When the Minister first came to the House in January with his statement on the Government’s plans for a flat rate state pension, I suggested that the devil would be in the detail and that there would be winners and losers from such a substantial reform. Inevitably, that has proven to be the case. I think we have to give the Minister credit for taking the Bill through its various stages. It is a complex Bill; certainly some of its consequences and implications are complex.
The Minister has decided—with some justification on his part—that he sees a hard and fast wind-up of the second state pension and the move to a flat rate state pension as the best way to proceed. At the same time, the Minister says that the Bill makes private pensions fit for purpose and gives a firm foundation for auto-enrolment. That would be a fair characterisation of the Minister’s comments at Third Reading.
If we reflect for a moment—usually Third Reading is a time to do that—the Minister deserves credit for taking forward the consensus created by the Turner commission, which, set up by the last Government, had three important aspects in particular: to start dealing with the issue of longevity; to start rebuilding the additional pensions savings pillar that decisions of previous Conservative Governments had damaged significantly; and to get a simpler state pension. That is the context in which the Minister has proceeded with his Bill and taking forward that consensus means that he deserves significant credit.
In any Bill such as this, there will inevitably be kinks and things that need to be sorted out, but there is a lack of balance in the Bill. The Minister has been very clear and put into statute everything that will happen in terms of the state pension. In terms of the other side of
the equation—private pensions via automatic enrolment for the 10 million people who are currently going through that process—the Minister says he has to do a lot of things, but a lot of them remain to be done. The Minister is giving himself powers in various areas but without specifying what he intends to do with those powers. I suggest that while we can welcome the move to a flat rate state pension, there will be more work for the House to do in terms of keeping the Minister on the right track regarding how the private pension system interacts in a coherent and comprehensive fashion with the flat rate state pension.
The Minister rather generously suggested that Labour Members had a vision for the private pensions market. He went on to say that he did not agree with it, but it turns out that in one respect, he does. He seems to have come round to Labour’s view on the need to take tough action to cap pension charges. As I mentioned earlier today, it was just over a year ago that he said that the Leader of the Opposition was scaremongering when he drew attention to the problems in the pensions market, yet we have heard the Minister using tough language today on the need to sort out the market, and on having a consultation on a price cap. The details of the consultation will be produced tomorrow, and we await them with great interest. We welcome the Minister across to the side of right and justice on the issue of a pensions price cap.
The Bill has thrown up a number of questions on the two essential parts of the pension system—state pension reform and the pillar of additional pension saving—and many of them have been dealt with effectively. However, questions remain about the pensions market side of the equation and about additional pension savings. Let us not forget that the new flat-rate state pension will not provide most people with the kind of income they will need and expect in retirement. The burden will therefore be on the new auto-enrolment pensions to deliver the necessary additional income. We believe that the Minister still needs to do a significant amount of work on this, either by using effectively the powers he has given himself or by bringing further proposals to the House.
In taking forward the Bill, the Minister has taken significant steps forward in the state pension sphere. There will be losers, however, and he has not said much about them. He has inevitably focused on the winners in the flat-rate state pension reforms. However, we do not oppose the Bill. We believe that the principle of a flat-rate state pension is sensible, but if the Minister really wants both parts of the pension system to interact cohesively and effectively, he will need to act fast to reform the dysfunctional private pensions market.
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