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Saving Gateway Accounts Bill

I apologise for not being present for some of the earlier speeches, but I have heard some interesting contributions while I have been in the Chamber, and I have been provoked into saying a few words myself. I take an interest in general terms in savings and especially in pensions and income for pensioners. The Bill is a step in the right direction, as others have said, but we will have to go a lot further, not just for people at the lower end of the income spectrum, but for those on middle incomes in particular, for whom the savings habit has died. I come from a long line of devout Puritans who saved money. Even when I had pocket money, my friends suggested that I had only a very small amount, even though I came from a prosperous family. That was because my family believed that we should work for our income. If we wanted something, we saved up for it. I did save up over weeks for things, and it was a habit that our family had. Friends, even from less prosperous families, had fivers thrown at them from time to time in a rather casual way. That attitude is not common in many other cultures. In Germany and Japan, for example, people are much more keen on saving. A number of important issues have been touched on, such as confidence in where we save. In the longer term, we will have to consider a state savings bank for everyone, where our money is secure, the administrative costs are very low and we get good returns over time. We do not want to see people in Christmas clubs that go bust, like Farepak. We want people to have absolute confidence in where they put their money. In time, some people may have to be compelled to save if there are not to be millions of people of pensionable age living in penury, even though they had good incomes during their working lives. At the lower end of the income scale, we must aim to raise the basic state pension significantly and for it to rise considerably faster than the rate of inflation or earnings to get back to the kind of ratio between pensions and earnings that we saw before the link was broken in the early 1980s. At that time the basic state pension was 25 per cent. of average earnings, and we should get there again so that the basic state pension is well above the poverty level. Currently, it is below the poverty level. At the same time we could eliminate all the means-testing, perhaps progressively over a period, so that other savings would be additional to the basic state pension, which we can all take for granted. That is the way forward. For many other people on higher incomes, the drop from having a reasonable income to the basic state pension would be pretty catastrophic. For those who have lived a fairly modest life, a good basic state pension might be regarded as sufficient, although they might want more. For people who have not saved and have had big incomes, it is a matter of regret for them, perhaps when they reach the age of 65 or whatever state pension age will be in future, that they have not saved properly. We will have to look towards a universal, comprehensive, compulsory SERPS system for everyone, with defined contributions, as a proportion of earnings or whatever, and defined benefits so that we know what we will get and so that that is not related to the state of the economy, the stock market or anything else. If we had a savings bank, we would know what we were going to get back. That should be defined and not interest-rate related. Other countries have much higher basic incomes than we do for people of pensionable age. The gulf between the rich and the poor will have to be narrowed by looking seriously at the incomes of poorer pensioners in future. At the moment, we are just nibbling at the edges. We are not taking the matter seriously. I want to see much more radical action from, I hope, a Labour Government, this one or future ones, substantially to raise the level of incomes of those who have retired at the lower end of the income scale. That may mean some redistributive taxation from the very rich to the very poor, and I would not disagree with that. [Interruption.] I do not want to go into my usual speech about what the income tax rates were back in the days of the Callaghan Government under Denis Healey. I have made that speech several times so I shall not trouble the Minister with it now. We are starting to take seriously the problems of the poor, particularly when they become older, and the Bill is a step in the right direction. I welcome it, but we must go much further.