Social Security

I welcome the chance to debate the orders before the House, which, like Conservative Members, Liberal Democrat Members will not seek to oppose. In debates on this order in recent years, Members have complained about and discussed in some detail a perceived lack of overall strategy from the Government on issues relating to benefits and pensions. This year, with the welfare reform Green Paper and the second report of the Pensions Commission, it is fair to say that debate on the future strategy for pensions and benefits finally seems to be taking off. How far it will get off the ground, however, remains to be seen in the coming months. As a result of the orders, the UK basic state pension will be increased from £82.05 to £84.25. That is still well below the poverty line, and well below the level of means-tested benefits, such as pension credit, which, as a result of the orders—assuming that they are passed, and it sounds as though they will be—will be £114.05 for next year. The Government’s own figures, to which the Minister referred, show that 20 per cent. of pensioners in the United Kingdom still live in relative poverty. About 1.7 million are not claiming the pension credit—mentioned by the Minister, among others—to which they are entitled. Moreover, figures released last month by the Office for National Statistics suggest that about 2 million more pensioners are not claiming the council tax benefit to which they are entitled. I should like to know what further efforts the Government will make to promote take-up of those two benefits. While the minimum income guarantee will increase by 4.2 per cent. in line with earnings, pensions will increase by only 2.7 per cent. in line with prices. Given the lack of take-up of some benefits, including pension credit, that approach means a continuing increase in the relative poverty experienced by the poorest pensioners. It should also be borne in mind that if the Government maintain their current policy, means-testing will extend to about 70 per cent.—some say 80 per cent.—of pensioners by 2050. Owing to the structure of the pension credit system and the extension of mass means-testing, which was mentioned earlier, there will always be a group who fail to take up means-tested benefits. The system is imperfect, and that is one of its chief flaws. The more people depend on means-testing, the larger will be the group who are left in poverty through non-claiming. The growth in means-testing, which is not altered but perpetuated by the orders, also makes the benefits system more complex and gives people a powerful disincentive to save for themselves. Last year, more than 50 per cent. of people of working age made no pension savings for themselves, relying almost entirely on their partners or the state to support them in their retirement. That is why the Liberal Democrats welcome many of the recommendations in the second report of the Pensions Commission under the chairmanship of Lord Turner. We agree with the report’s basic analysis and its long-term vision of the pensions system. We want to work with all parties to build a consensus based on Lord Turner’s proposals. One of the jobs that I did before my election was working for the Britain in Europe campaign, which promoted British membership of the European single currency. There are certain worrying parallels between the Government’s approach to pensions and their approach to Europe. The Minister recently announced five tests that he wishes to apply to pensions—there were five tests relating to the euro. The Minister told us earlier that the Government were promoting a great national debate on pensions—such a great national debate on the euro was promoted by the Prime Minister and, indeed, the Chancellor. Ultimately, the euro fell through the chasm between No. 10 and No. 11 and was kicked into the long grass, to remain there for many years to come—probably much to the appreciation of some Conservative Members.