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Dr. Lynne Jones (Birmingham, Selly Oak): Is not the problem that the state second pension will be extremely complex? My right hon. Friend says that it was been welcomed, but an analysis of responses--particularly from the pensions industry--shows that many respondents recoiled in horror at the complexity of the scheme. As a result of what the Tories did to the basic state pension, people have lost out by £27 a week. By introducing the state second pension, we are only replacing what was a good basic state pension. Would not it have been simpler to increase the basic state pension?

Mr. Darling: If I were my hon. Friend, I would be very careful about taking at face value what some respondents said about the state second pension. The complaint of many of them is that it exists at all. If there were no enhanced state earnings-related pension--the state second pension--people would be better off in an occupational pension scheme because otherwise they would receive very little.

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The Tories make the same complaint. They do not like the state second pension; their answer to its complexity is not to have such a scheme at all, leaving SERPS to give people precious little. In fact, they are not terribly keen on SERPS either. Their proposal was to privatise the entire pensions system at a cost of some £150 billion. It is not surprising that, three years after they announced that proposal, they have still to find any serious commentator prepared to buy it.

I believe that the system that we are introducing is not complex. It recognises that people earning less than about £9,500 a year will never earn enough to go into a funded pension on their own. They might do better in a company scheme, with the company contributing as well. We are determined to ensure that the state gives them far more than they would otherwise get.

Under our proposals, someone on £6,000 a year would be £40 a week better off because of the rebalancing of SERPS under the new state second pension. I should have thought that anyone--especially my hon. Friend the Member for Birmingham, Selly Oak (Dr. Jones), considering where she stands in our party--would have considered that particular piece of redistribution a good thing, to be supported rather than criticised.

Mr. Ian Bruce: Will the right hon. Gentleman give way?

Mr. Darling: No, I have not finished my point yet.

Although a number of respondents were concerned about the existence of the state second pension, the industry as a whole welcomes the fact that the state second pension will help not only low earners but moderate earners because they will have an enhanced rebate that they can take into their occupational pension, their stakeholder pension or, in some cases, a personal private pension.

Mr. Bruce: On advance corporation tax and the £5 billion that is being taken away from pension schemes, how does that compare with what the Government claim to be putting into the second pension? I am sure that a balancing act has been done somewhere in the Treasury or the Department of Social Security to work out how much extra the Government are getting out of future pensioners, rather than providing extra for them.

Mr. Darling: I wondered whether any Tory would be daft enough to raise that question today. Yesterday, the hon. Member for Havant (Mr. Willetts) made a great song and dance, with much synthetic anger, about the Government's changes to the ACT system. Let me give him an answer. As I was perusing the reviews for our pension changes announced yesterday, my eye was caught by an article in the Financial Times headed

"Pension funds show second best results in 10 years."

He said yesterday that our changes to ACT had denuded pension funds of all their money. Yet the article quoted the company that compiled the figures as saying:

"This was an incredible year, with an end-result beyond most people's expectations."

So much for all the accusations that we were damaging pension funds--they have had a very good year.

As I said yesterday, I do not want to go into too much detail on ACT. The changes simplify the corporation tax system. We now have the lowest corporation tax this

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country has ever seen--something the Tories could never achieve. We have a stable economic background and a healthy economy, which is helping pension funds and pensioners. To cap it all, I bet that the Tories have no intention of going back to the old system, so I discount all their synthetic anger.

The state second pension gives disabled people and carers a pension that they would not otherwise get. The pensions proposals that we announced last year, together with the proposals in the Bill, mean that all who can save now have the opportunity to do so. The changes that we are making as a result of the state second pension will help some 14 million people. That is a substantial amendment.

Finally, the Bill provides additional powers to deal with suspected fraud. We are giving inspectors substantial powers that they do not have at present. We are also continuing to align tax and national insurance contributions with new measures to extend national insurance contributions to benefits in kind.

Mr. Tony Baldry (Banbury): I have listened carefully to the Secretary of State's speech. Could he help the House by telling us to what extent the Bill increases or decreases overall public spending? Will he tell us the amount? It is not clear whether the Treasury will be better or worse off as a consequence of the Bill.

Mr. Darling: On the state second pension, the answer is that the Bill increases expenditure by about £5 billion. [Hon. Members: "Ah."] It is all in the financial memorandum. If hon. Members care to read that document, they will find out what the position is.

The Bill contains a radical package of measures to build a welfare state fit for the needs of the 21st century. It will be a welfare state founded on fairness and opportunity--two concepts that Opposition Members would not begin to understand. The measure will be fair for those who meet their responsibilities, but will be tougher on those who are not prepared to face up to their responsibilities. It links the right to benefit with the responsibility to comply with obligations. It is fairer for low-paid people, for carers and for disabled people with broken work records. It will help more than 14 million people on pensions.

We are reforming the Child Support Agency; something that is long overdue and that it falls to a Labour Government to deliver. We are making better pension provision at present and in the future--something that only a Labour Government can do. We are making changes to the benefit system so that it is far tighter and far more affordable, and will be far more sustainable in the future.

We are building a welfare state that will be supported. Step by step, we are delivering: we are ending child poverty; we are providing opportunity and we are building a fair society. I commend the Bill to the House.

4.31 pm

Mr. David Willetts (Havant): I beg to move, To leave out from "That" to the end of the Question, and to add instead thereof:

"this House notes that the Child Support, Pensions and Social Security Bill will make the social security system yet more complicated; regrets that the child support formula will reduce the

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entitlement to child maintenance of many parents with care; believes that the transitional period risks causing further resentment amongst people caught between two child support regimes; deplores the complexity of the Government's proposals for the state second pension; believes that the lower earnings threshold will act as a barrier to people moving into private provision; regrets that important features of the state second pension are being left for later regulation; and accordingly declines to give the Bill a Second Reading because it represents a missed opportunity on the part of the Government to reform social security."

I begin with the same part of the Bill to which the Secretary of State referred--child support. I confirm that we agree with him on the fundamental principles of reform; indeed, they go back to our Child Support Acts 1991 and 1995. We believe that biological parents have an inescapable financial obligation to the children whom they bring into the world. Furthermore, unlike the Liberal Democrats, we believe that we cannot simply go back to the courts--on that we are with the Government. We need an effective administrative system in order to secure the financial support that all parents should give to their children. That was common ground when we introduced the original legislation, and it remains so.

The Opposition also accept the need for reform. Every Member is aware--not least from our constituency surgeries--that the Child Support Agency is not working. We accept that the formula is too complicated and that more emphasis should be placed on enforcement. That is common ground and we support the Government's proposals on those matters.

However, we have serious concerns about how the Government's proposals will work in practice. In that regard, I learned much from the work of the Select Committee on Social Security. I greatly appreciate its work. The Committee undertook a thorough investigation of this subject last year. The Opposition think that it is wrong that, under the Government's proposals, no account will be taken of the income of the parent with care. For example, the parent with care--often, but not necessarily, a woman--may remarry. He or she might then be in favourable financial circumstances, perhaps much more favourable than those of their ex-spouse, and there will be widespread resentment if the system fails to take into account the new income of the parent with care. We shall hear of such cases in all our surgeries; people will regard that as unacceptable and contrary to natural justice.

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