My Lords, I apologise on behalf of my noble friend Lady Sherlock for her absence from today’s Committee. I should explain that she became quite ill over the Christmas holidays and spent part of them in hospital. She is now on the mend but, wisely but reluctantly, as I am sure those noble Lords who know her can imagine, she has accepted the advice of her medical adviser that it is not yet appropriate for her to come back to work. However, she is hopeful that she will be fit to recommence her duties in your Lordships’ House some time next week and hopes to be with us for the next scheduled Committee day. I know that noble Lords will want to extend their best wishes to her for a quick recovery.
I also pray the Committee’s indulgence to express my sadness at the news of the shocking and untimely death of my very good friend Paul Goggins. He was the best of the best. No words can express the sorrow that I feel. I shall miss him a lot, and I just want his family to know that my thoughts and prayers are with them at this very difficult time.
We are now on Clause 5, which, as my noble friend Lady Turner of Camden, explained, deals with the transitional rate of state pension. Once again, my noble friend has allowed the Committee an opportunity for some further clarification and explanation from the Minister. In the House of Commons, the Minister for Pensions, Steve Webb, dealt with this clause in two paragraphs. To be fair to him, it took slightly longer to explain Schedule 1 but most of that legislation was probably, rightly, a paean of praise for the drafting and for parliamentary counsel. It appears that Schedule 1 is a unique piece of drafting and reads logically, simply and straightforwardly. If all legislation were as clear, it would be very helpful.
I hope the Minister will forgive us if we tarry a little in this important provision, given that we do not have a lot to go on from the debate this Bill has been subject to thus far. Clause 5 and Schedule 1 explain how the transitional rate is calculated. My understanding—and if it is not right I am sure the Minister will correct me—is that this rate applies to everyone who, under Clause 4(1)(c), has at least one pre-commencement qualifying year. A pre-commencement qualifying year is one year of national insurance contributions before 6 April 2016 and, for completeness, after 6 April 1978—although I suspect that is not of great relevance. Everyone who has such a pre-commencement qualifying year and who meets the minimum qualifying period will have the foundation amount, which is the higher of either the pre-commencement and post-commencement years added together or the amount already accrued under the old system, whichever is the larger. In short, such a person will get what they would get under the old rules or what they would get under the new rules, whichever is the greater. Thereafter we are working on a maximum of £144 and one thirty-fifth of £144 for each year until they reach the maximum. Over and above that, as my noble friend has pointed out, there comes a point, no matter what age you are, when you cannot accrue any more pension entitlement. It is capped. Indeed, there was some debate in the House of Commons as to whether the pursuit of the word “cap” was appropriate. Interestingly, “cap” is in the schedule itself. You cannot accrue any further pension
under the current system. As with the present system, after 30 years you still have an obligation to pay national insurance but you will be contributing not to your pension but to the whole pot.
Beyond that, we knew—I think until the Prime Minister’s recent announcement on “The Andrew Marr Show” on 6 January—that none of this was guaranteed to be triple locked. I digress a little because I am not entirely sure exactly where we stand with the fact that the Prime Minister took the opportunity to make an announcement on “The Andrew Marr Show” on retaining the triple lock for the duration of the next Parliament. This will provide existing pensioners, I think, and those retiring soon after the implementation of this Bill, with some degree of comfort in the rather unstable financial world we are now living in and I venture to suggest that it was calculated to do so. It was calculated by the Prime Minister to generate that degree of relationship between him and those people.
The Opposition have supported the triple lock since it was proposed by the Government. Maybe the Minister can take this opportunity to tell us if this announcement constitutes a Conservative Party manifesto policy pledge or is it—as I think we could probably, in an inspired fashion, guess that the junior partner in this coalition is unlikely to take a different view—now government policy, issued on behalf of both coalition partners? I apologise if I have offended any noble Lords by my reference to “junior”. Perhaps I will just refer to them as “the other party in the coalition”.
Are pensions within the welfare cap now? People are asking whether the winter fuel allowance and other pensioner benefits will be protected. Is the Prime Minister planning to take from one part of a person’s pension pot and put it in another with no gain? Will the triple lock apply to existing pensions? Will it apply to pension savings credit? Is this within the welfare cap itself? Will the triple lock apply to S2P or are we retaining the uplift? There are lots of questions. I suspect the Minister, who carefully prepares for these things, anticipated a significant number of them.
I will resist the temptation to go back over all the ground of the debate on the triple lock which we could not have because there was apparently no guarantee for it. We now appear to have the best we can expect in terms of a guarantee, bearing in mind what the Prime Minister had to say. Maybe the Minister would be willing to engage with that. Perhaps he could also explain a little more than was in the two paragraphs of the Written Ministerial Statement yesterday about the money that has been captured from the reserve in order to build the IT for the accelerated implementation of these provisions. He may have something further to say that could be relevant to our discussions on this Bill, although this may not be the right time to do it.
To a limited degree, we know about the transitional rate of the state pension. This is an opportunity for the Minister to explain it with a degree of clarity that is always welcome in the official record of debates on Bills. I hope that the Minister will engage with the questions posed by my noble friend Lady Turner in relation to this, and I am sure we shall all be much the wiser if he does so.