Pensions Bill

My Lords, I should say first to the noble Lord, Lord Skelmersdale, that the drafting of the amendment was very much a joint effort between me, my noble friend Lady Thomas and the officials of the House, who have been very helpful. The amendment has been carefully constructed. I thank the noble Baronesses, Lady Hollis and Lady Turner, for their support in principle, but the answer to their points are the striking figures quoted by the noble Baroness, Lady Hollis. They show how amazingly low the current level of knowledge is with the existing set-up. I must say to the noble Baroness, Lady Turner, that it is all very well saying that TPAS is available, but the problem is that this is the present situation and the information is clearly not getting through. These responses and those of the Government suggest that the Government do not begin to appreciate the scale of the problem. It is not a question of slightly stepping up a gear; we are dealing with 10 million people, many of whom are, as we know, very unsophisticated. That is why we believe that something much more substantial and radical—a one-stop gateway, if I can put it like that—is required. Of course there are many good individuals doing different kinds of work, but they are not getting through to people now and they certainly will not get through when 10 million are involved. I do not think that experts such as the noble Baronesses or the Government have any concept of how big the problem is going to be. We say clearly from these Benches that it is wrong to auto-enrol vulnerable groups into what for some of them will be a pay cut—let us be quite straightforward about that—without auto-enrolment to face-to-face advice. Of course, auto-enrolment means that there will be an option not to enrol; it does not mean that you have to have it and many people will not want it. However, the network must be in place. By making sure that at least the most vulnerable groups—research by the PPF and others shows that the over-50s are most at risk—have in place a serious framework of advice, we know that things will happen. The noble Baroness, Lady Hollis, asked how long we had to do this and how much it would cost. We have four years if the Government start facing up to it now. On my rough figures, I think that the people who are auto-enrolled will be paying around £5 billion a year of their pay into this scheme. In particular, the over-50s will be paying in something approaching £1,500 million a year. Those are enormous sums. Are we seriously saying that the money cannot be found to fund a provision that we suggest is likely to cost around £100 million a year? Just think about those numbers. I am disappointed that although the Conservatives feel that means-testing is a problem and they do not quite like this approach because of their concerns about public expenditure commitments—I wish that we could engage and talk about how it could be done—the fact is that the amendment has been deliberately drafted so that it does not specify the method of paying for it. If the amendment is passed, it would be open to us to ask industry for a contribution. We are saying that the Government, in bringing in this legislation, must make a commitment to auto-enrolled advice, particularly for vulnerable groups. It was bad enough even before the desperate credit crunch, which is clearly not going to go away any time soon, but when two-fifths of all households have negative monthly cash flows and with pension saving virtually down to nil—the squeeze has basically destroyed pension saving at the moment—it is essential that we do not start off personal accounts on the wrong note. If people, particularly the over-50s, were to find that they were being ripped off after a year or two—as quite a few of them will—that would be the worst possible start for personal accounts. I ask the House and the Government to face up to the fact that a much more substantial commitment to providing advice through a single gateway—a one-stop shop—is essential. The exact way to do that is not sacrosanct for us. We feel that Citizens Advice is the right base because it has a trusted name that people know. I say with great respect to the Pensions Advisory Service that if it carried out an opinion poll I would be interested to know how many people had ever heard of it. It is important to use a name that people know, to build on that and to work around it. I am afraid to say that last week’s Pensions Minister, Mike O’Brien, displayed a very cavalier attitude. What a way to run a Government and a long-term policy. However, we are delighted that our own Minister is now more closely involved. The Government will run the serious risk of derailing the pensions consensus if they persist in their attitude that there is not a serious problem and in their piecemeal approach to giving people proper advice on the toxic interrelationship between debt, means-tested benefits and what is now looming as a pay cut for many people. I warn the Government that we shall not stand by if they do not move on this issue.