Mike Penning, MP for Hemel Hempstead, used the opportunity of a Conservative-led debate on pensioner poverty to call on the Government to address the issue of the Dexion pensioners being taxed at 40% when they receive their compensation for five years of stolen pension.
Mike told MPs:
"…because this has taken five years, a lot of these pensioners will now get a lump sum, which will put them into a completely different tax bracket from the one that would have applied if they had been given their pension, to which they had a right, five years ago.”
He added:
“It cannot be right for the Government to bring forward a compensation package that will force pensioners to pay more tax than they would have done if they had had their pension by right.”
Mike went on to raise the plight of a smaller group who will now lose out because of the abolishment of the 10 per cent rate. If they had received their pensions over the past 5 years they would have been taxed at 10 per cent, now their compensation will be taxed at double that.
He told the House:
“Another group—a smaller group, I admit—comprises those who are the most needy and who would have paid only 10p in the pound before the Government abolished the 10p tax rate. Surely it cannot be right for any Government—let alone this Government, who have promised to compensate the people who have lost out—to do that.”
In his speech, Pension Reform Minister Mike O’Brien refused to take up this matter and said this was a matter for the pensioners concerned to take up with their tax office.
Speaking after the debate Mike said:
”It is incredible for a Minister to stand at the despatch box and congratulate the Government for arranging a 90% compensation package for the Dexion pensioners. The Government had to be dragged screaming into this position and hard-working pensioners – who had paid into their pensions all their working lives – were forced to take the Government through the courts and the Parliamentary Ombudsmen in order to secure compensation.
”It is not right that individual Dexion pensioners are left to fight this out with the tax office. They haven’t done anything wrong – they paid into their pensions all their working lives only to see these pensions stolen from them. The Government has a duty to sort this matter out.”
FULL TEXT OF MIKE'S SPEECH
Mike Penning (Hemel Hempstead) (Con): It is a pleasure to follow my hon. Friend the Member for Broxbourne (Mr. Walker). We have come to expect a passionate speech from him, and we heard another one this evening.
I am pleased to see that the Minister has returned to the Chamber, because I want to address some of the points that he made in his speech. I shall also try to persuade him to deal with the question that I asked him in an intervention earlier. If he does not manage to do so on this occasion, perhaps he will write to me.
In his opening remarks, the Minister said what a wonderful situation the country is in at the moment. He said that there were no marches or demonstrations and that everything out there is rosy for our pensioners and other constituents. I am not certain what world he lives in, but that certainly is not the case in my constituency, and I draw his attention to some recent demonstrations. Pensioners have joined me to demonstrate against the school closures in my constituency that the Government are, sadly, pushing through. The Government will not listen to the local pressure groups that have asked them not to close those schools now, while we are short of numbers, because they are imposing 18,000 homes on us, whether we want them or not, and children will be coming through.
The Minister could have joined me on the picket line at my local fire station, which has recently been closed because of financial problems. It is not the first time that I have been on a picket line at a fire station, as I used to be a member of the Fire Brigades Union.
David Taylor: On a point of order, Madam Deputy Speaker. I wonder whether we could consider what is being said, because fire station closures and school closures do not seem immediately to be linked to the topic of debate.
Madam Deputy Speaker: Order. I think that is for me to decide. I was allowing the hon. Gentleman some leeway in the hope that he would soon address his remarks to the motion on the Order Paper.
Mike Penning: Thank you, Madam Deputy Speaker. I was addressing the comments that the Minister made in his opening remarks. If the hon. Member for North-West Leicestershire (David Taylor) had been in the Chamber at that time, he would have known that and would not be wasting the Chamber’s time now.
If the Minister thinks that no demonstrations are taking place and that pensioners are not concerned, he should join the hundreds of thousands of people around the country who are demonstrating against hospital closures, not least the 30-odd thousand who have signed a petition in my constituency. He mentioned that there is no bed blocking, but the reason why there is not much bed blocking in my constituency is that the wards are closing. Many care homes are also closing, and that is causing even more problems for hospitals in other areas that are trying to bring patients back to my constituency, because there is nowhere for them to go.
The Minister said that things are better today than they were 11 years ago. At that time, I was in a union that is no longer affiliated to the Labour party, and we made contributions to the Labour party—I must admit that I had my donations removed—in the hope that it would address the issues that it had talked about so much when it was in opposition for so long, but that has not happened. The figures that we have heard today are frightening—not least those given by the hon. Member for Cardiff, Central (Jenny Willott)—and show the many problems of so many pensioners who are still in poverty.
Let me draw the Minister’s attention to one of the biggest demonstrations by pensioners in this country. The hon. Member for Cardiff, Central has joined me on many demonstrations, at which, to draw attention to the plight of the 140,000 pensioners whose pensions were stolen from them, many middle-aged men who had never demonstrated in their life took off most of their clothes just to get some publicity and to get the Government to listen to their plight.
The Minister has proudly said that he has addressed that issue and that the Government have come forward with a package for those pensioners, who will get 90 per cent. of what they would have got, but I find that slightly difficult. I know the Minister well and I know that he has tried hard, but that has taken five years of promises, meetings, more meetings and demonstrations by people who had done the honourable thing. I have made this speech many times before in the House, and I know that the Minister agrees that they are honourable people who did the right thing. They worked hard and did not spend their money on holidays in lavish places, but put it into a pension scheme that Governments had said was safe.
