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Session 2006 - 07 Publications on the internet General Committee Debates Pensions Bill |
Pensions Bill |
The Committee consisted of the following Members:Alan
Sandall, Committee
Clerk
†
attended the Committee
Public Bill CommitteeTuesday 30 January 2007(Morning)[David Taylor in the Chair]Pensions BillClause 5Up-rating
of basic pension etc. and standard minimum guarantee by reference to
earnings
Amendment
proposed [25 January]: No. 1, in clause 5, page 5, leave
out lines 32 to 38.—[Mr.
Waterson.]
10.30
am
Question
again proposed, That the amendment be
made.
No. 29, in
clause 5, page 5, line 38, at
end insert
‘; or by a
percentage not less than the percentage by which the general level of
prices is greater at the end of the period than it was at the
beginning, whichever is the
higher.’.
No.
2, in clause 5, page 5, leave out lines 39
to 41.
No. 31, in
clause 5, page 5, line 41, at
end insert—
‘(3A) The
general level of earnings shall be defined as the Average Earnings
Index.
(3B) The general level
of prices shall be defined as the Retail Prices
Index.’.
No.
3, in clause 5, page 5, leave out lines 42
to 44.
No. 4, in
clause 5, page 6, line 13, leave
out from ‘shall’ to end of line 14 and insert
‘determine the general level of
earnings as set out in subsections (8A) and
(8B).
(8A) If the average earnings index
(including bonuses) for the whole economy for September in any year is
higher than the index for the previous September, the Secretary of
State shall as soon as practicable make an order in relation to each
sum mentioned in subsection (1), increasing each sum, if the new index
is higher, by the same percentage as the amount of the increase of the
index.
(8B) In making the
calculation required by subsection (8A), the Secretary of State shall
in the case of the sums set out in subsections (1)(a) to (1)(d)
inclusive, round up the result to the nearest 10
pence.’.
No.
33, in
clause 5, page 6, line 14, leave
out ‘he thinks fit’ and insert
‘may be approved by resolution of
each House of
Parliament’.
No.
5, in
clause 5, page 7, line 3, at
end insert—
‘(6A) The
Secretary of State must, within six months of the beginning of the
Parliament referred to in subsection (6), inform Parliament by means of
an oral statement of the date at which the provision set out in this
section could be
afforded.’.
No.
78, in
clause 5, page 7, line 3, at
end insert—
‘(6A) The
Secretary if State must, on or before 5th April 2009, announce his
decision as to the date from which he will implement the provision set
out in this section.’.
Mr.
Nigel Waterson (Eastbourne) (Con): Good morning, Mr
Taylor. Welcome to week two of the Committee. I am sure that the time
is flying by. It falls to me to respond to what in many ways has been a
fascinating debate on this group of amendments. I will try to do so
fairly briefly. It is worth just commenting at the outset that both the
Minister and the hon. Member for Yeovil tried a little too hard to
justify the fact that neither of their parties, unlike ours, fought the
last election on restoring the link with earnings. I should perhaps
remind the Committee that we got there first.
For the record, as the Minister
seemed a bit confused about this, we remain in favour of restoring the
link with earnings. We agree with the Government that it must be
affordable—not a word that appears very often in the Liberal
Democrat lexicon. The point was made last week, I think by the hon.
Member for Yeovil, that this use of the increase of the state pension
age as a kind of smokescreen for putting off the day of restoring the
link seems to be a very recent addition to the Government’s
armoury on this issue. We think that this is a bit of an afterthought
and an excuse. I do not intend to press amendments Nos. 1 and 2 to a
Division. We have made our points on those.
I was fascinated to hear what
the Minister had to say about amendment No. 3 and his suggestion that
it amounted to a spending commitment of £1 billion, although
that is dwarfed by the amendment tabled by the hon. Member for
Northampton, North which would cost £14 billion. One wonders how
that figure is reached. Certainly we would take out the words
“up or down” by removing the whole of that subsection,
but how can the Minister look into a crystal ball and decide that this
will be the cost in future? That will be determined by future changes
in average earnings and the extent to which levelling up or down
arises. Perhaps he was pulling my leg. I am a good sport, so I will
take it in the spirit in which it was intended. In any event, it will
be a relief to him and to the Chancellor that I do not intend to press
amendment No. 3 to a vote
either.
I am, however,
minded to press amendment No. 4, and I was emboldened by what the hon.
Member for Yeovil had to say on the subject. This is one of a series of
amendments promoted, to give credit where credit is due, by
Mr. David Yeandle of the Engineering Employers Federation,
who has been very helpful on many aspects of this Bill. The Minister
went to enormous lengths to deal with the points made by the hon.
Member for Yeovil about putting in an alternative to “of
earnings and prices”. To some extent, I understand the reason
for that, but his only arguments against amendment No. 4 appeared to be
the need for flexibility. Well, flexibility is very nice when one has a
credit card or is going on holiday, but I doubt whether it is a key
function of pensions legislation.
The Minister cited the fact
that for one brief period in late 1998 and early 1999, the Office for
National Statistics suspended publication of this particular index. It
seems to us that he is getting over-anxious about this. If some ghastly
development were to occur so that this index was no longer used, it
would be a matter of a moment for that future Government to pass brief
legislation to deal with the issue. The Minister said rather
delphically:
“The
point is that different circumstances may call for the use of different
uprating measures”.
He then talked about the
flexibility
“to enable us
to adapt to technical changes or different approaches if we need
to.”
However, he got
back on track when he
confirmed:
“We
have made it clear that we intend to use that
index”——[Official Report, Pensions Public Bill
Committee,
25 January 2007; cc.
145-6.]—
that index being
the earnings index set out in my amendment.
There comes a point in every
Committee on every Bill at which the Minister says, “Well we
intend to do that, but we do not want to put it in the Bill.”
The Opposition say, “Why not put it in the Bill if that is what
you intend?”. The whole ballet goes round and round in circles.
Given that the Minister has confirmed his clear intention to use that
particular index, we cannot see any good reason why that should not be
in the Bill. I will urge hon. Members to support amendment No 4 in due
course.
With
all due respect, the Minister did not deal seriously with my amendment
No. 78. The amendment is still valid and important. It would require
the Secretary of State to make an announcement about the intention to
implement the restoration of the link “on or
before” 5 April 2009. I was pretty open in my purpose,
which was to ensure that, prior to the most likely date for the next
general election, the Government should come clean on the issue. I find
it inexplicable that they would do anything else. As I said, I even
think it possible that the Chancellor, in his first 100 days, might see
this as one of his eye-catching initiatives. I am sure that I also
speak for the hon. Member for Yeovil, but the Opposition parties will
absolutely have something in their manifestos about this, so it is a
bit puzzling that the governing party is not prepared to make that
commitment.
