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Willetts: Action on pensions

Speech to Conservative Party Conference 2004

My children are growing up in a country very different from the one I grew up in. A country that has changed in so many ways. A country where we face new challenges and new insecurities.

There are new opportunities in education and at work. But people don't feel secure.

We can borrow money when we need to. But it is easy to borrow too much.

More women have the chance to build a career. But balancing work and family seems more of a struggle than ever.

Only the other day someone sent me this short letter which shows in a single sentence how the world is changing. Here it is:-

"Yesterday I had to leap off the pavement to avoid being knocked down by an elderly woman driving an electric buggy flat out as she talked into her mobile phone."

So yes, it is a changing world, and we should embrace change. It means new opportunities not just for young people but for older people as well. We must look to the future with optimism.

But however much we change, that doesn't mean that we should forget. We shouldn't forget our obligations to older people. After all, what we enjoy today is only here because they raised us, they cared for us, and yes, sometimes they died for us. That is why the sheer injustice of this Government's treatment of our old people is so wrong.

Do you know how many pension schemes have wound up since Labour came to office? A shocking 10,300.

And of course you know how much Labour have taken from our pension funds with the worst stealth tax of the lot £5bn a year. Every year. Year after year. That makes £35bn already taken from our hard-earned savings.

And as our pension funds lose value what do Labour do - they drive people on to means-tested benefits instead. They have set up the new Pensions Service to administer the new Pension Credit. Let me tell you how they are getting on.

There is the pensioner who received an official letter saying that his Pension Credit would be back-dated to the 28th February 1852.

There was the telephone helpline number which they printed wrongly so instead of getting through to the Pension Service baffled pensioners found themselves speaking to the Gay and Lesbian Directory.

There was the day last month when the whole system broke down and pensioners all over the country were turning up at post offices only to be told that they could not get their money.

And worst of all there are 1.7 million, yes 1.7 million pensioners entitled to the Pension Credit but still not getting it because it is all so nightmarishly complicated.

Means-tests on this scale are a threat to the dignity and independence of today's pensioners. And how on earth will we get the next generation to save if they see their parents who have worked hard and saved hard being punished for their prudence?

So here we are with this enormous social change. People are living longer and staying more active than ever before. Retirement is becoming a more and more important part of our lives. We want it to be our chance to do the things we never had time for when we were working. But we can only do that if we prepare for it by saving more while we are still earning. Any Government that really understood how our lives were changing would be helping us to do just that. But Labour are stuck in the past. They don't think older people can be independent. They do want to help pensioners, but they want pensioners to depend on them for that help. That is why they have got more pensioners on means-tested benefits than ever before.

Just about everyone agrees we need to reverse the spread of means-tested benefits and improve incentives to save by increasing the value of the basic state pension. It's not just us. It's business, and the trade unions. It is the pension funds and pensioners themselves. There is indeed a progressive consensus that Conservatives have helped to shape.

But Gordon Brown is not part of it. Instead, he penalises our savings and means-tests our benefits. And that's not just an innocent mistake. It's because he really does want to determine everyone's income down to the last pound. It's what old socialism and new Labour have in common. And it doesn't go with the grain of human nature.

Conservatives would do things differently because we understand, as we always have, the human need for dignity and security.

So I can tell this Conference today that the moment a Conservative Government is in office we will send out a clear instruction that the pension should be uprated by earnings not prices. But there is something we can do now. We don't have to wait. We can tell pensioners today what a Conservative Government will do to help them. So, after this Conference we will be writing individually to pensioners in our target seats explaining that we are going to offer them a basic state pension better than ever before.

Ours is a promise they can trust because we have shown very clearly how we can pay for it. First, of course, as the basic state pension rises, fewer pensioners need to claim means-tested benefits.

In fact, we can take one million pensioners off the means-test in our first parliament alone. We are not going to abolish the Pension Credit but it will gradually be replaced by the higher state pension. We save money on means-tested benefits that pensioners don't like in order to put more money into the basic state pension which they do.

And we will get more money into pensions by abolishing the New Deal, which hasn't worked. Do you know how many young people were neither studying nor training nor working last month - 1,058,000. I have seen our lost generation of young people, in hostels for the homeless or out on the streets. Such a waste of young talent and energy is bad for society and above all it is bad for them.

We will replace the New Deal with a New Programme - Work First. There will be no place for so-called training schemes which play such a cruel trick on the young unemployed by raising their hopes of a job only then to dash them again. And we will sweep away the cumbersome bureaucracy of traditional Job Centres. Instead we will work with charities and commercial providers to transform the opportunities facing our young people.

And there is another group of people who have been badly let down. 60,000 people have lost their savings as their pension schemes have wound up without enough money in them. They were told that their pension schemes were safe and the money was guaranteed but they weren't and it wasn't.

We can't rebuild confidence in pensions in the future unless we tackle this injustice today. We will use the unclaimed assets of banks and building societies to rebuild the pension funds of people who have lost out through no fault of their own.

And we wouldn't stop there. We'd provide new incentives to save. In Britain today, it is so easy to borrow and so hard to save. We want to make saving as easy and flexible as borrowing. That's what our Lifetime Savings Account is all about.

We'd give employers a direct interest in making sure their employees had access to a decent pension scheme. And in our first year, we'd scrap the rules the rules that stop companies telling their staff about the benefits of joining.

There's another rule we'd change. It's the one that says if you live to 75 you must use your savings to buy an annuity even if you don't think it's a good deal. If you can't treat someone like an adult when they are in their 70's how much longer do they have to wait?

So we will sort out the mess of the state benefit system.

We will reform welfare to work.

We will help the victims of pension wind-ups.

We will provide better rewards for saving.

There is something else we must do. Do you know the most widespread form of discrimination in our country today? It is not gender or race or religion - though those problems have not gone away. The most widespread form of discrimination in our country today is on the grounds of age. It is our over 50s who have a wealth of talent and experience to offer who find doors slammed shut in their faces.

There is a useful organisation that tries to help older people find employment. It's called Wrinklies Direct. And its slogan? "Been there, done that, got the cardigan." We need more organisations like that and more opportunities for our older people.

What we've been discussing this morning isn't just about pensions. It isn't only about older people. It's about the way people live their lives today.

There is a common thread which ties together so many of the challenges we now face. In modern Britain, for all its opportunities, it is difficult to feel secure.

There are threats to security from without - terrorists who want to kill us and destroy our way of life.

There is the lack of security on our streets - the sense that public spaces no longer belong to us but to the criminals.

There are the parents who work flat out to provide for their children - but who don't know if their jobs will still be there next year.

And there is that nagging insecurity - the thought at the back of our minds that, because we're not saving enough, the things we want to look forward to in retirement will remain beyond our reach.

We have a Prime Minister who prides himself on being in touch with people. But how can he be in touch when he has made us more insecure by making it harder to save?

Longer, healthier lives are great news. When we're told we must look at them as a threat, how badly must we be going wrong?

We can do better than this. The chance to live longer and stay active for longer should be something we celebrate.

That's why we need a Government that is on our side when we save for retirement. It's why we need action on the pensions crisis. It's why we need a Government that believes in freedom but understands that to be truly free we must also be secure. It's why we need a Conservative Government."

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