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The noble Lord, Lord Skelmersdale, noted the demise of the de minimis £10 and asked whether we should have a de minimis at all. In considering any detailed implementation of proposals we expect to stem from the Young review, we can consider whether it makes sense to make small payments in the form of regular payments or in some other way. The administrative issue that the noble Lord raises is reasonable. On the number of people who are currently being paid £10 or below, the de minimis has already been lifted for initial payments. We debated that in the Pensions Bill 2007. Significant numbers may already be receiving less than that amount, but I do not have a number. If we can readily obtain one, I would be more than happy to provide that information to the noble Lord.
The noble Lord, Lord Skelmersdale, referred to the 25p for the over-80s. If I were a betting man, I would bet that that will be gone before the noble Lord reaches his entitlement to it, but who knows? He also asked about the cost to date. Two figures are always used: a net present value figure, which is associated with the basis on which these things are reported and the resource accounts; and the cash figure, which is just the sum total of the cash amount over the whole life of the scheme. I do not have right up-to-date cost
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Both noble Lords made reference to the 90 per cent figure of entitlement. As was made clear previously, and was emphasised by the Prime Minister at Question Time, the extra value that we believe is possible from the Young review, together with matching funds, would take us towards 90 per cent. On the basis of the Prime Minister’s announcement, that 90 per cent is now guaranteed. We have to await publication of the Young review to see quite how the extra assets are—
Lord Oakeshott of Seagrove Bay: I did not hear the answer to the question, which was very specific from me and, I believe, fairly specific from the noble Lord, Lord Skelmersdale. On the 90 per cent of core pension, what percentage typically of PPF-level benefits would that be? It is a very simple question. What is the answer please?
Lord McKenzie of Luton: It is a very simple question. I was coming to core pension. It would be wrong of me to pre-empt what is in that review. The 90 per cent figure—as we have previously discussed and was the aspiration that we talked about when we looked at the interim Young review—was of core pension.
Lord Oakeshott of Seagrove Bay: I am sorry. This has been going on for some months now. The campaigners have made it clear that they believe that the figure is of the order of 50 per cent or 60 per cent. I cannot see in any way how we need to wait for the Young review. If the Minister does not know, will he please give us an undertaking that he will immediately calculate that? This calculation must have been done in the DWP, given how much pressure there has been on it. If he does not know the figure, it is a disgrace. Will he promise to produce it next week?
Lord McKenzie of Luton: When we previously discussed the figure of 90 per cent we were referring to 90 per cent of core pension. I shall come to what that means in a minute. As to what may or may not be in the review, I ask the noble Lord to bear with us for a few more days.
Lord Oakeshott of Seagrove Bay: I am sorry but that is not a satisfactory answer. Will the Minister undertake that next week, when the review is published, at the same time the DWP will give figures on the 90 per cent core pension, and what percentage that is of the benefits that people would be entitled to under the PPF? That is all we are asking for. The Government must know the figures, but if they do not know them now will they please publish them next week?
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Lord McKenzie of Luton: I shall review that question when we have seen what is covered in the report. The noble Lord will have to bear with us until it is published, which may or may not satisfy his quite proper detailed inquiry. To the extent that it does not, I shall undertake to be more specific on outstanding residual issues. I hope that that satisfies the noble Lord.
Both noble Lords touched on the issue of the amount conceived by the Government to put into the scheme and the difference between core pension and what otherwise would have been pension entitlement. We should be clear that it was never conceived as a pension scheme; it was an income replacement proposal to deal with the challenges that individuals faced. There are difficult judgments within that, such as the net present value and total cost figures of where we are today, which are considerable sums of public expenditure. Those are the sorts of difficult judgments that have to be faced and analysed in government.
I have a feeling that I have answered most of the questions of the noble Lord, Lord Skelmersdale, but doubtless he will remind me if I have not. The noble Lord, Lord Oakeshott, referred to the vigil. I know that my colleague Mike O’Brien was there. I am pleased that the noble Lord has the T-shirt.
I reiterate that whatever anger has been generated, the Government have always had great sympathy with the plight of individuals who have lost their pensions. In a sense it is easy to do that; it is just words. The challenge has been deciding what goes in place to support those people. That is the journey we have been on, and I hope that what comes out next week will be the end of that journey. The noble Lord asked about the difference between the 80 per cent and 90 per cent rate and what that would mean per year, and he referred to previous correspondence between us. In light of what the Prime Minister said at Question Time, it will be best to wait until next week. If it is not clear from that, certainly I can write further to the noble Lord.
He asked whether I read Pensions Week. The answer is no but I shall put it on my reading list. I am still ploughing through the 1974 Second Reading of the Health and Safety at Work etc. Act when Michael Foot was Secretary of State, as part of my understanding of my ministerial responsibilities.
The noble Lord asked about administration and why it could not be dealt with by the PPF. There was a review last year of FAS administration, which looked explicitly at whether the PPF should administer FAS, and concluded that it should not. We need to look at that again to see how it can best be administered in the light of the Young report. I have not answered when next week it will happen; it is not within my gift. The usual channels have an influence on this, but it is not unreasonable that it will happen before the House rises. I do not think I am on my brief in saying that, but that would be reasonable and what we would want to achieve.
Going back to the issue of administration, there have been challenges—certainly on cost. For the first year, which we are only part of the way through, we
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I hope that I have dealt with each of the questions that have been asked. There was a reference to Northern Rock and how quickly the Government acted. There is no parallel. For a start, the funding that went into Northern Rock was a loan and not a payment or inevitably a call on taxpayers’ money. However, the judgment was that the Government acted to avert a threat to the very stability of the financial system, which is why they acted as they did and with the speed with which they did. It is therefore not right to make that parallel.
