Pensions Bill

When the hon. Gentleman is Pensions Minister in 2050, or even in 2040 or 2030, he will be able to deal with that. We have clearly set out a set of policies that we want to make work. The reason why I am slightly reluctant to answer his question—something that he may have spotted—is that it is a question of what is the right balance to reduce poverty. It is not about picking an abstract number out of thin air. For example, as was persuasively pointed out by my hon. Friend the Member for Northampton, North (Ms Keeble), the Front-Bench team could just say, ““We will get rid of council tax benefit and housing benefit.? That would reduce means-testing in retirement by a huge proportion, but they would not want to do that because it would push people into poverty unjustifiably. Therefore, we should all aim to create a policy that delivers the right balance between universal benefits and means-tested benefits to ensure that people do not fall into unacceptable levels of poverty. People will be able to work or care for their whole lives to get to £135 a week, and the Bill will introduce that important change. People can get to that £135 through a full life of caring, and caring contributions will be put on the same footing as working contributions—something that is extremely welcome—but their private savings will come on top of that. Many long-term savers in personal accounts can expect to get returns of at least £2 for every £1 initially invested by the individual. The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) asked whether we could give more definitive projections than that. We will publish further research on the issue, but we will not be able to give definitive projections to people because we cannot tell someone at the age of 22 what their working life will be, any more than we can tell them whether they will be disabled in retirement, whether they will be renting in retirement or, indeed, whether Government policy will have changed when they retire. The hon. Member for Eastbourne quoted the example of someone in rented accommodation. Would he really advise people in 2012 not to save when they are 22, because they thought that they might be renting and relying on council tax benefit or housing benefit in retirement? We have no way of knowing what the policy will be in 40 years’ time. We can all seek together, through the Bill, to create a consensus, but I warn particularly Liberal Democrat Members about looking for a level of certainty that is so great that it makes the scheme impossible. If the Liberal Democrats want to sign up to automatic enrolment, as I believe that they do, they will have to accept that we will be giving people a reasonable understanding of their future, rather than a perfect 20:20 prediction—no one could aim to do that. The large majority of people can expect a good return from personal accounts, but pension credit will provide a safety net of about £119 a week if things go wrong. The key aspect of the reforms is that someone starting off work after personal accounts come in will know that if they work or care for most of their working lives and pay into an account, they will retire on significantly more than the means-tested minimum. The Pensions Commission did not suggest eliminating means-testing and nor does any commentator or party in the House. Instead, there is a consensus that we should have a safety net to prevent unacceptable poverty in retirement, which is what pension credit becomes thanks to these reforms. The proportion of people entitled to pension credit will be reduced to less than 30 per cent. by 2050. There will thus be two main groups of people who will benefit from pension credit: those whose working lives did not turn out as they hoped and were not able to make contributions through working or caring to lift themselves above the means-tested level; and, just as importantly—and inconveniently for the policy of the Liberal Democrats—people who get more than £119 in retirement because they are disabled or caring for someone, or because they have other costs. We teased the hon. Member for Yeovil (Mr. Laws) in Committee to tell us whether he planned to take money away from that second group of people, but I assume that he will continue to duck the question, given that that issue is the fatal flaw in his proposal. We believe that our proposals strike the right balance between universal benefits and means-tested benefits. We are happy to consider any suggestions that Opposition Front Benchers might make, but in truth there are only two ways in which we could reduce the proportion of people on means-testing. The first way would be to increase the basic state pension to the standard minimum guarantee level of £119 a week, which is somewhere near the policy of the hon. Member for Yeovil. However, without making offsetting changes, that would cost £20 billion, or 5p on income tax. If it were not enough that such a policy would be unaffordable, it is worth noting that it would not get rid of means-testing. It would reduce means-testing by only about a quarter, so while £20 billion would be spent, the hon. Gentleman would still have to decide whether to support automatic enrolment because of, for example, the question of housing benefit, or the situation for people who got more in retirement because they were disabled. Perhaps he will tell us whether he would take money off the people whom we have been discussing for so long.