Pensions Bill

Tax cuts for older people—the increased age-related allowances. Let me make progress and answer as many points as possible because several important matters were raised. My hon. Friend the Member for Burton (Mrs. Dean) raised the important issue of her constituent who might miss out on extra pension contributions because child benefit had been paid to the father rather than the mother. My hon. Friend has campaigned on that issue resolutely, and I am delighted to be able to tell her that we will address that problem through the Bill. I think that her constituent will retire after 2010, so she will be able to benefit from the new regulations that will define those engaged in caring. Although that will usually mean that the credit goes to the person receiving child benefit, there will be flexibility to address the particular issue that my hon. Friend raised. The hon. Members for Runnymede and Weybridge (Mr. Hammond) and for Grantham and Stamford (Mr. Davies) raised the issue of the cliff edge. We need to remind ourselves of why we are introducing the Bill. We are doing so because at the moment only 30 per cent. of women receive a full state pension, compared with 85 per cent. of men. We want to put that right in the Bill. We could have followed the ordinary way of introducing policies such as these, which is to phase them in over time. If we had done that, however, we would have made progress too slowly—so we decided to bring in the policy in one stage in 2010, at which time 75 per cent. of women will benefit, compared with the 30 per cent. who benefit now. The hon. Member for Runnymede and Weybridge said that he wanted to bring in such a measure retrospectively for everyone and not have the cliff edge, but that would cost £1 billion, which is simply unaffordable. I am sure that he accepts that a line has to be drawn somewhere, and we have to say where that is to be. No one would benefit from his suggestion of phasing in the policy after 2010. The only difference that that would make is that women who would have benefited from our proposed changes would not do so. I understand why hon. Members have raised this issue, but a line has to be drawn somewhere, and 2010 seems to be the right time because before that women will be retiring at 60, whereas the women who will benefit from this measure will be retiring later. We will of course look in detail at the points raised by my hon. Friends the Members for Northampton, North (Ms Keeble) and for Colne Valley (Kali Mountford) about women who are doing two jobs that pay below the lower earnings limit. The problem should be addressed by the reduction in qualifying years to 30, however, and if we were to introduce a separate measure to deal with it, it would be complex for employers and could have consequences for the employment of those on low wages. We would therefore be reluctant to do that. My hon. Friend the Member for Aberdeen, South (Miss Begg) raised the issue of grandparents and we will be happy to look into the matter. It is worth saying, however, that it is possible to designate a grandparent as the recipient of child benefit if both parents are working. My hon. Friend might want to consider whether that is an adequate solution to the problem that she raised. Many Members, including my hon. Friends the Members for Northampton, North, for Aberdeen, South and for Amber Valley (Judy Mallaber), and the hon. Member for Hemel Hempstead (Mike Penning), mentioned carers. We will examine in detail in Committee the solution that has been put forward today—to include the provision as part of the local authority assessment period—to determine whether that would be an appropriate way of responding. Those are the points that were raised about women and carers and I hope that I have been able to address the concerns that some Members have expressed while welcoming the broad thrust of our proposals. Another key part of the debate related to the uprating of the basic state pension, which was raised by the hon. Members for Runnymede and Weybridge and for Yeovil. It is worth remembering that the last time we debated this issue, Opposition Members said that this measure was never going to be introduced. Fortunately, the Bill spikes that particular accusation by guaranteeing in legislation that the link will be restored in the next Parliament. Our policy on this is clear. Our objective is to restore the link in 2012, subject to affordability. However, the hon. Member for Runnymede and Weybridge could not even guarantee that. He could not guarantee that he could support his public spending plans. He could not even answer the point that my hon. Friend the Member for Burnley (Kitty Ussher) raised, to which I shall return later. However, he has less of a problem than the hon. Member for Yeovil. I was adding to my Laws index during the debate, and I shall now tot up the small spending commitments that the hon. Member for Yeovil has made. He is going to try to deal with the cliff edge, and with the issue of people having two jobs that pay below the lower earnings limit. He said that he would deal with frozen pensions—that is another £400 million—and that he would spend 0.5 per cent. of gross domestic product on his citizen’s pension. He also said that he would spend another £1.5 billion on restoring the earnings link immediately. I know that he has a money tree, but his proposals represent a friendly-fire attack on his own shadow Chancellor, who must feel dread every time the hon. Member for Yeovil opens his mouth. Of course, when in Government affordability is the limit of the possible. We have made clear how the proposals are affordable. They are affordable because of the tough decisions taken in the Bill on the state pension age. We are grateful for his and the Conservative party’s support on that issue. Hon. Members, including the hon. Member for Angus (Mr. Weir) and my hon. Friends the Members for Aberdeen, South and for Glasgow, North (Ann McKechin), raised the issue of the effect on poorer socio-economic groups. I understand those concerns. As the hon. Member for Angus said, that issue affects English industrial towns as much as it does other towns. For instance, people in my constituency die earlier than those in richer parts of the country. The right solution, however, is to address the causes: poverty, health inequality and occupational health. We must ensure that there is support for people who cannot work when they are closer to retirement. The wrong answer would be to duck that choice and pursue a policy that we cannot promise to deliver, because we cannot know how it will be affordable over time. The third issue that I want to address was raised by many Opposition Members—means-testing. It is an important issue, and the Bill more than halves the proportion of people who would have been subject to mean-testing. It is worth taking a step back and reminding ourselves what means-testing means in this context, namely, giving more money to poor people, disabled people and carers. The hon. Member for Yeovil talks about reducing the number of people who are means-tested, but 80 per cent. of those people who will get pension credit under our proposals in 2050 will receive more than the £115 under guarantee credit. Does he want to tell us how he will end means-testing? We would be interested to listen, as he clearly failed to answer that point in this debate. The hon. Member for Yeovil’s policy on means-testing fell apart during the debate. At one point, he said that his citizen’s pension would be based on people paying tax. Then he said that it would be based on the number of years for which people had been resident in the country. If so, he will have to have some kind of means-tested support for people who have not been resident for more than a certain number of years. He refused to say whether he would take benefits off people getting more than £115 under our proposals. Half of those people are getting more than £115 because they are disabled or are caring for someone with real care needs. Is he seriously proposing taking money off someone on £170 a week who is caring for a sick husband or wife, so that he can say that he is reducing means-testing? I will give way to him if he will confirm that.