For
the reasons given, the debate is a bit academic, because I am sure that
things will be made clear. Particularly if the Government continue to
be behind in the opinion polls, they will want to say something warm
and cuddly about pensions. Announcing the date of restoration of the
link strikes me as something that they could not avoid doing, unless it
is completely off the agenda because the economy is in such a state by
then.
So,
Mr. Taylor, I would like to give notice that, at the
appropriate moment, I would like to press both amendments Nos. 4 and 78
to a
vote.
The
Chairman:
Order. The Minister has responded to the debate
in the main. He wishes to respond briefly to the comments made by the
hon. Member for
Eastbourne.
The
Minister for Pensions Reform (James Purnell):
Thank you,
Mr. Taylor. It is a pleasure to be serving under your
chairmanship this morning. I respect the right of the hon. Gentleman to
press his amendments, but I will ask my colleagues to resist. I will
pick up on a couple of his points, which I did not cover earlier in the
debate.
The
hon. Member for Eastbourne tried to say that we were confused about
Conservative policy on uprating. That is slightly tendentious, if I may
say so. Even today, he still did not clarify whether his party’s
policy is that the state pension should be uprated with earnings from
now, which is what his shadow Secretary of State said
on Second Reading. The hon. Member for Eastbourne failed to say whether
that was the Conservatives’ policy or not. If anyone’s
policy is confused, it is the Conservative party’s. At least the
Liberal Democrats’ policy is clear—they will just spend,
spend, spend. What we do not know is whether the hon. Member for
Eastbourne agrees with his shadow Secretary of State; he has not
resolved that confusion
today.
On
the £1 billion, I do not have a crystal ball, but there are
analysts in the Department for Work and Pensions who do and who have
looked at the precise wording of his amendment. I made it clear that I
was sure that the Conservatives’ intention in tabling that
amendment was not to cause an increase in expenditure, but that would
be a result of the compound increases of 10p on a yearly
basis.
The
hon. Gentleman is trying to come up with new arrangements for
specifying the amount of earnings. He is right that one always comes to
a moment in Committee when the Opposition say, “Put it in the
Bill”, and the Government say, “That is our intention
anyhow, so it is unnecessary.” The existing arrangements have
worked well. They have worked well with pension credit. There has not
been an issue of substance caused by the proposals, so maintaining the
flexibility which the current legislation gives us and which is mapped
into the new arrangements from the current legislation is more
appropriate. I say, “If it isn’t broke, why try and fix
it?” I urge my colleagues to
agree.
Finally, the
hon. Gentleman said that I had not addressed his argument on amendment
No. 78. I thought that I had. What the Conservatives and Liberal
Democrats put in their manifestos is obviously up to them, but I would
treat cautiously an attempt by the hon. Member for Eastbourne to write
my party’s manifesto, although I am sure that he would like to
do that. As much as I have great respect for him, however, I am not
sure that he would necessarily do with it what we would
want.
So the truth is
that we have a clear policy on the matter, which is set out in the
White Paper and legislated for in the Bill. The hon. Gentleman might
not agree with it, but we believe that it is the right approach and,
therefore, I urge my colleagues to resist the
amendment.
Amendment,
by leave,
withdrawn.
Amendment
proposed: No. 29, in clause 5, page 5, line 38, at end
insert
‘; or by a
percentage not less than the percentage by which the general level of
prices is greater at the end of the period than it was at the
beginning, whichever is the higher.’.—[Mr.
Laws.]
The
Committee divided: Ayes 2, Noes
10.
Division
No.
3
]
AYESNOES
Question
accordingly negatived.
Mr.
David Laws (Yeovil) (LD): I beg to move amendment No. 32,
in
clause 5, page 6, line 10, leave
out from ‘force’ to end of line 11 and insert
‘from 1st April
2008.’.
The
Chairman:
With this it will be convenient to discuss the
following: Amendment No. 35, in
clause 5, page 6, line 43, leave
out ‘1st April 2011’ and insert
‘the first 1st April after the
first meeting of the next
Parliament’.
Amendment
No. 36, in
clause 5, page 6, line 44, leave
out subsections (5) to
(7).
Amendment No. 76,
in
clause 5, page 6, line 46, leave
out ‘the relevant dissolution date’ and insert
‘6th April
2013’.
Amendment
No. 77, in
clause 5, page 7, line 1, leave
out subsection
(6).
New clause
19—Linking the introduction of uprating the basic state
pension in line with earnings and the increase in the state pension
age—
‘For each
additional year after 2012 that retirement pensions referred to in
section 23A(1)(b) of SSCBA (inserted by section 3 of this Act) or not
uprated in line with the general level of earnings as defined in
section 150A(2) of the Administration Act (inserted by section 5(2) of
this Act) the increase in state pension age shall be delayed by an
additional
year.’.
Mr.
Laws:
Mr. Taylor, it is a pleasure to serve
under your chairmanship again. I say good morning to all Committee
members. Mr. Taylor, you will recall that I held back from
making a long and detailed speech on the last cluster of amendments, in
the knowledge that we would have a great opportunity this morning to
discuss those now before us. Obviously, I did not want to repeat
myself.
The amendments
deal with some of the issues touched on by the hon. Member for
Eastbourne when he spoke to the last set of amendments, and they deal
in a bit more detail with the timing of the restoration of the earnings
link. They raise other interesting issues about affordability, the
implications of delaying restoration and the extent to which
restoration of the link is inextricably linked to increasing the basic
state pension ages.
I
had better begin, however, with an admission. There comes a time in the
consideration of every such Bill when a scantily resourced Opposition
spokesman must admit that an amendment does not reach the intended
heights of perfection. There may be some ambiguity in amendments Nos.
32 and 34, which the Minister will have spotted, although the latter
was fortuitously not selected for debate, so I do not have to discuss
it.
In case there is
any cause for doubt about what my amendments and new clause seek to
achieve, I shall explain in plain language. I hope that the Minister
will be generous and kind enough, after the weekend break, to conduct
the debate on that basis. We believe that the restoration of the
earnings link should take place as
soon as possible. We are very disappointed that the Government are
waiting until 2012—two years after the Turner Commission
indicated was appropriate. We are also disappointed that there is an
element of uncertainty, as the hon. Member for Eastbourne mentioned; it
is possible that the link will not be restored until
2015.
