Pensions Speech
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab): In view of the number of Members who wish to speak, I will be as brief as possible. I wish to comment on the proposals as they affect women, and to inform the House of a number of matters that were raised with me and with my hon. Friend the Member for Central Ayrshire (Mr. Donohoe) in a consultation that we held with the five seniors forums in South Ayrshire. A number of strong views were expressed, which I shall put forward on behalf of those who aired them. Finally, I shall refer to the situation of people who have lost their pensions; I have been involved in that issue for a considerable time.
There is a great deal of public interest in the whole issue of pensions, and strong views are held. Contrary to what my right hon. Friend the Member for Birkenhead (Mr. Field) said, we have a once in a lifetime opportunity to reach a consensus that can take us forward. But, unlike what happened in the past, that consensus should not be built on the back of women’s unpaid work, nor on their assumed dependence and reliance on men regardless of what their personal circumstances happen to be. That has not served women well in the past, and as we know from all the statistics, it is totally irrelevant in the modern age and for the future.
Women are individuals in their own right, and they should be regarded as such in the pension system. The fact that they still bear the brunt of the nation’s caring responsibilities means that they should be rewarded, not penalised as they are at present. I greatly welcome the fact that that will be addressed as part of the reform process. Younger women will now be able to qualify for a full basic state pension and will have more income in retirement, as well as benefiting from other measures in the reforms, which will help them to plan ahead for their future—which many of them will spend on their own.
There is a general welcome for the core principles of the White Paper; we have heard that from Opposition Members today. However, there is also a need for much more discussion on the detail. Although the proposals will provide a better platform for pension provision in the future, there is a concern, which many Members have expressed in the debate, that the recommendations contain no immediate benefits for today’s pensioners. However, I have been impressed by the uptake of pension credit benefits among my constituents; it has greatly improved many lives, and many pensioners have told me that they have never been better off.
However, my right hon. Friend the Member for Birkenhead is right to say that we need a consensus on the current proposals. Older women—certainly the pensioners that my hon. Friend the Member for Central Ayrshire and I consulted—are concerned about how long it will take to implement some of these measures. They are impatient about the long time scale; they believe that the link with earnings should be restored more quickly, and that that needs to be done sooner rather than later. They cite the fact, as they have often done in my many discussions and consultations with them, that there is a substantial surplus in the national insurance fund that could be used for that purpose. I have never been able to substantiate that in any detail, and I shall be grateful if the Minister for Pensions Reform can make some comments on that this evening, which I can take back to my constituents. There is a frustration about the time scales, and there is a feeling on their part that they are being forgotten in the whole scheme of things.
My constituents recognise that there is a long time scale for raising the retirement age, but they are concerned that as people get older work opportunities become difficult to come by, and health could be affected, depending on the nature of the work involved. They also strongly feel that the rich will be able to retire early because they will have sufficient income, while the poor will be forced to continue working because they will not have sufficient income to retire early. They are also concerned about the current level of pensioner incomes and benefits, particularly as the costs of fuel and council tax are rising. They feel that that is the case now, and that it needs to be addressed now.
The group of pensioners whom we consulted were very pleased with the measures on women and the national pension savings scheme; those were given a warm welcome. But it was thought important that the scheme should be administered at the national level, as employers’ and pension companies’ records in administering pensions are not good; in fact, they are thought to be “terrible”. That is a direct quote; I am putting forward that opinion on behalf of my constituents—although I am not saying that I particularly disagree with it. They feel that the industry and employers have a terrible record in administering pensions, and that that should be done at the national level, with Government involvement.
That brings me to my final and very important point: the position of those who have lost their pensions. In the case of the people whom I represent, that is substantially due to lack of efficiency on the part of the people administering their occupational pensions. As the Minister knows, I have campaigned with my constituents whose pension funds collapsed—and those former United Engineering Forgings workers have been at the forefront of the campaign on this issue, along with trade unions.
As a result, the Government brought in the financial assistance scheme and the Pension Protection Fund in the Pensions Act 2004. Then, on 25( )May, they announced in the White Paper that we are debating today that they will extend the FAS to those who were within 15 years of retirement on 14 May 2004. That will bring the actual pension paid to 80 per cent. for those who were up to seven years from retirement, 65 per cent. for those between seven and 11 years from retirement, and 50 per cent. for those between 11 and 15 years away. To achieve that, the Government are increasing the FAS funding from £400 million over 20 years to £2.3 billion. There is dispute about the actual percentages involved; I have quoted the Government figures. As my hon. Friend the Member for Sunderland, South (Mr. Mullin) said, one of the problems with this whole issue is that different figures are being bandied about by different parties. Some are disputing the Government figures, and we are not getting substantiation, which is leading to those involved becoming further disillusioned.
Mr. Nigel Waterson (Eastbourne) (Con): Does the hon. Lady agree that one of the problems is that the Government talk about percentages of what they call the core pension of those individuals—that is a new concept in the pensions world, so far as I am aware—and that in most cases the core pension in no way represents the pensions they could and would have expected if their schemes had not got into difficulties?
Sandra Osborne: I agree that it is alleged that the80 per cent.—in common with the other percentages that I have quoted—is not 80 per cent. of 100 per cent. of what such people would have received. I am raising that matter to seek clarification from the Minister.
Stewart Hosie (Dundee, East) (SNP): The hon. Lady will be aware that one of the problems with the financial assistance scheme is that it does not kick in until a pension scheme is fully wound up, which can be delayed for many years simply because the people administering the scheme cannot find one or two of its members. That is causing a great deal of worry for people who are due money from the FAS. Will the hon. Lady join me in encouraging the Minister to look at that and to find a remedy for that particular fault with the scheme?
