Previous SectionIndexHome Page

Mrs. Dunwoody: I am a little confused. Is the hon. Gentleman really saying that, although it is very important that one should pay for one's own children, if, for any reason, one's ex-partner is able to get money from a wholly different source, that automatically absolves one of any responsibility for continuing to pay for one's children at the existing rate? If that is what the hon. Gentleman is saying, it seems to be a somewhat complex--even unacceptable--set of mores.

Mr. Willetts: I am not saying that that should be automatic, but that--as the Select Committee said--if the parent with care remarries and finds herself or himself with an affluent new spouse, there will come a point when it is simply unacceptable to fail to take those new financial

11 Jan 2000 : Column 166

circumstances into account. Labour Members will find that their constituents will come to their surgeries to make that very point.

Mr. Connarty: Is not the hon. Gentleman saying that he is going to play this issue for politics and not the moral right of the child?

Mr. Willetts: I am talking about what seems to me to be a clear and simple principle. The hon. Gentleman will find that his constituents and others throughout the country are simply unable to understand why no account whatsoever should be taken of the financial circumstances of the parent with care if he or she remarries.

Mrs. Joan Humble (Blackpool, North and Fleetwood): Will the hon. Gentleman give way?

Mr. Willetts: I am sorry, but I would like to make a second point about the formula. I do not intend to take quite as long as the Secretary of State.

We also oppose the fact that, at the moment, there is no upper limit on the liability of the non-resident parent. Again, as the non-resident parent's income rises--perhaps that is long after the relationship with the other parent of the child has broken up--there must come a point when one cannot indefinitely extract 20 or 25 per cent. of the income of the non-resident parent. We need to have an upper limit somewhere in the system.

Trying to take account of the income of the parent with care and setting an upper limit on the liability of the non-resident parent would bring our system of child support much more into line with the common-sense instincts of the average constituent whom we are trying to represent. I will now give way to the hon. Lady.

Mrs. Humble: As a member of the Select Committee, I have tried to refresh my memory about some of our recommendations. On the point about the income and resources of the parent with care, I draw the hon. Gentleman's attention to the fact that the recommendations of the Select Committee were to do with the earnings of the parent with care. Perhaps the hon. Gentleman will reconsider his remarks about remarriage and income from other sources.

Mr. Willetts: No. This is an important matter, which we will find is one of the sticking points that we shall all face in our surgeries if these proposals, as currently formulated, are passed into law.

Mr. Andrew Dismore (Hendon): Will the hon. Gentleman give way?

Mr. Willetts: Yes, but very briefly because I want to move on to other points about child support.

Mr. Dismore: The hon. Gentleman seems to want to pick and choose between the recommendations of the Select Committee, of which I am also a member. It accepted the Government's proposal that there should not be a limit on the income of wealthier parents because we believe that children have the right to share in the income of wealthy parents and share their standard of living.

Mr. Willetts: The hon. Gentleman is a member of the Select Committee and I am not. However, from my

11 Jan 2000 : Column 167

recollection, a proposal in the original draft was changed after a vote of five votes to two. I agree with the two members of the Select Committee who thought that such income should be taken into account. I do not accept everything that the Committee said, but I think that its report is valuable and that some of its proposals should be reflected in the Bill. I regret the fact that they are not.

I shall move on to another feature of the Bill--something that loomed very large when the Secretary of State was spinning and briefing on his proposals, but which he strangely passed over today. I refer, of course, to the tough new penalty, which we were told about several months ago, of taking away people's driving licences if they fell into bad odour with the Child Support Agency. We were told at the time that that was an example of a Government getting tough with people who did not comply with the Child Support Agency. The Government managed to get a lot of coverage for its tough new approach of taking away driving licences. There was even a suggestion at one stage that they would take away passports as well, but they allowed the Passport Agency to do that through its own devices.

Now what do we find? This tough new measure is not an extra penalty, it is an alternative to a jail sentence. It is not, in other words, a toughening of the regime at all. It is a bold new initiative in which the Government are saying, "If you don't fancy going to jail, you can always hand in your driving licence instead."

