Pensions Bill

I would back the noble Baroness, Lady Miller, against a sore throat any time. We on these Benches support her amendments and I propose to speak mostly to Amendment No. 17, which is tabled in my name and that of my noble friend Lord Kirkwood and is similar in content. It is a very simple amendment that states that the level of prices means the retail prices index and the level of earnings means the average earnings index. These are simple, straightforward, well understood definitions, and we see no reason for leaving wriggle room. The Government—indeed, all of us—claim that simplicity and clarity should be the watchwords in pensions, and this is a simple example of where things can be simple. I am struck by the evidence of David Yeandle of the EEF, who is a practical, experienced and persistent lobbyist on pensions for his members, who are mainly smaller and medium-sized businesses. He says that they are disappointed that, as drafted, the clause gives the Secretary of State almost complete carte blanche to determine the way in whichthe uprating is undertaken. New subsection (8) in Clause 5 states that, "““the Secretary of State shall estimate the general level of earnings in such manner as he thinks fit””," as we have heard. Indeed, the Explanatory Notes let the cat out of the bag, stating: "““In practice this means the Secretary of State will be able to decide which measure or index of earnings growth shall be used for the purposes of earnings uprating””." The EEF considers that the current wording of the clause gives too much flexibility to the Secretary of State when implementing this important element of the package of pensions reform. I cannot see the reason for it. When people are planning their pensions and their future investments, it is very important that they know where they stand. The point of substance that the Minister, James Purnell, made in another place when he was talking about flexibility was that if the Government got into a situation, as has happened under previous Governments, where inflation reached 10 or 12 per cent, we would not want them to be tied in to a position that would make it harder to put that right; that is, he would want to cut again, effectively ending the link with earnings. That is very serious. I was a special adviser to Roy Jenkins in a Government in the 1970s when inflation got to 27 per cent, so I have a rather longer memory than James Purnell. However, with inflation at 10 or 12 per cent, I would not want pensioners to have their link taken away. Why should they be the ones to suffer? It is more than flexibility. If I read this right, the Government are genuinely saying, ““We’re restoring the earnings link, but only for so long as it suits us””. That is very serious, and I ask the Minister to clarify the position and respond to the clear feeling of the Committee that we should know exactly where we stand, and so should pensioners.