Pensions Bill

Lord Stoneham of Droxford Excerpts

Monday 16th December 2013 Grand Committee

[Baroness Hollis of Heigham (Lab)]

My Lords, I would like to ask a simple question that relates to one of the hopes that some of us had a year or so back. The greatest proportion of those claiming pension credit tend to be elderly widows—when the husband died, the pension died with him—over the age of 80 or 85. I fully understand that to bring all pensions on to this would be a big-ticket item for any Government to contemplate; that is not in doubt, as the previous speaker mentioned. However, what if we were to introduce the pension not just for people reaching pension age in 2016 but for those over 85, and then for the next decade bring the 85s down by a year, with the 65s going up a year, as they will? They would meet in about a decade for men, perhaps slightly later for women. In about a decade or so, virtually all pensions would be covered on an incremental basis. I have not been able to cost that. I was told, teasingly by the Minister in the other place, that he thought it would probably cost half a billion pounds, but whether that was per year or in total was not made clear to me. Have there been any thoughts about how we might progressively increase the coverage?

[Lord Stoneham of Droxford (LD)]

I would like to make three points. I hope that there will be cross-party support but, if we are now saying that the higher pension should apply to everybody, clearly we need to know the cost. I have to ask the question: why did Labour not do this in its 13 years if it does not cost money? The point has to be made. Resentment could build up among those who see younger people coming forward on larger pensions. We know that there is a problem with women in the 1951 to 1953 age group. We have to understand exactly how much this is going to cost. The noble Baroness, Lady Hollis, is absolutely right: it is not necessary for this legislation, but in the future obviously we should look—as the country can afford it—at how we can phase in for various groups of pensioners the higher rate and get rid of means-testing for them. We need to know about the money but we also have to be realistic. You have to start somewhere on this higher-rate pension, and where the Government have tried in difficult circumstances to start is the best that can be done at the moment, I think. Obviously we should look at the future at some stage, once we are aware of the cost and how we can afford it.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I would like to add a more operational note to the questions raised by the important amendment from the noble Baroness, Lady Turner of Camden. She makes a powerful case, but the financial circumstances suggest to me that there is more likelihood of eventually getting into the position that was explained by the noble Baroness, Lady Hollis, than she was suggesting.

The implication of the amendment is that it would extend the single-tier pension to all pensioners. I have some questions about the operational capacity of the system to deliver sensibly some of these significant changes. In the first place, the Green Paper suggested that we should be looking at this by 2017. That has been brought forward; there are obvious advantages to that but it has caused some people to raise questions with me. Some of that is informed by the current controversy about the efficacy of the systems for universal credit, which are of course of a different order in terms of the IT systems. It also has to be acknowledged that the Pension Service has a very good record of implementing some of this stuff; when pension credit came in, it was done in a way that got very high marks from the National Audit Office, as I recall. So it may be that everything is going to be fine, but if the national insurance records are not all clean data then we could be facing some serious difficulties in delivering the payment of pensions on time. There are other operational matters that I am sure are concerning people at Longbenton in Newcastle, as they should be.

Speaking for myself, I would be very pleased to get some kind of assurance at some stage in Committee that with regard to this huge and significant change, affecting a number of very vulnerable households, the department, having regard to the recent reductions in staff and all the other matters, is in place to be able to deliver this efficiently and on time in the way that is proposed.

--- Later in debate ---

I have one slight hesitation about that. That is that at one stage in the debate, the Pensions Minister said: “The problem with a review in this phasing is that if it makes recommendations, there will be an expectation that they will be implemented. If they are to be implemented, that will issue a degree of uncertainty into a system that we have spent a lot of time making much simpler and trying to get certainty into because it is to be the base for pensions income going forward and to encourage saving”. That makes me believe that he may think that a review might recommend change. Why would he deploy that argument otherwise? If he is as certain as the briefing paper that we received and his simple explanation of no confusion suggest that there is no reason for anybody to be confused, they should all just be satisfied that they will be as well off as they were entitled to expect to be.

[Lord Stoneham of Droxford]

With respect to the noble Lord, it is slightly unfair to criticise this document for being so long and then not get the point that the pension for 30 years is £110, and the pension for 30 to 35 years will be £123. That means that somebody is better off. That is the point, is it not? It was unfair to attack civil servants for writing that long brief to make that point, when I am not sure that the noble Lord got it. They will be better off under this system.

I should like to make two other points. If we set it at 30 years now, there is no going back. We might like it to be 30 years, but the fact is that if we set it at 30 now there will be no going back if it does not work out. If we cannot afford it, it will not go up to 35 and we will have to stay with it; whereas, if it is at 35, there is the possibility of review and it could come down.

[Lord Browne of Ladyton]

Clearly, my carefully constructed argument was utterly wasted. I just want to make two points to the Minister, who may well not have been intending to look at me. I am not arguing for 30 years; I am arguing for a review. I was commenting on an earlier amendment, which is not in my name and which I do not support, for a reduction to 30 years, suggesting that it opened up an interesting debate about why it is 30, not 32 or 35. That is not for me to explain. The noble Lord can be reassured that I understand the mathematics, or the arithmetic, on this. I am just arguing for a review for reasons to do with the expectations of people whom I think are entitled to have those expectations.

[Lord Stoneham of Droxford]

I am sorry if I lost the noble Lord’s argument in not realising that he was arguing for a review; I thought he was arguing to reduce it to 30. I think that makes my point, actually: it is easier to have the higher figure to start with and then review it down than to start with something lower that you then cannot afford.

My other point is that the additional contributions are very beneficial in their rate of return. Under the scheme, we are trying to encourage people to save. That is one of its main merits and motives.