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Pensions Bill

I am grateful to my hon. Friend, who makes a fair point. Almost by definition, the 6 million, 7 million, 8 million, 9 million, 10 million or however many people who, it is hoped, will be attracted into personal accounts will be those who are currently outside existing pension provision. Many may simply be seen as unattractive propositions by the pensions industry and will be in a marginal situation as to whether the scheme will be good or bad for them. My hon. Friend's key point, to which I was coming, was about confidence. At one time, the argument was advanced that there would not be a problem until 2020 or even later, when it would become apparent to people, after they had saved for some years under personal accounts following the assumed start date of 2012, that they were not receiving the returns that they had been led to expect. It has been clear to our party, and it is now clear to everyone, that in the run-up to 2012, and not later, journalists and others, whether we like it or not, will be writing a story to the effect that some people in similar situations will be benefiting and others will not be. If, as journalists say, that story has legs, it could cause untold damage to confidence in the system, not least as a tool for the unscrupulous employer who wants to persuade people not to auto-enrol in the first place. Now is a good moment to pay full tribute to the Pensions Policy Institute, which has done so much work on that and the other big issue, the so-called levelling down, to which we shall come. The PPI set the foundations of the work that will now be carried forward by identifying the at-risk groups of people—whether low, medium or high risk—under the proposals. The PPI came up with the expression ““the funnel of doubt”” to refer to the likely level of means-testing even after the reforms. There is no doubt at all that the level of means-testing will fall somewhat when the reforms are introduced. However, there is still a difference between the Government and the PPI and other experts on what that level will be. As John Hills and others have picked up, it is particularly difficult for people at the beginning of a career or a lifetime of work to predict where they will end up, with respect to a broken work record, marital break-up or whatever else. It is important that we should consider carefully the likely effects of the interaction between means-tested benefits and personal accounts. No matter how much work has been done by outside bodies, particularly the PPI, all are now at the point at which they can make progress only by having access to the sort of model that the Department for Work and Pensions uses—the Pensim2 model, as it is called. I am particularly pleased that, as a separate and parallel process to the passage of the legislation, we are now all engaged in an attempt to establish the size of the problem, within certain parameters, and to run a slide rule over the suggested solutions. The Minister has been extremely helpful in allowing people access to Pensim2, and in putting together a series of meetings, seminars and all those wonderful things that come to us who are involved in the pensions world. The initial phase has involved ensuring that we are all signed up to the basic assumptions that go into any proposition that is run through the model. There has already been one big step forward, for which I claim no credit whatever because it was nothing to do with me. There was a problem, as despite its no doubt excellent other characteristics, the Pensim2 model did not take any account of housing benefit. I am told that that is no longer the case, and that it does now incorporate housing benefit. Why does that matter? It matters enormously because one of the major factors in the at-risk groups identified by the PPI is the question whether people rent their home in retirement. That makes a massive difference to many of those people. There is a whole range of issues to be addressed. Assumptions are made about take-up rates, the likely success of personal accounts and the whole question of behavioural reactions to the new policy. This is not an easy task, and we have always said that we did not necessarily expect it to be resolved within the lifetime of this legislation. We did expect, however, that the process should start off in a serious fashion, and in a way that we could sign up to during the passage of the Bill. So far, so good. There is clearly a lot of work still to be done, however, and we might not agree on all the parameters and the options and how they should be looked at. I hope that the Minister will say a few words on this issue in a moment, but I think that I am right in saying that the ultimate aim is to produce a document—perhaps a report that will be available to all and sundry—at the end of the process, possibly in the autumn, which will try to nail some of the uncertainties that are in the system at the moment. Perhaps it will admit defeat on the known unknowns, to go back to Rumsfeld, but it should at least set out some of the options more clearly and possibly eliminate some of them, if that will be helpful. This will not be a problem for this Government, but it will be one for future Governments of whatever political colour, and it is important that we tackle it now.