I am sorry, but much time has been taken up by the important contributions of other Members and I know that the pensions Minister wants, rightly, a reasonable amount of time to wind up this debate on a Bill of which he is the architect.
I have described the Bill’s context, but what is the detail? Even on its own terms, the Government’s case demands testing. First, the Government claim that the Bill will simplify pensions, thus encouraging individuals to save privately on top of their flat-rate state pension. My hon. Friend the Member for Aberdeen South (Dame Anne Begg) and the hon. Member for Banff and Buchan (Dr Whiteford) have noted the complexity of pension reforms generally and of the transition process in particular. Put simply, we will have two systems running in parallel for the next 30 years. That is not a case against the reform, but it is worth considering when we are thinking about the simplicity of this pension proposal.
Secondly, the Government claim that the Bill will substantially reduce means-testing, but the DWP’s own impact assessment reveals that means-testing will be reduced by just 4%. Any reduction in means-testing is welcome. There is no debate about that. Government Members must recognise that pension credit was a necessary and significant reform to reduce pensioner poverty and Opposition Members must accept that reducing means-testing is a good thing. The question is by how much means-testing is being reduced.
Thirdly, the Government claim that the Bill is cost-neutral, but we know that billions of pounds will fall into the Treasury coffers every year because of the increased national insurance contributions in both public
and private sector defined contribution schemes. That point was made eloquently by my hon. Friend the Member for Glasgow North East (Mr Bain).
Most importantly, the Government claim that the Bill will encourage saving. I can only refer Government Members to the analysis of the hon. Member for Warrington South on the failings of the private pensions industry. The incentive to save is important, but I say again that we must look at what people are saving into. [Interruption.] There is no point in Government Members laughing at me. They should speak to their colleague, who set out clearly the problems with the private pensions industry.
More widely, the Government claim that the Bill is fair. However, we have to be aware that the fast-tracking of the single-tier state pension has created steep cliff edges and inequities, to which a number of my hon. Friends and other hon. Members have referred. The Government’s pension changes have consistently hit working women. They have denied more than 1 million women the ability to build retirement savings via auto-enrolment. Now, their flat-rate pension will short-change 700,000 women. My hon. Friend the Member for Inverclyde (Mr McKenzie), who is not in his place, referred to 600 women in his constituency who will not get the new state pension, while a man of precisely the same age will.
I will give the Minister a case study. Catherine Kirby is nearly 61 and was born on 1 October 1952. She has worked for 41 years that qualify for national insurance contributions. At today’s rate, her basic state pension is £110 per week. She receives £20 in SERPS and S2P, so the total amount that she gets each week is £130. That is £15 less than the single-tier amount will be. Catherine had to leave school at 16 because her parents could not support her any longer. She had caring responsibilities and in later years, due to health constraints, had to reduce her hours of work and her already low income. She is unable to afford a private or other pension arrangement and is unable to defer taking her state pension as she has no other income. She has chronic, deteriorating health conditions. Every pound is important to her, as it is to many women close to retirement.
That is the personal story behind the rather abstract 700,000 women to whom Ministers refer. Catherine simply asks to receive the improved pension that a man of the same age will receive. We accept that there are many significant advances in the Bill, so in that spirit of co-operation, I ask the Minister to look again at the issue of women such as Catherine.
The Work and Pensions Committee raised the issue of those who are close to retirement and who had planned to retire based on their partners’ contributions. Those people face a difficult transitional situation. We believe that the Government should consider offering those individuals something along the lines of the 15 years’ transitional protection that the Select Committee suggested.
Another issue is the rise in the national insurance contributions required to get the full state pension from 30 years’ contributions to 35 years’ contributions. One of the many excellent things that the previous Labour Government did was bring down the years of contribution to ensure that there was greater eligibility for the full state pension. We ask the Government to make up the
difference, especially for those who are close to retirement and who have had letters saying that they need only 30 years’ contributions. From the look on the Minister’s face, he is not keen on that idea, but I ask him in a spirit of constructive engagement to look at that matter.
Another critical aspect of the Bill that has not received enough attention this evening concerns what the abolition of the second state pension will mean. The hon. Member for Rochester and Strood explained that he is now convinced of the merits of the Bill because it is not redistributive, but it would be worth his looking at who are the losers from the abolition of the second state pension. For many people in private sector employment, on both low and higher earnings, the abolition of the second state pension means losses. More generally, Government Members might consider that one way of looking at the new pension scheme is that it puts a cap on state pension savings because no one can get more than £144 a week. Previously, under the second state pension one could get significantly more than that.