Pensions Bill

My Lords, it is a great pleasure to follow the noble Viscount, Lord Trenchard. Estimations of the Bill have ranged from it being not the worst the Government have ever brought forward to a 95 per cent approval rating—although I think the noble Lord, Lord Turner, had his tongue in his cheek. This has been a well argued, interesting debate. I have enjoyed participating in it, and I have learnt a lot. I look forward to the remaining stages. It is an important Bill that will set the scene for the long term—not before time. We are lucky to have not just the expertise in this House, of which we have taken advantage this afternoon, but a great deal of expert knowledge in the industry in the United Kingdom. We should be grateful for that, too. I declare an interest as a governor of the Pensions Policy Institute. I have been thinking about these things for some time. The climate in which the Bill has been introduced is important. The noble Lord, Lord MacGregor, said that you must try to achieve a culture and atmosphere in which positive thinking can be developed, because the industry has experienced difficult patches, to put it mildly, over the past few years. I hope that the Bill will begin to rebuild the confidence that is necessary, to which the noble Lord, Lord Skelmersdale, referred. Re-establishing confidence is as important as taking the long-term view. Some important threads have come through the debate and will repay careful study by the House, including issues such as the imbalance between the government-provided, unfunded public-sector schemes. One in three speakers today rightly referred to the need to review that. I hope that the Government will accept that there is still a long way to go in establishing the long-term fairness needed. That anomaly is increasingly obvious to those who know about these matters. That was a clear message from both sides of the House. We look forward to continuing that debate, although it is not technically part of the Bill. We should acknowledge some of the Government’s achievements of the past 10 years. When I was chairman of the Department for Work and Pensions Select Committee in another place, in the previous two Parliaments, the Government’s work on pensioner poverty in particular was acknowledged as essential considering the position that they faced on coming to power 10 years ago. Means testing was an important and quick way of delivering some of the help necessary in the short term. I agree with the observation made today that means testing has become part of the long-term problem. I listened with interest to the important contribution of the noble Lord, Lord Turner. I accept his point that there must always be a trade-off and there will always be a degree of means testing in any system that can be foreseen in the near future. However, he suggested that continuation of means testing for 30 per cent of people by 2050 was acceptable. I am not sure about that; I do not even know if the estimates are robust. I am not a statistician or an economist, but I cannot fathom how the Government have arrived at the figure of 30 per cent. We may have to live with it, but it is rather high. I would feel more confident if, during the passage of the Bill, the Government were able to back up that estimate with more robust reasoning and statistical analysis. I, for one, would be grateful for that, because it is a key issue. That will be a feature of this debate for the next 30 or 40 years. For the first time, the Bill seriously tries to integrate the public and private sectors, with provision made on top of that of the state sector. I agree with my noble friend Lord Oakeshott—noble Lords would expect me to say that, anyway, but I say it also as a governor of the Pensions Policy Institute—that the citizen’s pension is a much cleaner way forward. That policy should be developed, and the Bill heads in that direction. With a little work we may improve it as the House wants. There is a feeling that the Government should go further and faster, and I hope that we encourage them to do that in Committee. Everyone anticipated that the noble Baroness, Lady Hollis, would make a powerful speech about women. It will repay careful reading, particularly the example that she gave at the end, as the noble Baroness, Lady O’Cathain, said. We are trying to achieve an income of £145 per week, in today’s prices, for pensioners by 2050. However, I have always been interested in what constitute modest but adequate income levels. We must not forget that the minimum standards used by most of our European partners in calculating what it costs to live as a 75 year-old or an over-65 year-old are not the same as ordinary retail price index calculations for other members of the population. Even if we achieve an income of £145, a goal that I want to reach as fast as anyone else, perhaps we should examine some of the experience and practice regarding minimum income standards in other European countries. There was another thread with which I identified strongly. The Second Reading prize for propaganda coup of the day goes to the Resolution Foundation by a wide margin. It made an impact on the contributions of the noble Baroness, Lady Greengross, and many others, who referred to the need to obtain not just information but advice. The foundation’s clear proposals resonated throughout the debate, and I hope that the Minister will look at them carefully. For personal accounts to do the job I hope they will do, the issue of generic advice must be properly addressed. My noble friend Lord Oakeshott mentioned the work done by Steve Bee and Scottish Life. The noble Baroness, Lady Turner of Camden, mentioned the 650,000 who might fall out of the scheme withoutany savings, as a result of wrong and unsuitable advice at the outset. It is unacceptable that 650,000 benefit units—to use the department’s rather ugly characterisation—should suffer that kind of loss. I hope that there will be further consideration of that. The current Thoresen review is welcome; we will have access to the report at the end of the year. I hope that it will be a foundation on which we can build. The noble Lord, Lord Fowler, said that he had anticipated in 1986 the demographic surge that we experienced. I was around at the time, and a surge was identified, but the noble Lord, Lord Freeman, was right to say that suddenly, out of the clear blue sky, there came a level of demographic change that I was certainly not expecting. I do not know where the actuaries were when all that happened. I accept the observation by the noble Lord, Lord Fowler, that it was a known dimension to the problem, but we did not anticipate the extent to which it landed on us all. As a result, people started to panic. We really need to try to deal with the see-saw of estimates more sensibly in the longer term. Demographic change will have a profound effect not just on DWP issues, health and carers, but on education and transport. The noble Baroness, Lady Greengross, rightly referred to the frightening disparity between the life expectancy in Glasgow and that in Kensington and Chelsea. These will be issues for the Government during the rest of this Parliament and beyond, because inequality and social mobility are, rightly, climbing up the political salience index. Some of these issues will have to be dealt with urgently in this Bill because they will take a long time to fix. I was pleased that reference was made to those issues. Everyone has recognised the debt we owe to the noble Lord, Lord Turner, and his two fellow commissioners. The most inspired thing that they did was to go way outside their brief. Good for them, because if they had not done so the outcome would not have been worth a tenth of what they did. As your Lordships know, the noble Lord has a great deal of style. On page 173 of the first report, a wonderful footnote to table 5.1, on personal assets in the private and public sectors, reads: "““Correct to the nearest £50 billion””." No cheapskate is the noble Lord, Lord Turner. It reminds me of the old Highland acronym ATHINE, meaning ““Ach to hell, it’s near enough””. Before I dieI want to have a table that is correct to the nearest£50 billion. I think it has immense style. Perhaps I should go to Zimbabwe. Means testing has been a cardinal thread throughout the debate. I hope that the Minister will clarify the reasoning behind the estimate of 30 per cent as the proportion who will continue to be means tested by 2050. The noble Baroness, Lady Hollis, and the noble Lord, Lord Howarth, mentioned the issue of self-employed people. I expected it to feature more in today’s debate but we must not forget about it. S2P will not work for self-employed people. It is not adequate and is too complicated. I have never been able to work it out for myself, even though I have been looking at these matters for longer than I care to remember. I hope the Government will address this issue. It has been an extremely good debate on a very important Bill. I do not know whether this is not quite the worst Bill the Government have ever brought forward or whether it gets 9.5 out of 10, but there has been a consensus today that there is scope for improvement in Committee, and I look forward to contributing to that.