We want the Bill
to make clear when the Government will make an announcement on that
issue. I am assuming that this Parliament will go the full five years
and that there will be an announcement about the earnings link in the
first year of the next Parliament, which is where the April 2011 date
comes
from.
10.45
pm
We are
wondering why the Government have not sought to put a detail into the
Bill to clarify that whenever the start of the next Parliament, there
will be an announcement on the uprating within the first year. We all
know that there is a lot of speculation at the moment about the
changeover of power at the top of Government in this country, and the
possibility that there might be an early general
election—perhaps as soon as this year. If that were to be the
case, we would not want any uncertainty about the commitment that the
Government have already made in very clear terms, which is that there
will be an announcement on the timing of the restoration of the
earnings link at the beginning of the next Parliament. We want to make
sure that there is appropriate flexibility to ensure that that will
happen, even if the next Parliament occurs surprisingly
quickly.
The third
issue that we are seeking to raise in these amendments and which is in
new clause 19, is the extent to which the restoration of the earnings
link should be tied to the increase in the state pension age. We know
that prior to the Turner commission no British political party has
proposed that there should be higher state pension ages. This is
potentially an unpopular and controversial matter with the public. It
has been acceptable to all the parties, and to Back Benchers in all the
parties, precisely because the offset has been a restoration of the
earnings link. So there is a piece of good news to go against the piece
of bad news about the state pension age. The Government have said a
number of times that these two things—the good news and the bad
news—are inextricably linked. New clause 19 will test whether
there really is an inextricable link, or whether the Government might
delay the good news while not even contemplating delaying the bad
news.
It is worth
starting off by noting that there is quite broad concern about the fact
that the Government are going to take so long to restore the earnings
link. This was an issue that the Select Committee on Work and Pensions
looked at in detail when it took evidence on the Government’s
proposals. The hon. Member for Weston-super-Mare will be aware that the
Committee concluded on a cross-party basis that, although it welcomes
the decision to re-link the basic state pension to earnings, it
was
“concerned by the
inconsistency between the unequivocal statement that the link will be
re-established by the end of the next Parliament ‘in any
event’ and the Secretary of State’s statement that
affordability would come first.”
The Select Committee concluded:
“We ask the Government
to clarify this. In our view the link should be restored as soon as
possible, and certainly no later than April
2012.”
This
is a big issue for the existing generation of pensioners right across
the country. The Committee will be fascinated to know that I was in
Worthing yesterday, talking to a large group of pensioners. The
particular issue that they wanted me to raise with the Minister was why
there is nothing in the Bill for the existing generation of pensioners.
Why will they have to wait so long before the earnings linked is
restored?
The Minister
will be aware that a number of the representations on the Bill from
pensioners groups highlight their concerns about the delays that will
be involved. I have a good briefing note here from the National
Pensioners Convention, which points out that, relative to the wider
population, the pensioner’s income will continue to fall for at
least five or six years, as a consequence of the delay in the earnings
link. On the basis of its calculations, 3 million of the present
pensioner population will not be around to see the link restored
because they will not be alive by then. It also points out—as do
a number of the other pensioner representative groups—that by
the time the restoration of the earnings link takes place, the basic
state pension will have shrivelled further in relation to earnings to
just £75 a week in current earnings’ terms, or 12 per
cent. of average earnings. Other groups, such as Age Concern, made
similar points. Even one of the Government’s favourite
think-tanks, the Institute for Public Policy Research, indicated that
it would like to see the earnings link restored
immediately.
Therefore,
there is this issue about why the Government are delaying the
restoration of the earnings link, and what the implications of that
delay will be. Not only will pensioners be worse off than they might be
otherwise, but every year that the restoration of the earnings link is
delayed the number of pensioners who will be on means-tested benefits
in the future will rise. That rise will be locked in for the future,
undermining the Government’s hopes that the proportion of
pensioners facing a life of means-testing will fall.
The Work and
Pensions Committee, when it took evidence, helpfully highlighted how
the failure to restore the earnings link until 2012 or 2015 will
increase the proportion of pensioners on means-tested benefits. In a
note of evidence, dated 30 June 2006, that was given by the Department
for Work and Pensions itself, there are figures—figures from the
Department, not from the Pensions Policy Institute or another
independent body—that seem to indicate that, if the earnings
link were to be restored immediately, the proportion of pensioners on
means-tested benefits by 2050 would only be about 26 or 27 per
cent., which is below the existing estimates. By contrast, if the
restoration of the earnings link is delayed until 2015, about 32 per
cent. of the pensioner population would be on means-tested benefits,
based on the Government’s own figures. That is quite a large
difference. It means that, compared with restoring the earnings link
now and restoring it at the latest date that the Government concede
that they might restore it, there would be about 6 per cent. more
pensioners on means-tested benefits, which would be nearly 25 per cent.
more pensioners on means-tested benefits than would be the case if the
earnings link were restored immediately.
Therefore, this is not just an
issue about the incomes of existing pensioners; it also relates
directly to the range of concerns that have been expressed about the
sustainability of the Government’s pensions policy and the
reliance on
means-testing.
It is
necessary for us to touch briefly on why the Government have decided
that there should be a delay in restoring the earnings link. The
Secretary of State set out the Government’s position when he
made his statement on pension reform on 25 May 2006. He indicated that
the Government’s objective of restoring the earnings link in
2012 was subject to affordability and to the fiscal position. He made
it clear that the Government would make a statement on the issue at the
beginning of the next Parliament—not in 2011, but at the
beginning of the next Parliament.
There were
some very interesting exchanges indeed in the Work and Pensions
Committee about this issue—about why the Government had decided
that it was not possible to restore the earnings link now. The hon.
Member for Putney (Justine Greening) was magnificently
persistent—for about three pages of the transcript that has been
printed from that sitting of the Select Committee—in trying to
get an answer from the Secretary of State about why he was delaying the
restoration of the earnings link. It was quite clear that the Secretary
of State understood that there is a big problem with the delay in
restoring the earnings link. He said:
“It is not desirable. I
clearly accept that.”
As the hon. Member for
Putney also pointed out in that sitting, Lord Turner had indicated
that, although he was just about willing to tolerate having his
proposals about the 2010 date ignored and the Government delaying the
restoration of the earnings link until 2012, he had also said that any
delay in the implementation of the process in 2012 could undermine the
balance of the overall policy package. That was obviously a serious
concern for Lord Turner to express.