Sandra Osborne: I am aware that there are genuine difficulties in identifying all those who are eligible for the scheme, but that would be the case whatever scheme the Government—any Government—introduced. But I do believe that the Government are taking steps to try to improve the scheme’s efficiency. The number of people being paid has increased significantly, but I agree that there is a problem and I encourage the Minister to look at it.
I recognise that the Government have made significant progress in providing assistance, but as we all know and as we are discussing today, serious gaps remain. For example, it is perfectly possible for someone who started in a scheme at the age of 21 and who is now 45 to get nothing, even though they have paid in for 20 to 25 years. The Government have made it clear that the financial assistance scheme is not a compensation scheme and that they do not accept liability; the money has been targeted at those closest to retirement. It is certainly true that those closest to retirement will be in the most difficulty, because they have no time to make up the shortfall. But we all know that it will also be difficult for those aged 45 and over to make up the years that they have lost—years for which, in any case, they paid for through deferred wages. They have already paid that money and they feel very strongly that they are entitled to a return on it.
The Minister for Pensions Reform said in last week’s Westminster Hall debate that of the 125,000 people affected, about a third would qualify for the scheme, a third would not qualify because their loss was less than £520 a year, and a further third would not qualify because they are not within 15 years of retirement. Of course, there is also a sliding scale even for the third who will qualify. The Minister has been very candid about the reasons why the arrangement has been made in this way. The scheme is cash-limited, and although the Government have been able to extend it significantly, which we all welcome, the amount available is not sufficient for all 125,000 people. The money has therefore been targeted in the way that the Minister felt most appropriate to meet the greatest need, which is perhaps understandable. But the crux of the matter is that a difference of opinion exists as to whether these workers have been treated unfairly and are entitled to redress, or whether they are entitled simply to assistance, welcome though that may be.
Long before the ombudsman reported, there was a strong view—certainly among Labour Back Benchers—that an injustice had been done, and calls were made for the Government to correct it. Successive Secretaries of State, pensions Ministers and even the Prime Minister have recognised the plight of these workers, and the will has been there to do something. It was repeatedly stated that a pension promised should be a pension paid. How much would it cost to keep that promise?
It is clear from today’s debate that there are differences of opinion on how much it would cost to implement the ombudsman’s recommendations. The Minister said that it was valid to consider future costs according to a net present value calculation, which produces a figure of some £3 billion—not that much more than the Government are already putting in. However, the Government have calculated that the figure is between £13 and £17 billion in cash terms, which is the normal way that they express such figures. This is not a question of anybody being conned or of a lack of transparency, and it is very unhelpful to describe the situation in that way.
I am not an economist, as is probably fairly obvious—nor are most of the people who have lost their pensions. To a lay person, there is a very big difference between the figures that have been bandied about, and further explanation of them is required. For example, it has been said that £25 billion might need to be spent to replace Trident. That seems like a lot of money, but so does the £17 billion required for this proposal. Where does such a figure fit into the overall scheme of things? These differences in the figures are adding to people’s frustrations; we need more clarification. Will the Minister agree to meet my constituents and me to discuss them in detail?
Of course, the official Opposition have never at any stage in this debate, which has been going on for four or five years, committed themselves to spending public money to resolve this issue.
Mr. Waterson rose—
Sandra Osborne: If the hon. Gentleman is about to dispute that, I am happy to give way.
Mr. Waterson: The hon. Lady is absolutely right: at no stage have the official Opposition ever committed taxpayers’ money to this issue above and beyond what the Government have already committed. What we have said consistently is that the Government should look at unclaimed assets, which total some £15 billion; they are now doing so—rather belatedly—but for different purposes. This has been our consistent position from start to finish; indeed, I said the same during the passage of the Pensions Act 2004.
Sandra Osborne: I thank the hon. Gentleman for backing me up—I have certainly heard him say that many times before.
James Purnell: But is my hon. Friend aware that those unclaimed assets are not the Government’s money? It is obviously up to the financial services industry to decide how to spend that money, and it has kindly come forward and said that some of it should be spent on community facilities. But even if all that money were spent on the cause that the Opposition mentioned, it would be nowhere near the amount implied by the £3 billion, or £15 billion, figure. It would amount to barely a few hundred million pounds—even if it were our money to spend, which it is not.
Sandra Osborne: I will ask the Minister about precisely that issue in a moment. The Opposition’s reaction to the money that the Government have put in is slightly disingenuous, as they are not prepared to commit any public money themselves.
I recognise why it is difficult for the Government to come up with any more public money, but I cannot understand why the unclaimed assets cannot be used. There is strong support among Labour Back Benchers for the use of that mechanism. My early-day motion 1868, which deals with this issue, attracted substantial support. Some 113 Members—mainly Labour Members—have signed it. The Chancellor has managed to prise money out of the private sector for other purposes; why can he not do so for this purpose? I ask the Minister to pursue that issue.
So far, the Government have responded with what I call incremental benevolence. There is nothing wrong with benevolence—I am all for it—but it is no substitute for justice. Those of my constituents and others throughout the country who have lost their pensions are seeking justice. They feel that promises have been broken, and that trust has been broken.
Two things are clear. First, as many Members have said, this issue will not go away; indeed, two court cases are outstanding. As I have made clear, I am very proud of what the Government have done so far, but I feel that they can and should do more. Secondly, if this issue is not wholly resolved, confidence in saving will not be restored as quickly as it should be. One Opposition Member pointed out that according to Scottish Widows people are not saving, and in my view, this issue has had an influence in that regard. It appears that ongoing publicity about the problems has put many people off saving.
My hon. Friends will not be surprised to have discovered that, as usual, I have not minced my words on this issue. I have stood four-square behind my constituents since day one, and I will continue to do so. I congratulate the Government on what they have done, but I ask them to do more.
