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CPI/RPI Pensions Uprating

I am grateful to all who have contributed to the debate. I think that it has been incredibly constructive, and a credit to the House. The hon. Member for West Worcestershire (Harriett Baldwin) displayed her experience of these matters, but I do not agree with her. She criticised the CPI, but argued that it was about the best we have. Not even the Government accept that—they are undertaking a review of the CPI in order to install the housing costs that we have argued should be included in it. Within two years, or perhaps one, they will produce their report, and the system will change again. In the meantime, however, people will lose out as a result of the removal of the RPI link. I believe that although the hon. Lady was clear in her defence of the CPI for the moment, she acknowledged the need for change at a later date. My hon. Friend the Member for Bolton North East (Mr Crausby) hit the nail on the head: this is a matter of trust. People were told that if they contributed to a pension scheme, they would receive a certain defined benefit. It is no good the Minister's saying that they should have looked at the scheme rules, because in leaflet after leaflet and in scheme after scheme, they were told that they would be protected by the RPI. It is almost like a dodgy car salesman saying ““You didn't look at the hire purchase agreement in sufficient detail.”” The hon. Gentleman mentioned Maxwell, and that resonates in this context. The hon. Member for Eastbourne (Stephen Lloyd) mentioned the calculations that would need to be verified. As was explained earlier, according to one calculation someone with a £10,000 pension would lose out, because he or she would not even gain as a result of the other measures. There are two issues. We expect the changes in the state pension to improve matters, but that improvement should not be at the cost of people's employment pensions. It is not acceptable to wrap the two together as if they would be of some benefit to people with employment pensions, because those people will lose out whatever happens. As my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) rightly pointed out, the long-term prospect is that some people will give up on their pension schemes and will not contribute, and as a result the viability of some pension schemes will be at risk. Today's debate smacks of the debate that took place many years ago about the link with earnings. People now regret the breaking of that link, because it led to the erosion of the state pension over the years. Unless the Government's decision is reversed, the same despair and anger will be expressed in 20 years' time. The hon. Member for Gloucester (Richard Graham) spoke eloquently about the need for sustainability, and he was exactly right. We must ensure that pension schemes are sustainable. Most contributory schemes are, and we must ensure that state-funded schemes are as well. That means ensuring that contributions are made, both through tax—a fair taxation system means tackling evasion and avoidance, so that there is a sufficient amount in the Exchequer—and from scheme members themselves. The unions have made it clear that if the costs increase because of the increasing longevity of their members, they will be willing to pay more, but not to subsidise the Treasury. My hon. Friend the Member for Easington (Grahame M. Morris) presented his assessment of the Government's decision in his usual honest and extremely thoughtful manner. He said it was about placing the burden of the deficit and the economic crisis on the pensioner rather than on the tax avoider and tax evader, and I entirely agree with him. The hon. Member for Aberconwy (Guto Bebb) was entertaining as always, and irrelevant as always. [Interruption.] I do not wish to be too cruel to him, but the fact is that we are not debating the Labour party's pension fund. That is a debate for another day and, possibly, another Back Bencher's application. We are debating a serious matter. As we have pointed out time and again, firefighters will lose between £25,000 and £50,000 as a result of these changes, and the Forces Pension Society has emphasised that some former military personnel who were injured in action will lose up to £200,000. As the Minister said, the Secretary of State has the right to set any indexation level in law, but I think there is a moral obligation to abide by the commitment given over decades that the link should be with RPI, because the link with CPI will undermine the pensions that people are paid. The issue of retrospection was raised. People feel that they are having their pensions cut retrospectively. There will be a debate about what is the appropriate index. My view is that CPI is not the right index. I urge the Government to introduce the reforms to CPI as rapidly as possible. Pensioners face the threat of losing significant sums of money. They must not do so. The judgment in the courts was very clear. The objective of—