That is a bizarre new approach to enforcing benefit penalties, and I should be interested to know whether the Secretary of State believes that it will have wide application. If so, he has certainly created an incentive for people to try to get a driving licence, if they have not already done so, because they can trade it in against the alternative punishment of a custodial sentence. That measure is exactly the opposite of the spin that the Secretary of State put on it months ago: it is not a toughening of the regime, but a weakening of it.

Mr. Andrew Mackinlay (Thurrock): That is trivial.

Mr. Willetts: The hon. Gentleman says that it is trivial, but the Government's briefing on these proposals focused on the driving licence measure. It was about all that they could say about the proposals. Inches and inches of newspaper comment focused entirely on that bold new approach--and we now discover that it is not an extra penalty but an alternative to a custodial sentence, as the Bill makes clear.

The transitional phase will be one of the biggest single problems that we shall face if and when the legislation is implemented. It will be very difficult to run two systems and it will be very difficult to maintain any legitimacy in the current arrangements if, at the same time, a new and more simple formula is being passed into law by the House. The Secretary of State did not properly address the problem of how he believes that he will be able to carry on collecting child support under the old formula while at the same time introducing the new system. He will be trying to run both systems in parallel, and that is where his problems will arise.

We want to hear from the Secretary of State today--he gave no figures on this in his lengthy speech--whether he thinks that he will have to write off a large amount of the debts accruing under the old formula, and how he

11 Jan 2000 : Column 168

seriously expects us to explain to our constituents that they still have substantial financial obligations under the old formula, long after the House has passed a new formula into law. It will be very difficult to explain to people in new cases in the coming year that even they will be treated under the old formula. As we all know, there is a serious enough crisis of legitimacy in child support at the moment. Trying to run two systems in parallel will make an already difficult problem far worse.

Mr. Coaker: Is the hon. Gentleman seriously saying that there should be a big bang and that everything should change at once? Is he seriously suggesting that there should be no transitional phase? If there were not, we would experience again the problems that occurred six or seven years ago when the CSA was established. Is not it far better to accept the suggestion of my right hon. Friend the Secretary of State that, despite the difficulties, we should have a transitional phase because without it we will simply recreate the chaos of the past?

Mr. Willetts: I accept that we will need a transitional phase, but I want to hear from the Secretary of State, who will be responsible for running both systems during that phase, how in practice he expects to collect child support under the old formula and what scope there is for trying to introduce the new formula more rapidly, at least for new cases.

The hon. Member for Gedling (Mr. Coaker) will find it very difficult to explain to people who come to his surgery with a new child support case that despite everything that they have read in the newspapers about the new formula coming into force, they will still be judged under the old formula. That is a legitimate question for the Opposition to raise because it is a problem that hon. Members on both sides of the House will have to face. That is why we say that the new formula for new cases needs to come into force as quickly as possible.

Ministers have not yet revealed as much as we need to know about the regulations that will enforce the detail of many of the proposals. We are not even sure what the measure of income will be. That is not in the Bill. There is very little detail in the Bill and only a little more in the White Paper. We do not know, for example, how so-called unearned income--perhaps it is better to call it income from savings and investments--will be treated. It appears that it will be completely ignored in the new formula. If it is ignored, there will be many cases--we used to call them departures but they will now be called variations--where people will say, "It is unfair. A substantial income from investment and savings will not be taken account of in the formula. We want an individual investigation to ascertain how this will affect us."

The proposed legislation fails to provide the necessary information to enable the House to reach a view on how the new systems will work. Given the admitted problems of child support over many years, it is our experience that above all we need clarity. Unfortunately, the Bill does not bring with it the clarity and information that the House is entitled to expect if it is to reach a full view on the Government's proposals.

It is a great pity that the Government have not responded to the Select Committee's proposal of a Special Standing Committee. It would have been helpful if Ministers had accepted the suggestion of a scrutiny role

11 Jan 2000 : Column 169

for the Social Security Advisory Committee. I speak as a former member of that committee. The Secretary of State's rather cavalier dismissal of a possible role for the SSAC in his response to the Select Committee's report was mistaken. There must be careful scrutiny of the detailed regulations that will implement the meat that is lacking in the Bill, and we are not persuaded that the Government are offering us the information that will be necessary for that scrutiny. We are not persuaded that there will be sufficient scope for scrutinising and debating the regulations. We have substantial concerns about the way in which the Government are going forward on child support reform, but we accept that the current system cannot be allowed to continue in its current form.

