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Mr. Terry Rooney (Bradford, North): Does the hon. Gentleman accept that people in different earnings bands have different pension requirements and opportunities, and that the responsible section of the insurance industry, not the cowboys, accepts that people earning £9,500 or less should not be in a personal pension scheme?

Mr. Willetts: The point is that we believe in a mobile society, in which people earning less than £9,500 one year can have legitimate hopes that their earnings will be well above that the next. The system the Government propose has high barriers that will trap people in the second state pension and make it extremely difficult for them to move

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into funded provision. The problem is that the system lacks the flexibility needed to accommodate people's mobility.

Maria Eagle (Liverpool, Garston): How do the Conservatives suggest that those who throughout their working lives have caring responsibilities or receive low pay--the Conservatives oppose the national minimum wage, which would increase pay levels--can be assured of receiving good funded pensions that will keep them in their old age?

Mr. Willetts: We believe that it is possible to encourage many more people than currently do so to take out funded pensions. The primary reason we oppose the Government's proposals is that, at the same time as quite gratuitously messing around with SERPS, they are creating complexity and additional burdens that will deter those who want to take out funded pension provision.

Contrary to what the Secretary of State said in his speech, that has been the widespread reaction of representatives of funded pensions across the country. The National Association of Pension Funds complains:

the second state pension--

    "will add considerably to the complexity. Neither of the alternatives proposed seem likely to encourage employers to set up or continue to support"--

that is important--

    "contracted-out pension schemes."

The National Association of Pension Funds is saying that existing contracted-out pension schemes will become more onerous for employers to operate, because of the provisions introduced by the Government in the Bill and in previous legislation. There is a complacent assumption among Labour Members that the Government can continue to rely on the success of funded pensions as in our years in office. They assume that there will be an ever-wider spread of occupational pension provision. If they carry on in the way that they are going, that marvellous development over the past 20 years will go into reverse, and it will be the fault of Ministers.

Kali Mountford (Colne Valley): Is not the hon. Gentleman missing the point? What realistic prospect can there be of someone who has been a carer for 20 years getting private pension provision? Does not the Bill give something to someone who has no hope of anything in the current circumstances?

Mr. Willetts: As the hon. Lady knows, there was already home responsibility protection under the basic state pension, and we also intended to introduce wider home responsibility protection at the same time as other changes to SERPS. That would have addressed the issue that concerns the hon. Lady.

Mr. Boswell: Has my hon. Friend also considered the administrative aspects of a structure that is set up in national insurance terms, whereby earnings are assessed on a weekly basis and contributions calculated appropriately, and the proposed superimposition of annual limits, which may well create further anomalies and turbulence within the system?

Mr. Willetts: My hon. Friend is right to raise that point; indeed, I was about to deal with it. The interaction

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of the provisions with the national insurance system is one of the important aspects that the Government have so far failed to address.

Mr. Bercow: In the light of the chutzpah of the hon. Member for Liverpool, Garston (Maria Eagle) in talking about people with caring responsibilities, does my hon. Friend agree that it would be extremely wise to abolish the age restriction of 65 for claimants of invalid care allowance and the carers premium, thereby assisting 55,000 of the poorest carers throughout the land?

Mr. Willetts: My hon. Friend is right. That policy proposal, which was put forward by my right hon. Friend the Leader of the Opposition, would do far more to deal with a practical problem than all the empty paper promises contained in an unnecessarily complicated set of proposals.

The Secretary of State could have achieved his objectives--his own, not ours--simply by making relatively technical adjustments to SERPS. Instead of going down the straightforward route, rescinding some of our changes to SERPS and changing some of the factors whereby future pension entitlement was attained, which would have been a better way of meeting his own objectives, he proudly announces that he is abolishing SERPs, introducing something completely different in its place, and imposing a new set of administrative burdens and complexities on private pension providers, thereby threatening the funded pension arrangements that are one of this country's great economic successes.

Mr. Jim Cousins (Newcastle upon Tyne, Central): Does the hon. Gentleman recognise that the pension system that his Government left in 1997 meant that more than two thirds of women workers earning less than £10,000 a year had no second pension provision whatever? If he proposes to get those women to enter a funded pension system in the private sector, what sort of structure of coercion or incentives will be necessary to achieve that?

Mr. Willetts: I believe that it would be possible to encourage far more funded pension provision through a suitable contracting-out regime. One of our objections to the proposals is that the contracting-out regime will become so complicated that it will impose a significant extra burden on employers who run funded schemes. Labour Members are far too complacent about the implications of the proposals for existing and new funded pension arrangements. They will regret the way in which they have ignored significant objections, not only from the National Association of Pension Funds, but from others. I could quote many other pensions experts who say that the Bill's proposals for a second state pension will impose unacceptable burdens on them. That is one way in which the proposals will threaten the funded pension provision that Conservative Members want to encourage.

I want briefly to make a point about NIRS2, which lay behind the intervention of my hon. Friend the Member for Daventry (Mr. Boswell). The Secretary of State had the good grace to speak with some humility about computer problems. However, given the Government's record of managing computer problems--they are their own millennium bug--it is not feasible that the system will be ready in the time scale that the Secretary of State outlined.

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It is ludicrous to claim that people who run pensions will face tough new proposals on winding up pensions when their biggest problem is their inability to get accurate information from NIRS2. It is simply not good enough to pass legislation that imposes new burdens on them when NIRS2 problems remain far from resolved despite Ministers' assurances.

I shall refer briefly to other measures in the Bill, because some of them merit careful scrutiny. We have heard a little from the right hon. Gentleman about loss of benefit for breach of a community order. Conservative Members believe that there should be tougher benefit sanctions to ensure the integrity of the social security system. We are always keen to examine ways in which benefit sanctions can be made more effective. However, when we considered proposals such as those in the Bill, we were told that we could not get away with them and that they would not be legally watertight.

Let us consider the idea of imposing a similar community order on two offenders, one of whom has earnings and one of whom is on benefit. Both fail to meet the terms of the order and are thus in breach of it. The Bill proposes that the offender who receives benefit should receive an extra punishment--withdrawal of benefit--which will not be imposed on the offender with earnings. That may sound attractive, or be one of the gimmicks that the Secretary of State's spin doctors devise to make him sound tough, but I doubt whether he will get the provision through the courts.

I shall be interested to read the legal advice on which the right hon. Gentleman bases his claim that the provisions will be compatible with the obligations that the Government assumed when they incorporated the European convention on human rights into British law. I do not believe that he will succeed in implementing the proposal, because it will face significant problems in the courts. It is a gimmick like curfews, which the Home Secretary introduced. Such gimmicks are spun to get Ministers on to the front pages, but they fail to make an impact in the real world. They are the empty pledges and claims for which the Government have become notorious.

I shall have a modest bet with the Secretary of State that he will be unable to take away benefits from people who breach community orders any more than the Home Secretary is able to impose curfews on people who are responsible for anti-social behaviour. I look forward to the day when he is hauled before the courts and told that he simply cannot get away with it.

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