Pensions Bill

I beg to move, That the Bill be now read the Third time. The Bill implements the most ambitious reform of our pensions system in modern times. It provides the basis for a sustainable and affordable system that strikes a new balance between the responsibility that Government have for retirement and the responsibility of individuals and their employers. It addresses past inequalities and inadequacies, and embeds in our pensions system the crucial values of fairness and simplicity. Above all, it is based on the foundation of consensus. We have an opportunity to send out a signal to people listening to this debate and reading it in the future that the Bill received a Third Reading on the basis of consensus and agreement on the direction of travel in our pension system and, in particular, on giving people who are putting their money away for the future greater certainty that the system will endure and can be relied on. I wish to take this opportunity to thank the many individuals and organisations who have played their part in the Bill’s passage. I particularly thank all the members of the Committee for their good humour and dedication to our proceedings. I also wish to thank the two Chairmen who presided over the proceedings. Of course, I thank my right hon. Friend the Secretary of State for Work and Pensions for his support, and the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt), who led on many clauses in Committee. I also wish to put on record my appreciation—I am sure that it is shared by all my hon. Friends—of my predecessor, my right hon. Friend the Chief Secretary, who played an important part in the early formulation of the Bill. On a personal note, I particularly wish to thank my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks), whose support and wise advice throughout the Bill’s passage has been invaluable. Finally, I wish to thank the Bill team, which has done a fantastic job, and all those in my Department who have worked on the Bill. What will the Bill do? It comes after 10 years of progress in reducing the poverty that we inherited and that had all too often become associated with old age. Since 1997, 1 million pensioners have escaped from relative poverty, and more than 2 million from absolute poverty. We are spending more than £10 billion—or about 1 per cent. of gross domestic product—more on pensioners than we would have had we continued the policies that we inherited in 1997. As a result, pensioners’ incomes have grown roughly in line with those of people in work. In effect, they have tracked earnings over the past 10 years. For the first time in a generation, therefore, pensioners are less likely to be poor than other groups in society, even though they are not in work and even though people who are in work benefit from increases in earnings. That is a remarkable achievement. Earlier this afternoon, the hon. Member for Eastbourne (Mr. Waterson) said that means-testing was a cancer. I do not agree: on the contrary, it is the generosity of the pension credit system that has enabled us to achieve such an improvement. It must be accepted that mechanisms such as the pension credit system must be introduced if we are to reduce poverty. After all, that is why the Conservative party has supported the uprating of pension credit in line with earnings that will be guaranteed by this Bill. The Government have an ambitious vision, and it is one that makes a clear break with the past. Conservative and Labour Governments in the 1980s and 1990s pursued a voluntary approach to retirement provision. I am not trying to score any political points, but the link between earnings and the basic state pension was broken in the early 1980s and, for many years, people—including people in the Labour movement—campaigned for its restoration. However, that was resisted by both the Conservative and Labour parties, because it was not possible to make a formal commitment to a long-term link between earnings and the basic state pension without making it clear how that could be afforded. There would have been no point in talking about plans to restore the link if it was not possible to tell pensioners how that would be done. It is the hard choice at the heart of the Bill that will make the Government’s approach affordable. Because we have raised the state pension age, we know that it will now be possible formally to restore the link between earnings and pensions, in a way that is both sustainable and affordable. Moreover, we will not place an unfair tax burden on our children and grandchildren as we arrange a more generous retirement for ourselves.