The
interesting element of that debate between the Secretary of State and
the hon. Member for Putney was that the Government appeared to be
taking the position that they could not give a cast-iron commitment to
restore the earnings link in 2012, because of issues about
affordability and the fiscal position at that stage in the economic
cycle. However, under questioning from the hon. Member for Putney, the
Secretary of State indicated that there was no concern about public
service expenditure. So it seemed to be in the Secretary of
State’s mind that there was concern about the 2012 date; the
concern that somehow the economy would go off the rails and that the
fiscal position would deteriorate, and therefore that it would plainly
be irresponsible to be firmly pinned down to a date. However, as the
hon. Member for Putney persistently pointed out, it is somewhat bizarre
to suggest that there will be uncertainty about affordability in 2012
but that there will be such certainty three years later that the
Government are in a position to announce the restoration of the
earnings link come what may. They seem to be trying to hold two
different positions: that they cannot make a commitment with regard to
2012 because that might be unaffordable, and that it will be affordable
in 2015, come what may. How it is possible to be sure that something
will be affordable in 2015 when it is not possible to be sure that it
will be affordable in 2012 was beyond most members of the Committee, as
they indicated in their conclusions.
We must also
point out that in his evidence on that occasion the Secretary of Sate
threw further uncertainty into the mix under intensive questioning by
the hon. Member for Putney. When she asked what would happen if there
were an affordability issue—whether the package of pension
reforms or affordability and the public finances would come
first—he indicated that the priority would be affordability. He
almost seemed to suggest that the Government have a problem with the
policy, because the Chancellor is not allowing the earnings link to be
restored until 2012 and possibly not until 2015, so we have uncertainty
as to whether the situation will be affordable by 2015. The Committee
pointed out in its conclusions that it was concerned about that
inconsistency in the Government’s position. In their response to
the report, the Government claimed that there was no ambiguity about
the commitment. I hope that we will find out about that
today.
The other
element of the earnings link issue is to understand how clearly the
restoration of the earnings link is tied to the higher state pension
age. We know that when Lord Turner made his recommendations he wanted
the earnings link to be restored in 2010, and that he thought that that
was affordable. We also know that he wanted a higher state pension age,
and suggested that that should come in in the late 2020s. However, in
the package that was announced by the Secretary of State, the
Government brought forward the higher state pension age and delayed the
restoration of the earnings link. That was regrettable—it has
caused concern among a lot of people, not least the existing pensioner
population—and it raises a further, more fundamental, issue
about whether the two parts of the policy package are tied up very
closely. The White Paper published in May 2006 claimed at paragraph
3.25 that the restoration of the earnings link is “inextricably
linked” to two other elements of the reform package.
Another Conservative Member
raised the issue on Second Reading. He asked why the restoration of the
earnings link would be affordable in 2012 but not today. The Secretary
of State responded by saying that it
was
“Because it
is linked with our policy for increasing the state pension
age.”—[Official Report, 16 January 2007; Vol.
455, c. 662.]
That
appeared to imply that the funding of the pledge was inextricably
linked to the increase in the state pension age.
New clause 19
simply seeks to ask the Government to confirm what appears to be their
position, namely that the two pieces of news, one good and one bad, are
inextricably linked, and that we are not going to end up in a situation
in which they keep delaying the earnings link yet implement the
increase in state pension age on the stated date. I invite the Minister
to accept that those two things are inextricably linked in the package.
If there is a delay beyond the date that the Government have given in
restoring the earnings link, they ought to delay the increase of the
state pension age. Those are important issues; we discussed some of
them in the debate the other day, led by the hon. Member for
Eastbourne, but the amendments probe the Government further. We hope
for some detailed responses from the
Minister.
11
am
Mr.
Waterson:
I shall be brief, because as the hon. Member for
Yeovil pointed out there is a danger of repeating oneself on this group
of amendments.
As
long as these are genuinely probing amendments, we support them, as
this issue remains in need of probing. The Government cannot have it
both ways. In a great burst of glory, they announced that they will
restore the earnings link, following the Chancellor’s personal
odyssey from opposing the link to coming round grudgingly to restoring
it. They then said that it would happen some time in the medium term:
2012, 2015, or perhaps even later depending on affordability. Why the
Government are not prepared to advance at least the announcement of the
restoration of the link remains a mystery to us, as it does to the hon.
Member for Yeovil. I agree with him that it is difficult to see how
affordability can change dramatically between 2012 and 2015. I will be
interested to hear from the Minister why he thinks it will be
unaffordable before then. On the basis of what calculations does he
think that?
At the
risk of breaking my own rule, I should like to repeat something that I
said in the last debate. I am still rather sceptical about the much
more recent linking of the increase of the state pension age to the
restoration of the earnings link. Like the rest of the Committee, I am
agog to hear what the Minister says on those
points.
Ms
Angela C. Smith (Sheffield, Hillsborough) (Lab): I shall
speak against the amendment. This is not an argument about
affordability from the point of view of the Treasury; it is about
economic stability and the potential impact of instability on
pensioners and their children and grandchildren.
I want to test the Minister on
the commitment to introducing the new link as soon as possible. Of
course, 2012 is a much preferred date: I would not like to think that
the delay would stretch to 2015. I would like to hear from the Minister
about the DWP’s commitment to press the Treasury for the
earliest possible introduction of the link after the next general
election.
The
background to this debate bears rehearsing. Pension credit has reduced
pensioner poverty considerably. In a previous debate, I intervened to
point out that the net income of the poorest 20 per cent. grew by just
28 per cent. between 1980 and 1997, while for the top 20 per cent. it
increased by 76 per cent. The pension credit is now paid to 2.65
million households. In Sheffield, Hillsborough, the average credit for
the 5,340 pensioner households that receive it is £40. That is a
considerable contribution to reducing the gap between the richest
pensioners and the poorest.
Mr.
Waterson:
Does the hon. Lady accept that there are still
1.5 million pensioners not receiving pension credit who are entitled to
it? Does she agree that the best way of helping the poorest pensioners
is to boost the basic state pension, of which the take-up, I guess, is
99 per
cent.?
Ms
Smith:
The hon. Gentleman makes an important point. In a
previous debate, the Minister said that every effort is being made to
ensure that all those eligible for the credit are encouraged to apply
for it. The pension credit has got us to a point at which we can start
to think about universal measures to reduce pensioner poverty even
further.
Ms
Sally Keeble (Northampton, North) (Lab): Does my hon.
Friend accept that contrary to what the hon. Member for Eastbourne
said, if the basic state pension is increased it misses out a swathe of
the poorest pensioners who are not on the basic state pension: women
who have never had the entitlement? That is fundamental in tackling
pensioner poverty and inequalities.
Ms
Smith:
My hon. Friend makes a valid point. The Bill
contains a settlement, a package that is designed to give the right
combination of universal coverage to increase the number of women who
get the full basic state pension—up to 90 per cent. by 2020. It
is a combination of security and incentives to save for retirement and
I applaud it.