This Government were taken to the parliamentary ombudsman on this matter, who found that they were in breach and that there had been maladministration. That is a fact that even the Minister cannot deny. He might disagree with the conclusions that were reached, but that is what the independent ombudsman found. The Government challenged the finding and said that they would not pay the compensation that the pensioners deserved and went to court, where they lost again. They went to the European Court, but they lost again, although they kept saying that they would not. They challenged the ruling in the courts.
For the Minister to stand here and say what a wonderful job the Government have done in compensating those pensioners five years later sticks in my throat slightly, because I know that although he has done his bit, his predecessors have been misleading, frankly, in many ways, regarding the promises that were made. I do not know why the Government did not listen to the parliamentary ombudsman at the time. That is exactly what previous Governments had done; they had adhered to the parliamentary ombudsman’s report, come up with a compensation package and paid the compensation.
One of the great problems—I know that the Minister knows this to be a fact—is that, because this has taken five years, a lot of these pensioners will now get a lump sum, which will put them into a completely different tax bracket from the one that would have applied if they had been given their pension, to which they had a right, five years ago. It cannot be right for the Government to bring forward a compensation package that will force pensioners to pay more tax than they would have done if they had had their pension by right. Earlier on, the Minister said that this was a matter for the pensioners to take up with the taxman, but it is not; it is a matter for the Government to sort out. It is not the pensioners’ fault that they did not get their pensions. It was due to this Government’s maladministration—that is the parliamentary ombudsman’s word, not mine—that they failed to get their pensions.
Two groups of people are really suffering, at both ends of the spectrum, in relation to income tax. There are those who will receive a lump sum and will have to pay 40 per cent. of it, which they would not have had to pay if they had had their compensation earlier. Another group—a smaller group, I admit—comprises those who are the most needy and who would have paid only 10p in the pound before the Government abolished the 10p tax rate. Surely it cannot be right for any Government—let alone this Government, who have promised to compensate the people who have lost out—to do that. If the 10p rate had still been in place, and if those people had been given the pension that they deserved, they would not have to pay the 20p in the pound that they will now be asked to pay. I have not seen any compensation package that will protect those people.
Anne Main (St. Albans) (Con): I thank my hon. Friend for giving way. He and I share the same group of pensioners who have been affected by the Dexion pension collapse. He has put forward a cogent argument in relation to the package that has now been put in place, but that package will not compensate for the stress and worry that people went through, and the life-altering changes that they had to make during that time, when they did not know how much money they would be able to spend or what debts they might incur. On top of all that life-altering stress and change, it seems doubly unfair to tax them at a higher rate. The Government really should show a bit more compassion over this.
Mike Penning: I thank my hon. Friend for that intervention and pay tribute to the work that she has done on behalf of her constituents on this issue.
As the Minister knows, some of those pensioners did not live to see the end of the process, and there are widows out there who are suffering as well. They will now fall into the higher tax bracket. Some of them have had to go to work because they had no income from the pension that they had paid into. They have already paid tax on the income that they earned, and now they will be asked to pay tax on top of that, which will take them into the 40 per cent. tax bracket.
However, the particular people for whom everyone in the House should feel sorry, and for whom the Government must do something, are those who would have paid only 10p in the pound before, and who are now going to have to pay 20p. They are the most vulnerable pensioners—in my constituency, they worked for Dexion—who earned the lowest amount, but they are now going to be hammered. That is not compensation; that is vindictiveness.
6.38 pm
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MIKE'S OTHER CONTRIBUTIONS TO THE DEBATE
Mike Penning: The Minister is quite right: I am going to raise the matter of the 700 constituents who had their pensions stolen from them, and the 140,000 pensioners throughout the country—the minimum amount—who had their pensions stolen. They had to wait five years for the Government to come up with the compensation that they deserved, after the Government had been dragged through the courts, and in front of the ombudsman, and found guilty. What would the Minister say to those of my constituents who are still waiting for compensation today? Some of them will be taxed at a rate of 40 per cent., not the 20 per cent. rate at which they should have been taxed at the time.
Mr. O'Brien: As it happens, this morning, I signed the order that will ensure that those payments are made. They should receive their payments very quickly. We took the order through the House recently so those payments should be made very shortly.
Mike Penning: That sounds like great news for my constituents and the other 140,000 who have been waiting for five years-plus for the compensation that they deserve. What about the taxation issue? Will they be taxed at 40 per cent. on the lump sum? Will those who would have been taxed at the 10p rate before the Government abolished it—the poorest of those pensioners—have to pay tax at the 20p rate now?
Mr. O'Brien: On the reasons why the situation arose, and why his constituents had some difficulties when their pension scheme went down, he should remember that the regime under which the difficulties arose was created by the previous Conservative Government. His party is not without fault in that matter, and my party did arrange to compensate his constituents. On taxation, the people involved will be taxed, but will be able to refer that tax back to the period during which they would have otherwise received their payments. They will have to make arrangements with the taxman about how those payments are reclaimed, and they will be able to do so at the end of the year. We have, as he knows, consulted various people affected, including some of his constituents, to see what the best arrangements would be to deal with the matter.
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Mike Penning: The hon. Lady raises an important point. Traditionally, we have relied on private provision, but she will know from her own figures that that is now in massive decline, and that that has a lot to do with people’s fear of having their pension robbed by the Government.
Jenny Willott: I thank the hon. Gentleman for his contribution to the debate. I would like to turn to the issue of women’s pensions.
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