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Pensions Bill [HL]

My Lords, my noble friend Lady Hollis has been an initiator of thinking about, and a passionate advocate of, a single state pension for a number of years. She is truly a leader of the pack on this issue. As she explained, the nature of her amendment this afternoon is simply that it makes a request that the Secretary of State be required to lay a report before Parliament before the end of June 2016, which of course is the start of the timeframe for the acceleration of equalisation of the state pension age under the Bill. That would assess the consequences of the Bill on any proposals for the introduction of such a pension. This does not seem an unreasonable request. From time to time during our consideration of this Bill, there have been references to proposals for a single-tier pension and the Minister acknowledged this himself at Report, when he referred to being challenged by his noble friend Lord German to say more about the single-tier pension. The Minister duly obliged by referring to a Green Paper, which was due to be published a few days later. The Green Paper effectively consults on two propositions. One is accelerating the existing reforms so that the state pension evolves into a two-tier flat-rate structure more quickly; and the second, as my noble friend advocates, is a single-tier flat-rate pension set above the level of the pension credit standard minimum guarantee. The Green Paper, incidentally, also consults on proposals for automatically uprating the state pension age, but we are not focusing on that this afternoon. The consultation is just under way and not due to be completed until 24 June 2011. Which option, if any, the current Government wish to pursue may not emerge for a little while, but like all noble Lords who have spoken I will be interested to hear today’s thinking. Indeed, we as a party need to consider the outcome of this consultation, but see the thrust of the benefit of a single-tier flat-rate pension. A number of considerations will doubtless be brought to bear, particularly the voice of the Treasury. I think that it was the noble Lord, Lord Boswell, who made the point that we need to reflect on these in terms of long-term issues—pensions are about long-term issues—and, I suggest, of the need to drive consensus where we can. The Minister also referred to the contributory principle, and that is very much the same position that my noble friend is in, which is why she prefers the single state pension to a universal pension that would not rely on such provision. If the proposition emerges that a single-tier pension is to be introduced, it would clearly need primary legislation, and this process would cover the ramifications of existing pension legislation and, doubtless, much else. If legislation does not emerge by 2016, however, notwithstanding the proposal for such a pension, then my noble friend’s amendment would come into play. How might the Bill have consequences for single-tier pensions? It would be difficult to argue that there will be cost ramifications, because the Green Paper makes it clear that any proposals for a single-tier pension must be cost-neutral—that is, for all the fanfare, there is to be no new money beyond existing allocations. Conversely, it would seem perverse to argue that the manifest unfairness in the changes to the state pension age can be justified as necessary for the introduction of a new state pension system, as no additional funding is to be allowed. The state pension age changes are funding the triple lock but you can spend that money only once. One of the ramifications of a single-tier pension—this was touched on by my noble friend—is that there could be a significant reduction in means-tested benefits for pensioners, and the demise of the pension credit in particular. This would undermine some of the Government’s argument in the pays-to-save debate. Even though we do not accept the rationale for the trigger in auto-enrolment, the Government’s main justification for the trigger would fall away. Like my noble friend, I am supportive of the single-tier pension but as things stand we need to understand its full ramifications, the long-term implications and the distribution effect if it is going to be cost-neutral overall. This will doubtless emerge over the next three months in particular. At points during our debates on the Bill I wondered if some noble Lords were looking for cover or justification for the state pension age changes in the single-tier pension. Whatever the benefits of such a pension—they could be considerable—I doubt whether those noble Lords can get the comfort that they seek for supporting the state pension ages as provided in the Bill at the moment. I support my noble friend’s amendment. It seeks to achieve something important. In particular, it keeps a focus on the progress of the single state pension, which, if achievable, would be a considerable gain.