Pensions Reform

I do not accept that, because the White Paper confirmed that we would continue to uprate the pension credit in line with earnings beyond 2008. That has been a welcome decision. As I shall point out again later, that decision alone will ensure that up to 500,000 pensioners will not end up falling into poverty. It is not true to say that there is nothing for today’s pensioners. These matters are addressed by my right hon. Friend the Chancellor during the course of his annual review of public spending in the Budget. In the remaining years of this Parliament, there will be plenty of opportunity for the Government to ensure that we do not forget the needs of today’s pensioners, but the White Paper was very much about the future and long-term reform. It is not acceptable for us to duck the long-term challenge of reform, and we have tried to avoid doing so. When we came into office, we could have restored the link between the state pension and earnings, as many people were urging us to do, but if that had been our policy, 1.5 million more pensioners would be below the poverty line today. Instead, since 1997, we have spent three times as much on pensioners as it would have cost to restore the earnings link. We have targeted the bulk of that extra investment on the poorest pensioners, which was entirely right. Compared with 1997, we are now spending more than £10 billion extra each year on British pensioners. Almost half the spending is going to the poorest third. Two million pensioners have been lifted above the poverty line and, for the first time in a generation, pensioners are less likely to be poor than any other group. It is simply not true, as some have said, that progress is not being made in tackling poverty among the retired. In our second phase of reform, we tried to address the loss of confidence in the private pensions market, to which the Conservative amendment correctly refers. That included dealing with the pensions mis-selling scandal and the impact of the falling stock market on occupational pension schemes. In 1997, fewer than 2 per cent. of pension mis-selling cases had been satisfactorily resolved. By the end of 2002, more than 99 per cent. of consumers with mis-selling claims had been compensated, with total compensation reaching £11 billion. The Pension Protection Fund and the pensions regulator are today helping to respond to the problems experienced by those in defined benefit occupational schemes and acting to boost security for scheme members. The significantly expanded financial assistance scheme, which we announced last month, offers a new prospect of help for those who have lost the most when the pension schemes of insolvent employers have been wound up.