§ 1. Mr. Haynes
To ask the Secretary of State for Social Security whether the Government Actuary's estimate that personal pensions schemes would cost the national insurance fund £2.018 billion in 1990–91 has been updated; what is his most recent estimate of the cost; and what the cost is expected to be in 1991–92.
§ 6. Mr. Martyn Jones
To ask the Secretary of State for Social Security what is the most recent estimate of the cost of personal pensions schemes to the national insurance fund in 1990–91; and what is the cost expected to be in 1991–92.
§ The Secretary of State for Social Security (Mr. Tony Newton)
The Government Actuary's latest estimate of the cost to the national insurance fund in 1990–91 of personal pensions is £1,910 million, assuming that 3.9 million personal pensions are in force by the end of 1989–90. If the assumed number in force remains unchanged to the end of 1990–91, then the estimated cost in 1991–92 is £2,090 million.
§ Mr. Haynes
This is another con trick by the Government. The Secretary of State did not admit, but I hope that he will, that the Government will run the insurance fund into a deficit of £500 million. That will be their answer. Who will suffer? In the main, it will be pensioners. That is how the Government treat pensioners. They should be ashamed of themselves. They are filling the pockets of the rich by pouring money into private pension funds so that somebody can get a nice rake-off at the expense of pensioners. It is a shocking state of affairs.
§ Mr. Newton
The hon. Gentleman made his points with his characteristic charm, but he appears not to have looked at the figures on the national insurance fund, which currently is running a surplus twice as high as the level recommended by the Government Actuary. It is expected to be higher in the forthcoming year, partly as a result of steps that I have already taken to deal with a problem that might otherwise have arisen. The earlier statistics show 876 that about 90 per cent. of people with personal pensions earn less than £13,000 and that more than 40 per cent. earn less than £6,000 a year. If the hon. Gentleman regards those people as rich, he is living in a dream world.
§ Mr. Jones
I cannot ask my question in the manner of my hon. Friend the Member for Ashfield (Mr. Haynes), but if, as the Secretary of State suggested, the fund is in surplus, why is it not being used to pay pensioners a decent pension in line with European pensions? Is not the net effect, as my hon. Friend the Member for Ashfield said, that pensioners are paying for the profits being made by insurance companies?
§ Mr. Newton
Let us be clear, because there is considerable misunderstanding, that the overwhelming bulk of the cost is not the so-called incentive but the rebates for contracting out introduced by the Labour Government in the mid-1970s. The hon. Member for Oldham, West (Mr. Meacher) has not suggested the ending of contracting out. A major reason for the expected drop in the balance of the fund is the substantial reduction in national insurance contributions which the Government made last October to help many lower-paid people.
§ Mr. Newton
I must leave Opposition Members to explain that. Personal pensions have been an astonishing success, which reflects people's welcome of the greater choice that they now have. The Opposition's attitude is yet another illustration of their persistent unwillingness to let people decide things for themselves.
§ Mr. Meacher
On what possible grounds can even this Government spend £2 billion on a bribe for people to invest in a highly speculative and risky pension scheme when they freeze child benefit for three years, deny pensioners a share in rising national incomes by breaking the link with earnings and will not even financially protect pensioners from eviction from residential and nursing homes? When will the Government ever learn that the people totally repudiate that order of values?
§ Mr. Newton
As the hon. Gentleman knows, it is absolute nonsense to suggest that, in general, pensioners have not been sharing in the country's rising prosperity. I have always accepted that there are less well-off pensioners, whom we have been trying to help in other ways. Since the Conservative party took office, pensioners' incomes have, on average, been rising faster than those of the rest of the population, partly because of the growth of occupational and now personal pensions, adding to the security of provision for retirement. If the hon. Gentleman's remarks about rebates, which embrace the existing contracting-out—
§ Mr. Newton
The hon. Gentleman described as a bribe a sum, two thirds of which consists of the rebates introduced by the Labour Government in the mid-1970s. I take the hon. Gentleman's remarks as a clear threat to the continuation of those arrangements.