Treasury and Work and Pensions

The number of people living in deep poverty, below 40 per cent. of median earnings, has shot up by 400,000 between 1996-97 and 2004-05, the latest year for which figures are available. If the Economic Secretary thinks that those figures are not right, I would be happy to hear from him. The percentage of children in persistent poverty is unchanged over the same period. That reminds us, if a reminder were needed, that good intentions do not translate automatically into good outcomes. Poverty exists, of course, right across the age spectrum. New Labour boasts of the success of pension credit, and clearly it has lifted several hundred thousand poor pensioners out of relative poverty—[Hon. Members: ““Ah!””] We accept that. That is why we support the new architecture for the state pension system, which includes pension credit. However, the weakness of mass means-testing as a strategy is also underlined. Some 1.5 million pensioners, half of them living in poverty, fail to claim because the forms are too complex, because the process is too intrusive and because they are too proud. The pensions Bill and the White Paper mentioned in the Gracious Speech will not solve that problem and will not address the immediate crisis facing Britain’s occupational pension funds. Duck and weave as the Chancellor might, he cannot escape responsibility for the crisis, as it was he who imposed a £5 billion a year stealth tax on pension funds, accelerating the collapse of final salary schemes in the private sector and causing a loss of confidence, which has almost halved Britain’s savings ratio since he came to office. Some 60,000 pension schemes with 1 million members have begun winding up on the Chancellor’s watch, and the crisis has cost 125,000 people all or part of their pension as their schemes have failed—we heard an impassioned plea on their behalf from the hon. Member for Cannock Chase (Dr. Wright). It has also reinforced the pensions apartheid that increasingly exists between the private and public sectors. Public sector unfunded pension liabilities are now estimated at up to £1 trillion. That is the real crisis, about which the Gracious Speech has nothing to say to those who have saved all their lives, who did exactly as Governments told them to do and who have been left with little or nothing. With breathtaking arrogance, the Chancellor and the Secretary of State have decided in their wisdom that the ombudsman and the Public Administration Committee are wrong, and that the Government will sit in judgment on themselves. This is not about a couple of leaflets, as they would have us believe, but about a systematic weakening of the security of fund members through reductions in funding levels and the ignoring of actuarial advice, all of which was going on while Government information was reassuring members that their money was safe. I am not asking the Secretary of State to write a blank cheque with taxpayers’ money. I am asking him to display a little humility and accept the finding of maladministration by the ombudsman, to engage in the discussion with all the stakeholders, to examine unclaimed assets and residual assets in the failed schemes, and to come up with sensible figures for the net cost of support at different levels. In short, I am asking him to show some leadership in resolving the situation. This issue is a terrible blot on this Government’s record, and risks undermining all the Secretary of State’s attempts to rebuild confidence in the pensions system for the future. The modern Conservative party shares many of the Government’s aspirations on poverty, pensions and welfare reform. As so often with this Government, it is not the aspiration but the delivery that lets them down. They say that it is the thought that counts, but that is cold comfort to people trapped on incapacity benefit, to people living on a pension which is a fraction of what they were expecting and what they saved for, or to people facing marginal tax and benefit withdrawal rates of 80 to 90 per cent. as they go into part-time work. We doubt not Labour’s emotional commitment to tackling these problems, but its ability to deliver. We understand that sustainable social justice can be built only on strong economic foundations. With declining productivity, spending out of control, public debt up 8 per cent. in a single year and our once world-class pension system in tatters, it is clear that the clunking fist is losing its grip. For the Prime Minister, such a litany of failure is a serious dent to his legacy, but for his successor, whose only claim to fame is a claim to competent economic management, it is a disaster. As my hon. Friend the shadow Chancellor said today, when people look back on the Chancellor’s 10 years in office, they will remember him as the Chancellor who failed to prepare Britain to compete in the new global economy; the Chancellor who, by his own fundamental yardstick, has fundamentally failed in his ambitions for the British economy; and the Chancellor who spent a decade dreaming of his future, only to find that he had become the past before he got there. When the people of this country finally lay this Government to rest, the epitaph on the headstone will surely read, ““New Labour. 1997-2009. RIP. So much promised, so little delivered””.