However, we
need to test the date of introduction and I look forward to the
Minister’s comments on that matter. We must remember that people
in the generation coming up to retirement age who are 65 this year, are
not ready to put their feet up— Paul McCartney is 65 this year.
It is the generation that produced the Stones and the Beatles, and it
does not consider itself old in any way. That generation has
contributed a great deal to British society, but it also suffered
rising unemployment in the 1970s, the three-day week and the mass
unemployment in the 1980s. In my constituency, Corus, one of the main
employers, employed 6,000 people in the early 1980s and now employs
only 600, albeit in very high-value, highly skilled jobs. It is the
generation that suffered a collapse in the housing market, high
interest rates and inflation in the 1990s.
The key point to bear in mind
when we consider the introduction of the earnings link is that the
generation that is retiring now values economic stability more than any
other in recent years because it has experienced the full impact of
economic instability. We cannot do anything that destabilises economic
prosperity or risks doing so, because that generation of pensioners
understands the importance of having the money in the Treasury in the
first place to pay for the earnings link.
Members of that generation
value economic stability for their children and grandchildren. It is
not true that pensioners are selfish people who think of no one but
themselves. Pensioners have worked all their lives, they have brought
up children and they want to be able to enjoy their retirement and to
see their children and grandchildren enjoying life, enjoying prosperity
and seeing that their young ones are doing better than they did, if
possible.
We must put
the issue in a wider context: that economic stability provides the
Government with the resources to invest in health, education, housing
and all the other things that are as important as the subject of this
debate. It would be reckless to tie the Government to the introduction
of the earnings link in 2008-09. Nevertheless, I ask the Minister to
respond to the genuine concern about a potential delay to 2015. It is
important that the link is introduced as soon as possible, but the
judgment about when that will be is incredibly important and I want to
know the criteria that underlie
it.
James
Purnell:
I start by putting the issue in context, because
some of what has been said in the debate assumes that since 1997 the
basic state pension has
been linked to inflation and that pensioners have not had any other
increase, or, indeed, that Government do not accept the principle that
as the nation’s prosperity rises so the income of pensioners
should rise. That is the opposite of the truth. Since 1997 we have not
just recognised that principle but legislated on that basis.
Pensioners’ incomes, or just their incomes from the state, have
gone up broadly in line with earnings or faster than earnings,
depending on which measure one uses. That principle has been well
established. Under this Government the amount of public spending on
pensioners has gone up faster even than GDP as a result of the measures
that we have introduced since 1997. There is an increase of 1 per cent.
of GDP in the amount going on pensioner benefits. That principle is
accepted.
People
often also say that it has gone to people on means-tested benefits only
because of pension credit. It is of course true that we have
prioritised the incomes of the poorest. That is because when we came to
power there was a scandalous amount of pensioner poverty in this
country, which has been significantly reduced because of the
introduction of the pension credit. The poorest third of pensioners in
this country are £2,000 a year better off because of what we
have done. That is something for which we make no apology, but it was
resisted by and large by the Opposition parties.
It is also true that even
pensioners who are not on means tested benefits have seen their income
from the state go up roughly in line with earnings. The average
pensioner is £1,400 a year better off than they would have been
under the policies that we inherited in 1997. It is therefore partly as
a result of those policies that we can now say that for the first time
in a generation pensioners are less likely to be poor than other parts
of the population. The general principle that pensioners should share
in the rising prosperity of the nation is well
established.
Mr.
Laws:
Can the Minister confirm that over the years between
2007 and 2010-11 there will be a decline in the proportion of GDP going
on pensioner benefits?
James
Purnell:
That is not the case. We have had that debate.
The hon. Gentleman tries to quote figures that are not just about
pensioner benefits. I am happy to point him yet again to the figures
that point to the fact that the amount of pensioner benefits is flat
broadly in GDP terms over the period to 2020. That is because of state
pension equalisation, so the amount going to pensioners on a
like-for-like basis is growing. The hon. Gentleman also assumes that he
can write the Budgets for the next few years. Much as I am sure that he
would like to write the Labour party’s Budgets over the next few
years, it is something that we would resist in principle.
So the general principle that
pensioner benefits should be in part shaped by the growing wealth of
the country is one that we have accepted all the way through. We have
always rejected making a pledge to link the basic state pension to
earnings without having a way of doing that for ever and locking that
in in legislation. The danger of the Conservatives’ policy at
the previous election was that they were saying that they wanted to
restore the link but they had no policy for doing so beyond one
Parliament. Indeed, during the
election their policy for doing so fell apart as first they had to say
that they were not going to abolish guarantee credit and they then came
under some pressure as to whether they were going to abolish the state
second pension. Much as the policy of the hon. Member for Yeovil on
citizen’s income does not bear scrutiny, I am not sure that
their policy at the last election would have borne the scrutiny that it
would have required had they thought that they were going to get into
government.
Andrew
Selous (South-West Bedfordshire) (Con): The Minister has
taken us back down memory lane so fairness dictates that we can reply.
To quote briefly from our campaign
guide:
“A
Policy for the Long Term...We are confident that we will be able
to identify the savings that will enable us to carry on this process.
Provided these are achieved, successive Conservative Governments will
continue the
policy”.
James
Purnell:
Exactly; they did not have a policy but how to
fund it. I think he may regret having
made—
James
Purnell:
The key point has always been, how could one have
a plan that would allow a Government to legislate on this? The hon.
Member for Eastbourne tried to say that the link between the basic
increase in state pension and the rise in the state pension age was
only something that had arrived recently. That is the opposite of the
truth. One has always had to answer the question of how one would fund
the provision for the long term. One can do so through the Bill because
those very two things come together in it, exactly as the Pensions
Commission recommended. So, this Bill moves from a situation where
pensioners have, in practice, been sharing the growing prosperity of
the nation to one where we can legislate for that. We can only do that
thanks to the difficult choice in this Bill on the rise in the state
pension
age.
11.15
am
Mr.
Waterson:
May I use this opportunity to clarify one
confusion on the Minister’s part? He seems to be claiming that
my hon. Friend the Member for Runnymede and Weybridge (Mr.
Hammond) said on Second Reading that the Conservatives believed that
the link should be immediately restored—today, tomorrow or
whenever. It is worth pointing out that he was responding to a specific
intervention by the hon. Member for Dumfries and Galloway on the pledge
for the one Parliament point that we have just discussed. I have tried
to make it clear that we agree broadly that this package can go forward
and that it should be affordable. Our only concern is why the
Government are so coy about making an
announcement.
