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Pensions Bill

Let me begin by saying that nothing is more glorious to God than a sinner that repents, even if, as in this case, the sinner is a Conservative. If we have achieved consensus on this issue, now is a good moment to put that into effect. I pay great tribute to my right hon. Friend the Member for Barrow and Furness (Mr. Hutton), because in many respects the package consisting of this Pensions Bill and the Pensions Bill that preceded it last year is very much his package, implementing the findings of the Turner commission. I have no doubt that he saw the restoration of the earnings link as being a vital part of that package. In his opening statement on these issues, he referred to the long-term damage caused by the eroding effects of our present system of indexation of pensions. The restoration of the earnings link is an absolutely essential component of the credibility of the Government's new pensions proposals in the Bill regarding personal pension accounts. The credibility of personal pension accounts depends on the restoration of the earnings link so that people are assured that they are not paying money into a scheme whose ultimate effect will not be simply to save the Government money, in the form of the benefits that they would otherwise have received. Another important part of the package is that by restoring the earnings link we build a bridge between tomorrow's pensioners, who we hope will benefit from the introduction of personal pension accounts, and today's pensioners, who in every other respect do not benefit from the proposals in the Bill. The restoration of the earnings link must not be delayed. It is essential for the delivery of the Government's pension reform package, and it must not be subject to the daily volatilities of the political and economic environment in which we all operate. The hon. Member for Eastbourne (Mr. Waterson) mentioned that for the Government the reintroduction of the link to earnings would be subject to affordability and the fiscal position. The current situation is a little different from the one that we were in last year. There is more uncertainty about the fiscal position of the Government, and when we see their accounts at the end of the financial year, we will see, rather remarkably, that they have observed their fiscal rules simply because a large number of people who were entitled to means-tested benefits did not claim them, thus saving the Government money. That is a difficult situation for any Government. The point must be made that the longer the restoration of the link with earnings is delayed, the more today's pensioners will end up in relative hardship and depending on the complex rules of pension credit. Indeed, the provision in the previous Pensions Act that pension credit should increase in line with earnings, even when the basic rate of state pension does not, has now become a machine that remorselessly, year by year, draws larger numbers into a state of dependency on means-tested benefits. Once they get there, there is no possibility of retrieving the situation. Parliament should not allow that to continue. Of course, we ought to seek simplification of tax and pension credits. We may well have an opportunity to consider some of those issues quite soon, which would be welcome. But in the meantime, we have to protect people from being drawn into dependency on means-tested benefits where that is not necessary. Let us recognise that the people who do not claim the means-tested benefits to which they are entitled are often old people—often women—who live on their own in social isolation. It is entirely wrong that we should not move to protect such people. A commitment to link pension credit to earnings, and to set a date for the announcement before the next general election, not after it, is absolutely necessary. That is the purpose of new clause 16, which will also have another benefit. If it is adopted in the launch period leading up to the introduction of personal pensions accounts, when people read about those accounts in the newspaper and the financial sections of the popular press, they will be reassured that they are reading about a valid, reliable, predictable and sound addition to their ultimate savings and income. If we fail to act quickly, many younger people will for years—perhaps for ever—be put off the new pension system we are trying to put in place. I welcome the fact that the hon. Member for Eastbourne has decided not to press new clause 7 to a vote, because it would tie the hands of the Government too tightly. It would mean forgoing some of the other benefits in the Bill to which we have not referred this afternoon, such as the introduction of a much longer assessed income period for people who are on pension credit. That provision was in clause 81 of the original Bill—I am afraid I do not know what clause it is in now. I would not want to forgo such provisions, which would be a consequence of the hon. Gentleman's new clause. It is the right moment to reconsider this issue. We should reconsider it before the next general election, not after it. Indeed, when the Government originally said that they would consider the issue early in the next Parliament, many people, including myself, assumed that that next Parliament would be rather closer to us than it now seems to be. That is another reason for trying to reconstruct the terms of the debate as my right hon. Friend the Member for Barrow and Furness left it. I offer new clause 16 to the House in the name of myself and my hon. Friends. We have discovered during recent days that as Back-Bench Members of Parliament, we are a very low form of life.