suspicion. It would harm the economy and infuriate business and the City. No doubt my noble friend Lady Noakes, who is expected to be fit enough to return to the House tomorrow, will pursue that when the National Insurance Contributions Bill hits us. As I understand it, the Minister will not be participating on that Bill, but I might well do so—we shall see. I have no more to add and I shall not, of course, object to the order.