James
Purnell:
That is not actually what Hansard says. It
has his colleague, the hon. Member for Runnymede and Weybridge, saying
that they believe it
is affordable now. If it were to be introduced next year, it would cost
about £0.4 billion in 2008, then £0.9 billion in
2009, £1.5 billion in 2010 and £2.3 billion in
2012. Rather as in that Conservative party document, which I will not
refer to again, it has no plan for funding that. Until it says that
that is not actually its policy, we will continue to scrutinise
it.
Mr.
Waterson:
I have said, am saying and will continue to say
that it is not our policy. If that is not good enough for the Minister,
then I do not know what is.
James
Purnell:
I know that you want us to move on,
Mr. Taylor, so I will, but what the hon. Gentleman says is a
contradiction of what his hon. Friend said on Second Reading.
Amendment No. 32 would do away
with the convention whereby increases in relevant pension amounts come
into effect from the first Monday in each tax year. It would replace
that with a commitment to increase pension amounts from 1 April 2008,
regardless of which day of the week that may fall on. To clarify, the
tax year begins on 6 April rather than 1 April, so the
intended effect might be for increases to take effect from the tax year
beginning April 2008. The hon. Member for Yeovil asked me to draw a
curtain over the precise implications of the words and the slight
“Groundhog Day” nature of the amendment: I am happy to do
so. I know that that was not his intention, which is to bring in
uprating from 2008. The point about those extra costs remains, and he
has still not told us how it is to be funded—whether by a 5p
increase in income tax or by abolishing state second pension and the
guaranteed credit premium. I am sure that the hon. Gentleman still does
not want to answer that question.
Given the importance of
earnings uprating as a central plank of our reforms, it may be helpful
if I first provide some background on why clause 5 has been drafted
this way. It is because we have a clear policy of guaranteeing in the
Bill that this will happen in the next Parliament. Our objective is to
do that in 2012: we will make a statement on the exact date at the
beginning of the next Parliament—exactly as the Bill
says.
Mr.
Laws:
Is the Minister making it absolutely clear, on
behalf of the Government, that there is no question whatever of
restoring the earnings link before 2012?
James
Purnell:
I said exactly what I said, which is that our
objective is to do it in 2012, and we will make a statement on that at
the beginning of the next Parliament. At one point, the hon. Gentleman
was saying that the earnings link would never happen—an argument
that has been rather undermined by our putting it into legislation. It
will happen as a consequence of this Bill and our policy, unlike his,
is absolutely clear.
So, clause 5 provides for this
to happen and the benefits uprating process relies on activity in two
consecutive tax years—the first being the year in which a review
of earnings is carried out and the second being that in which earnings
increases take effect. Clause 5 provides for that, allowing the first
year for review with
regard to earnings to be designated, in the words of the clause, and
earnings uprating would then take place automatically in subsequent
years. Most importantly, it allows for that to happen in time to
introduce earnings uprating from 2012. Our proposals fit with these
existing arrangements, as we are not looking to change the processes.
They are tried and tested and work well every year when we have debates
on the uprating process. I am not aware of any complaints about how it
is working. That would not be the case, of course, with some of the
amendments before us, which would introduce an untested process that we
do not think should be
supported.
As I have
mentioned, earnings uprating is part of an integrated package of
reforms. Our plans, including timings, are subject to affordability and
sustainability tests, which although not Liberal Democrat tenets, are
central to our
reforms.
Mr.
Laws:
Why is the Minister not certain that the proposal
will be affordable in 2012, but is certain that it will be in
2015?
James
Purnell:
If the hon. Gentleman will hold his horses, I
shall come on to that later in my speech. I shall try to answer all the
questions that he
raised.
I shall
provide some background: the Pensions Commission proposed that earnings
uprating should begin in 2010, as the hon. Gentleman said, although
Lord Turner has since confirmed that a short delay beyond that would
not seriously undermine the overall direction of his reform. In the
hon. Gentleman’s opening remarks, he quoted figures that seemed
to imply that the delayed implementation would result in a massive
difference between the numbers of pensioners on means
testing—between about a quarter, under his plans, and a third
under ours.
Actually,
we have projected that, as a result of our proposals, about 28 per
cent. of pensioners will be on pension credit in 2050. As the hon.
Gentleman knows, those projections are statistically
ambitious—it is more than 40 years away and the projection is
subject to many different factors. We have, therefore, always said that
we are aiming for less than a third, rather than pinning ourselves to
exact percentages based on very long-term projections. His figure of 26
per cent. and ours of 28 per cent. are not hugely materially different.
The material difference will be this: a reduction in the number of
pensioners on means testing from 70 per cent. to less than one
third.
Mr.
Laws:
Does the Minister agree that, based on his
Department’s figures, some 6 or 7 per cent. more of the
pensioner population will be on means testing as a consequence of
delaying the restoration of the earnings link from now until
2015?
James
Purnell:
Our policy is that we will make a statement on
exactly when that will happen in 2012. Our central projection is about
28 per cent., but, as I said, it would be inappropriate to pretend that
differences of 1 or 2 per cent. in the projections are reliable given
that we are projecting to a date that is 40 or more years
away. The hon. Gentleman might have a better statistical engine than we
do, but we set out
quite clearly in our forecasts the reasons why those variations in the
statistics need to be taken into
account.
So I have
dealt with the effect of amendment No. 32. Amendment No. 35 could
conceivably bring forward the date by which the order has to be made
if, for example, this Parliament were to run for four years, ending in
June 2009. That would mean that an order identifying the first review
year would have to be made before the first day in April 2010. We doubt
whether it will be possible to make legislation based on a start and
end date of a Parliament so we thought that the best approach would be
to pin it to the existing arrangements on uprating, which is what we
have done. That will clearly implement the Government’s overall
policy, which I have mentioned already to the hon.
Gentleman.
Amendment
No. 36 would also remove flexibility and inadvertently the provision to
bring into effect the earnings uprating of the pension credit standard
minimum guarantee as soon as possible after the Bill receives Royal
Assent—in other words, from the tax year beginning in 2008.
Similarly, amendments Nos. 76 and 77 would remove flexibility. Like
amendment No. 36, amendment No. 77 would remove the link
between the commencement of earnings uprating and the dissolution of
Parliament. Amendment No.76 then seeks to ensure that the year in which
earnings uprating would take effect must begin before 6 April
2013—in other words, no later than the tax year beginning in
April 2012.