Lord Oakeshott of Seagrove Bay: Does the Minister not understand that the way in which the FAS pensioners have been treated is a threat to the future of the pensions system and the trust in it?
Lord McKenzie of Luton: That is not right. Schemes that have become insolvent and are being wound up of course present challenges for pensioners who were in danger of losing out, but it was this Government who put in place the protection fund and the financial assistance scheme. Indeed, this is the only Government who have acted to seek to protect pensioners in a changing environment. Other reforms that are being made to the state pension, which we dealt with earlier this year, and the plan for the second Bill, which is now in the Commons and aims to build greater trust and engagement in the occupational pension scheme, take us in the other direction. The thrust is to encourage and to help people to understand how important it is to save for their retirement and the importance of pension schemes as a key component of that.
Lord Skelmersdale: Both the noble Lord, Lord Oakeshott, and I asked for definitions of “expected pension” and “core pension”. I am quite prepared for the Minister to respond by saying that this is not the time to give them. However, the time has come to have it written down in the Official Report. Will the Minister therefore undertake to make a Written Statement on that subject? If he does not, we shall be forced to table joint Questions for Written Answer.
Lord McKenzie of Luton: Let us see what comes out of the report next week. If it is not clear then, I am very happy to write to both noble Lords to ensure that there are very clear definitions of those phrases. Does that satisfy the noble Lord?
Lord Skelmersdale: I was going to say that on this occasion that is really not the same. I know that the Minister is very good about putting copies of his letters in the Library, but quite honestly this has got to the point where, irrespective of what is in the Young report next week, these terms really must be defined much more publicly than simply in a letter to the noble Lord, Lord Oakeshott, and me.
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Lord Oakeshott of Seagrove Bay: I support that request. That definition must be in the Written Statement which, following his helpful comment, we now expect by next Tuesday. If it is not, I am afraid that that is quite unacceptable and it is frankly discourteous to this House. The request, which the noble Lord, Lord Skelmersdale, and I are both making, is perfectly reasonable.
Lord McKenzie of Luton: I am helpfully reminded that the terms are already defined in regulations. Perhaps I can undertake to provide noble Lords with a copy of those regulations so that the terms are clear to them. We did touch on some core pension issues. A core pension obviously excludes some of the provisions. A routine pension might survive benefits. We also considered the extent to which there will continue to be uprating; and lump sum payments. The core pension does not typically cover that, but there is a definition in regulations and I will undertake to ensure that they are brought to the attention of Members of the Committee. If that proves insufficient, they can come back and we will find another way to make it absolutely clear to the wider world what these definitions are. But we are not trying to hide or cover up anything on this, particularly as I am reminded that it is already there in the regulations.
3.45 pm
Lord Oakeshott of Seagrove Bay: I am sorry to labour the point, but we are both asking a specific question. We can read the regulations, but we want to know what the DWP’s assessment is of the percentage that core pensions will be of benefits that people will be entitled to under the PPF. That is the question we continue to ask.
Lord Skelmersdale: I honestly think that this has gone on for quite long enough. The Minister has done his level best to produce an answer. He is probably right that there is a definition of the term “core pension” buried somewhere in regulations. I do not think that there has ever been a definition of “expected pension”. I know what I think it means: what the pension’s contract actually said that it would be. But then we have this extraordinary conflation of “core expected pension”. That is certainly where my confusion comes in—and, if I may speak, for once, for the noble Lord, Lord Oakeshott, perhaps it is where his confusion comes in.
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We await next week. I promise the Minister that if he thinks that he has had hell now, he has not had half of what he is going to get next week.
Lord McKenzie of Luton: I look forward to next week. We can be clear on the definition. Expected pensions will differ depending upon the nature of provision in the individual schemes, but it is perfectly possible to be clear on the definition and what “core pension” is. The basis of assessment of FAS support would be clear; we will set that down. If Members of the Committee are not satisfied by the time the review is published, then we will find a means, in a robust way and as transparently as possible, to ensure that those definitions are with Members of the Committee and shared with their colleagues. I cannot be more specific than that.
Lord Skelmersdale: No, indeed. “We’ll meet again”, as the song goes.
Lord McKenzie of Luton: I thought you were going to ask a question about prisons there.
We have heard further criticism of the way in which FAS operates and the speed at which it has been making payments, but I remind Members of the Committee that the operational unit has paid out more than £11 million. It is making real progress, and will continue to work closely with schemes to obtain the necessary data to enable us to pay affected members as soon as we are able. We are making steady progress on payment numbers. I should have quoted numbers earlier: we expect to reach around 4,000 payments by the end of this year subject to confirmation of personal details.
I hope that Members of the Committee will therefore join me in supporting the aims of the FAS to provide help to those people most affected by pension losses. I understand that many Members of the Committee are frustrated at not being able to examine the final recommendations of the Young review and the Government’s response before this debate. While I sympathise with such feelings, I hope that, whatever our conflicting views on the overall policy, we can today make progress towards getting assistance to more people as quickly as possible, and these regulations are ours to do that. I therefore commend them to the Committee.
On Question, Motion agreed to.
The Deputy Chairman of Committees (Baroness Gould of Potternewton): The Committee stands adjourned until Monday 17 December at 3.30 pm.
- The Committee adjourned at 3.48 pm.
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