My Lords, by tabling and moving these two amendments my noble friends have done the Committee in general and the Minister in particular a favour by creating an opportunity for him to expand on what his right honourable friend the Pensions Minister was able to tell the House of Commons about Clause 3. Despite the fact that my noble friend Lady Turner’s amendment is to Clause 2, I think that most of the issues raised can be dealt with within the context of Clause 3.
The provisions of Clause 3 set out a mechanism for calculating the full rate and the reduced rate of the single-tier pension for those whose contribution record commences post 6 April 2016. As we have already established, that does not actually set out in monetary terms the full rate; and as much of Monday’s debate made clear, that is at the root of some nervousness, not to say anxiety—or, on the other side, a possibly optimistic expectation—on the part of future pensioners, a state which, rightly, we anticipate will heighten as we approach these provisions’ implementation date.
Many are concerned as to what the single rate will be, whether they will be worse off as a consequence of change versus their expectations of the continuation of the status quo, and whether the actual rate will keep the new single-tier pension rate above the level of the pension credit sufficiently for it to prove an incentive to save, which is the relevance of my noble friend Lord McKenzie’s point, based on his characteristically forensic examination of the paperwork that is before us, and picking up this key point which instructed much of the debate in the House of Commons on these matters: the degree to which a prime objective of this policy—that is, to reduce in the longer term dependence on means-testing—will in fact be achieved by the full implementation.
In addition, people need some predictability of future pension arrangements to enable them to make appropriate decisions to prepare for their retirement, confident that they will live up to society’s expectations of them now and avoid financial difficulties in life and a life of poverty. My noble friend Lord Whitty described the central issue as whether there could be certainty that this figure would not disappoint people’s expectation to such a point that they would fail to support the policy. By the device of these amendments, my noble friends have created an opportunity for the Minister to engage with these challenges.
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His honourable friend the Pensions Minister disposed of the whole of Clause 3 in 14 lines in Committee in the House of Commons. We expect, not unreasonably, that there is a lot of ministerial briefing waiting to be deployed that has not yet been used and which may engage with some of the issues that concern us. The only point that the Pensions Minister made in those 14 lines, other than reference to the mechanism set out in the Bill, is that the Government have said that the full rate of the single-tier pension,
“will be more than the level of the guaranteed credit”.—[Official Report, Commons, Pensions Bill Committee, 2/7/13; col. 144.]
The Minister will recollect that we spent a significant amount of time on Monday with Members of your Lordships’ Grand Committee trying to tempt the Minister to translate that commitment into some sort of legislative provision. Understandably, he was reluctant to do that, but—understandably, of course—people tried to persuade him to do that because it would be the legislative translation of the undertaking of a promise that is implicit in the phrase used by his noble friend.
As is implied by both these amendments, millions of pensioners will be relying on the rate being significantly above the level of the means test. While we will listen with interest to the Minister's response and the assessment of my noble friend’s amendment, I am interested in the answers to some of the questions created by the nature of these amendments, because they will improve my understanding of the interaction of the existing system with the new system.
I ask a simple question. Does the device employed in Amendment 17 and by inference in Amendment 10 give a full rate that is, as my noble friend Lady Turner says, more than the level of the pension guarantee, and by how much? Is it possible, by a device of this nature, to put a figure on the full rate calculated by this formula? Does this formula translate into something that can in any sense be accurate? Finally, the Minister may not be tempted by this question, but is there any legislative device, whether or not the Government would welcome it, that would set in law the promise implied by his honourable friend the Pensions Minister’s contribution on the Bill in the Commons?