New clause
19 is at the core of the debate initiated by the hon. Member for
Yeovil. His proposal is that, from 2012, for each additional year that
the basic state pension is not increased by earnings, the increase in
the state pension age should be delayed. I glad that the House has a
general consensus on the principle of increases in the state pension
age, which is to the credit of the Pensions Commission and the way in
which my predecessors ran the national pensions debate. What might have
been a very difficult issue for politicians to agree on has been
tackled effectively, which is a credit to the way in which the process
worked.
The question
that the hon. Member for Yeovil asked was whether, if there is a delay
in the earnings link, there should also be a delay in the increase in
the state pension age. That is to mistake short-term for long-term
affordability. The state pension age decision is important because the
commitment is long term. We and the Pensions Commission had to come up
with a package that was affordable for the long term. On its own,
uprating the basic state pension in line with earnings would cost
around £56 billion in 2050. That is the main cost in our reform
package. By the time that the first increase in the state pension age
occurs, from 2024, the basic state pension will already have been
linked to earnings for a decade. Increases in the state pension age
from 2024 will, by 2050, reduce the cost of our reforms to the state
pension system by around £32 billion. That is the bulk
of the way in which it is made affordable, and in which it is made
fair. By increasing the state pension age gradually, we will be
ensuring that the costs of rising longevity are shared fairly between
those contributing to and those receiving state pensions.
A more
generous state pension and a rising state pension age, therefore, go
hand in hand for the long term. They are part of an integrated package
of complementary reforms, so they are of course linked. The crucial
point is that they are quite different in nature. People must have
absolute certainty about when they will get their state pension, so
that they can undertake meaningful planning. It would be irresponsible
not to provide
this.
Let me confirm
our commitment on earnings uprating. I said to the hon. Member for
Yeovil earlier that our objective, subject to affordability and the
fiscal position, is to introduce the earnings link in 2012 or, at the
latest, by the end of the next Parliament. I hope that that gives my
hon. Friend the Member for Sheffield, Hillsborough some of the
reassurance that she was looking
for.
Flexibility
around affordability is essential if the package is to stay within the
envelope of affordability at the time. Neither the hon. Member for
Yeovil nor I know what will be the precise budgetary position in 2012.
Framing the decision in terms of affordability at that stage has always
been important. The issue of the state pension age is quite different
and is about affordability in the long run. We do not think that saying
to people, “Here’s a timetable, but it might
shift”, is appropriate. People have to know when they are going
to retire. That is why we are planning to legislate on that basis for
the state pension age. We are clear that we can legislate the linking
of the state pension for the next Parliament and we have set out as an
objective a year for achieving that. We believe that to be the right
approach.
Mr.
Waterson:
Can the Minister see that people who are being
told that, whatever else happens, they are going to have to work longer
to get their state pension might see it as unfair that 2015 is not set
in stone? If I understand what the Minister was saying, if the promise
is unaffordable then, it could be unaffordable
later?
James
Purnell:
No, that is not right. We are legislating to make
sure that that comes in during the next Parliament. That is guaranteed
by the legislation. The legislation would have to be changed if that
were not to be the case. The legislation gives people that guarantee.
We set out the objective date of 2012, which is clear in our policy,
but it is appropriate that that should be subject to affordability. All
policies have to be subject to affordability, which was the Secretary
of State’s point in response to the
Committee.
11.30
am
James
Purnell:
No, we believe that we can do it in the next
Parliament, and that is why we are legislating on that basis. We are
giving people a legislative guarantee that it will happen in the next
Parliament, and our objective, subject to affordability, is to do that
in 2012. That is a clear position. It is much clearer than the hon.
Gentleman’s policy; it might include a citizen’s pension,
but he cannot tell us what it will cost, or how it will be
funded, or about the second state pension or premiums in guarantee
credit. I hope that the hon. Gentleman will accept that we have set out
our position clearly, we have costed it and we are legislating for
it.
Let me answer a
couple of the points raised. It was claimed that we were bringing
forward the increase in state pension age proposed by Turner. That is
not the case. The proposal that the Turner commission made was for
introduction in the decade up to 2030, the decade up to 2040, and the
decade up to 2050. Introduction in 2024, phasing to 2026; in 2034
phasing to 2036; and in 2044 phasing to 2046 is completely compatible
with the Turner model—it is in no way a bringing forward of what
was proposed. I hope that that answers all the points that have been
made, and I would urge the hon. Member for Yeovil to withdraw what I
think are probing amendments. However, if he does not, I would ask my
colleagues to resist them.
Mr.
Laws:
We have had a relatively good, if somewhat subdued,
debate. I was expecting more fireworks, but perhaps it is too early in
the morning for that, or perhaps hon. Members, including those on the
Government Benches, understand that there is genuine disappointment
among the existing pensioner population that they will have to wait so
long for the restoration of the earnings link. It might be that hon.
Members are also concerned about what those delays will do in relation
to the amount of means testing and the incentive structures that people
face.
The Government
have some logical hurdles to clear—if one can do such a thing.
The Minister set out the merits of two completely contrasting and
perhaps incompatible principles. One appeared to be certainty, which
apparently people welcome in relation to bad news such as the increase
in the state pension age. The other is the principle of flexibility,
which apparently people welcome in relation to things that are good
news, which they would not want introduced too quickly in case that
were imprudent.
James
Purnell:
I obviously failed to explain this point in my
speech, so I shall try in an intervention. Does the hon. Gentleman
recognise that delaying the increase in state pension age in 2024 would
make no difference to affordability in
2012?
Mr.
Laws:
What I recognise is that the Government have said
that the restoration of the earnings link is really an issue for the
longer-term costs, even more than for the short-term costs, and that
therefore the two things must be inextricably linked. I am saying that
pensioners ask me how they can be inextricably linked when they are
told with great certainty that they are going to have to work for
longer even though they do not know for sure when the earnings link
will be
restored.
James
Purnell:
By definition those pensioners will not have to
work for longer because they are already retired. Future generations
will have to work longer.
Mr.
Laws:
That certainly is the case. All of the population
share the concerns, but it is the pensioners who feel short-changed by
a package that does nothing for them. No doubt they have read in detail
the paper
that was issued alongside the Bill. The regulatory impact assessment
gives all the figures; they are very detailed and superbly prepared by
the Department and its officials, whom I congratulate on the clarity of
the document. In that very clear document, it is very clear that total
pensioner benefits as a share of gross domestic product will fall
between 2008 and 2011. Indeed, in the period from 2011 to 2020 there
will be a lower share of pensioner benefits, including pensions, in GDP
than there is today. That explains why there is such a lack of
comfort.