As for a second state pension if the child support measures in the Bill are an example of a problem that must be tackled, the second state pension is an example of the Government creating entirely unnecessary muddle and confusion. It is a gratuitous set of measures which, in so far as it takes welfare in any direction, takes it in the wrong direction. The second state pension is just more paper promises. We have more promises of state pensions being financed from the generality of taxpayers and further discouragement to funded pension provision, which we believe in and want to encourage.

We want to encourage people to save for themselves. Once again, the Labour party is looking to the state as a source of alternative pension provision. I remind Ministers of the pledge that appeared in the Labour party's manifesto, on which every Labour Member was elected when they fought the 1997 general election. It stated:

The Bill represents a failure to adhere to a simple pledge in Labour's manifesto to retain SERPS.

The Secretary of State says, "Our proposal is even better than SERPS." The right hon. Gentleman is trying to get the best of all possible worlds. He says, "We may be abolishing SERPS, but we are introducing something that is even better." One of the reasons for the extraordinary complexity of the proposals that he has put before the House is that he is trying to introduce a new system while replicating the distribution of benefits under the old regime. He is trying to ensure that no one will be worse off than he or she would have been under SERPS, while claiming that he is introducing a bold new system. One is reminded of the old child support formula. The sole purpose of the extremely complicated formula that is before us is to enable the right hon. Gentleman to try to do the job that the previous SERPS regime was doing.

We have an example of the point at which welfare reform disappears in its own ingenuity. The only purpose of the complicated formulae is to try to replicate the same distribution of benefits under SERPS, as though the Secretary of State had not decided to abolish it. The right hon. Gentleman has not succeeded. Despite all his claims that no one will be worse off under the new system, there will be a significant group of losers. I refer to the 150,000 people who have earnings from employment and from self-employment. Under SERPS, their earnings from self-employment were taken into account, but the Bill contains no provision to ensure that any earnings from

11 Jan 2000 : Column 170

self-employment are taken into account. Therefore, contrary to the Secretary of State's assurances, there will be a significant group of losers--people who do worse under his formula than they would have done under SERPS.

In his desperate attempt to protect the same distribution of benefit as would have occurred under SERPS, the Secretary of State has set up a complicated structure with, for example, different rates of accrual of benefit in different earnings bands. I agree with the hon. Member for Northavon (Mr. Webb) that it will take 25 or 50 years to deliver even a tiny increase in pension entitlements--that is, paper pension entitlements, not backed by a real fund. It will be a sight worth seeing when Labour Members in their surgeries, facing pensioners complaining that they are to receive only a 75p increase in their basic pension in the coming year, explain that those pensioners should not worry because they will get an extra £1.50 in 2025.

The proposed system delivers not jam tomorrow, but jam in the distant future. The Government have failed to understand that people want genuine funded provision for their future, not vague paper promises that in 2025 or 2050 they will have a theoretical paper pension that is worth £1.50, £2.50 or £3.00--if they are lucky--more than they would have had under SERPS. At the same time as those tiny and distant paper promises are delivered, the means-testing of current pensioners continues apace with the spread of the minimum income guarantee, which imposes yet another penalty on pensioners with modest incomes who saved for their retirement. Hundreds of thousands of pensioners find themselves trapped in a means test that results in their efforts to save not being rewarded.

The provisions to establish the second state pension contain one of the most outrageous examples of apartheid in pensions provision that the House has seen for a long time: an explicit set of regulations creating entirely different pensions regimes for people in different earnings categories. There is to be a three-class model of pensions, with one regime for low earners, one for moderate earners and one for high earners--with nice high barriers to keep the different groups apart. That is not a Conservative vision of pensions provision; we believe that there should be funded pension provision for everyone. There should not be a £9,500 barrier, with sheep on one side and goats on the other. That is how tickets for the millennium dome should be allocated, not the way in which pensions provision in this country should develop.

Next Section

IndexHome Page