Pensions Bill

There is no discrepancy. If someone is entitled to a citizen’s pension and has paid their taxation, of course they should be entitled to the uprating. The hon. Gentleman cannot, however, justify the Government’s proposal under which a British pensioner living in Canada will in future have their pension frozen, whereas a British pensioner living in the United States will get an earnings uprating. Is the Secretary of State happy about making an existing injustice even worse through the restoration of the earnings link? I shall make progress, as other Members want to speak—[Interruption.] I hear demands for me to raise other points. If my hon. Friend the Member for Solihull (Lorely Burt) catches your eye later, Mr. Deputy Speaker, she will want to raise some of the issues and concerns about women and carers. The Government could go further on some of those points. I welcome the intervention of the hon. Member for Colne Valley, who picked up on one anomaly that may arise. I also hope that the Minister for Pensions Reform will comment on the issue raised by the hon. Member for Runnymede and Weybridge about the money from scrapping contracting-out of defined contribution schemes and what it will be used for. That is an extremely important question. The Secretary of State raised the issue of affordability and the price that we ought to pay for getting the pension system right. Our contention is clear—the Government are building on an insecure and sandy foundation, which will undermine the personal accounts scheme. In that respect, our argument is exactly the same as the Conservative party’s, except that we are taking it to its logical next step. We are saying that something should be done about it, rather than simply aspiring, as those on the Conservative Front Bench have done, to finding some money to do something about it in 20, 30 or 40 years’ time. On affordability, I understand that the Secretary of State must operate within the plans laid down by the Government. It is notable that the Government are seeking to deliver pensions reform while cutting state pensions share of GDP. It is no good the Secretary of State shaking his head—that is precisely what his figures show. That is why we have such a problem with means-testing. The Secretary of State needs to pick up on two issues. As he knows perfectly well, we would introduce a citizen’s pension using the offset method at about 0.4 or 0.5 per cent. of GDP. That, of course, is a significant amount. The issue, however, is what the consequences would be of not finding the money, over a period of time, to improve the basic state pension. If the consequences are that the entire pension reform programme is undermined, spending such money would be sensible. Had we asked the Secretary of State, who was a Health Minister for a considerable period, to comment in 1996-97 on what increase in expenditure would be needed to deliver a decent NHS, he would have been constrained in his answer by the limited commitments made by the then shadow Chancellor. If any of his hon. Friends had suggested that the share of GDP spent on health should increase by 2.3 per cent. over 10 years—five times the amount that we are talking about for a reform of state pensions—he would have regarded such a proposal as idiotic. However, that is what has happened. The Government are spending £65 billion more in cash terms than in 1996-97 on the NHS, and £50 billion more in real terms. Anybody can seek to influence the debate and scare ill-informed opinion by waving large numbers around. However, over time, Governments who seek to make a priority out of particular areas of expenditure can do so, as the Government’s record on the NHS has shown. If the Government want to find some savings to improve the state pension architecture, I hope that they will adopt exactly the proposal suggested by the Select Committee on Work and Pensions—with the support of the excellent hon. Member for Aberdeen, South (Miss Begg)—and establish a commission to look into the reform and sustainability of public sector pensions. The current feeble proposals for reform mean that a Government who propose to cut the share of GDP going into the state pension architecture over the next 15 years are miraculously finding the money to raise the share of GDP to be spent on public sector pensions by 50 per cent. Finding the money to spend on public sector pensions before finding the money to put into the basic state pension architecture indicates a bizarre set of political priorities. If the Minister wants to find money for his reforms and make the pensions system work, he should consider reforming public sector pensions and adopting the Select Committee’s proposal. Ultimately, the Government must decide whether or not the pension reforms will work, and the biggest obstacle to their successful operation is the extent of means-testing. If the Government do not take account of shared concerns about that problem they may find that while, as in 1975, there is a loose consensus on the principles of reform, it is likely that in 20 or 30 years we shall be looking at a set of reform proposals that have failed to deliver on their basic objectives.