I have still
not heard a satisfactory explanation of why the restoration of the
earnings link is going to be affordable without any shadow of doubt in
2015. This is a definition of uncertainty which baffled the Select
Committee and which baffled me. This all begs the question why the
Government have made this decision. Is it because the Chancellor of the
Exchequer is still not very happy with this policy or that he was
bullied into it? Will he change his mind later? Will he attempt to
short-change pensioners in some way? Or is it the opposite of this?
Does the Chancellor of the Exchequer want to make this announcement of
good news himself? Does he want the flexibility, perhaps even within
months of becoming Prime Minister, if he does become so, to make this
grand announcement?
When I asked
the Minister whether he was absolutely sure and could give me a
guarantee that the Government were committed to not introducing the
earnings link before 2012, I thought I detected a little bit of
wriggling. The Minister knows that it is quite possible that the
Chancellor will suddenly decide that this is immensely popular and
that, if he is going to get all the credit for it, the measure may
suddenly be brought forward. Then the Minister and all his honourable
Friends will say how marvellous it is and what genius this man has and
how wonderful the Labour Government are and tell us all that we should
be grateful for it.
We know that positions can
change. We know sometimes that even the Minister has not been updated
on the latest policy thinking of his Department. He told us last week
that the Government did not have it in their mind to change the basis
on which lone-parent benefits were available and we wake up this
morning to discover that that is back in the melting pot. How confident
can we be, therefore, that the Government really have a clear policy on
the 2012 date? Maybe we should all be optimistic and actually think
that this deliberate uncertainty—or flexibility, as the Minister
described it—is actually designed for the Chancellor of the
Exchequer.
On the
final point, the Minister said that there was a great deal of
uncertainty about means testing and that we should not rely too much on
the estimates that I cited earlier about the consequences of delaying
the earnings link for the number of people on means testing. I pointed
out to him that all I did was to quote the figures that are available
in the notes supplied to the Select Committee from his own Department.
All members of the Committee have the very highest view of the
effectiveness and ability of his officials to make these detailed
calculations. That is why we take seriously the fact that they have
indicated that there could be a gap of 5 or 6 per cent in the number of
people on means testing, based on a potential delay in the earnings
link.
James
Purnell:
I have great respect for the hon. Gentleman and I
would not want him to take what I said out of context. What I was
saying was that single percentage figure differences in 2050 should be
treated with the caution as set out in the paper that we published on
this issue. If one is projecting 40 years away, that is well within the
margin of error. What I said in my intervention was that the forecast
that we have for the means-tested population in 2050 is 28 per cent.
The figure that the hon. Gentleman got for introduction in 2008 was 26
per cent. That was the only point that I
made.
Mr.
Laws:
I do not want to labour this, but the 28 per cent.
that the Minister cited is precisely the amount that appears in the
memorandum, based on the dates that the Government envisage introducing
this policy. Surely I am correct to say that the earlier the link is
restored, and the higher the basic state pension, the more reasonable
it is to assume that the number of people on means-testing will be
lower.
I accept that
the proportion of people on means-testing in 30 or 40 years’
time is very uncertain and, as the Minister knows, we have had plenty
of debates in which we have aired the issue of uncertainty about the
total level. Surely he would accept, however, that, whatever the
central estimate for 2050, it stands to reason that the earlier the
earnings link is restored, the lower the proportion of people who will
be on means-testing. Whatever that estimate is at the current time, it
must surely be less the earlier the earnings link is restored, and that
is a fundamental part of the Government’s
policy.
James
Purnell:
Of course that is right but that is only a
theoretical point until the hon. Gentleman tells us how he would fund
such a policy—whether the 5p increase in pension spending or the
abolition of S2P in the guaranteed credit
premium.
Mr.
Laws:
Without going too far astray of my amendments, we
will certainly set out before the next general election very clear and
costed plans which will not require increases in taxation but will
demonstrate how we will reduce existing areas of Government expenditure
in order to deliver on our policies on the earnings link and the
citizens pension. I detect that that is probably as far as you want me
to go, Mr. Taylor, but I look forward to the Minister
attending my seminar in the same way as I look forward to attending
his—neither of which has a date yet.
The one area where we have made
some progress in clarifying the Government’s thinking is that
the Minister did not appear to have an objection to the suggestion that
an announcement on the restoration of the earnings link should be made
at the beginning of the next Parliament, whenever it comes. I think his
objection to our amendments on that point was not so much that they
were objectionable on principle, but simply that he could not see how
the Bill could be amended to make that point. If he is willing to
confirm that the earnings link announcement will be made in the first
year of the next Parliament, however early that is, that would be
extremely reassuring. I note that he is not looking at me so perhaps I
am being excessively optimistic. He may want to write to me to give me
that warm assurance in the event that the Chancellor rushes to the
polls after the Brown bounce.
We have had a useful airing of
some of those issues. As the Minister anticipated, I beg to ask leave
to withdraw the
amendment.
Amendment,
by leave,
withdrawn.
Amendment
proposed: No. 4, in clause 5, page 6, line 13, leave out
from ‘shall’ to end of line 14 and insert
‘determine the general level of
earnings as set out in subsections (8A) and
(8B).
(8A) If the average earnings index
(including bonuses) for the whole economy for September in any year is
higher than the index for the previous September, the Secretary of
State shall as soon as practicable make an order in relation to each
sum mentioned in subsection (1), increasing each sum, if the new index
is higher, by the same percentage as the amount of the increase of the
index.
(8B) In making the
calculation required by subsection (8A), the Secretary of State shall,
in the case of the sums set out in subsections (1)(a) to (1)(d)
inclusive, round up the result to the nearest 10
pence.’.—[Mr.
Waterson.]
Question
put, That the amendment be made:—
The
Committee divided: Ayes 6, Noes
9.
Division
No.
4
]
AYESNOES
Question
accordingly negatived.
Amendment proposed: No.
78, in clause 5, page 7, line 3, at end
insert—
‘(6A) The Secretary
if State must, on or before 5th April 2009, announce his decision as to
the date from which he will implement the provision set out in this
section.’.—[Mr.
Waterson.]
Question
proposed, That the amendment be
made:—
The
Committee divided: Ayes 6, Noes
9.
Division
No.
5
]
AYESNOES
Question
accordingly negatived.
The
Chairman, being of the opinion that the principle of the
clause and any matters arising thereon had been adequately discussed in
the course of debate on the amendments proposed thereto, forthwith put
the Question, pursuant to Standing Orders Nos. 68 and 89, That the
clause stand part of the
Bill.
Question
agreed to.
Clause 5 ordered to stand
part of the
Bill.
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| ©Parliamentary copyright 2007 | Prepared 31 January 2007 |