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7.11 pm
Mr. Edward Leigh (Gainsborough): I echo what the hon. Member for Middlesbrough, South and Cleveland, East (Dr. Kumar) said about the staff at the Falkirk office, whom members of the Social Security Committee visited. I must admit that--like, perhaps, many hon. Members--I had, before my visit, entertained rather a low opinion of the staff, having listened to what all my constituents were saying. On that visit, however, I became aware of all the problems with which the staff have to deal, the enormous pressure that they are under and the low wages that they are paid. I now think that they are doing a good job in very difficult circumstances, and I am happy to pay tribute to them.
I do not know what the House considers to be the purpose of family law, but I believe that it is to create a structure in society whose aim is to keep couples together, if that is possible, and, if it is not, to ensure that absent fathers--it is usually the fathers who are absent--remain in touch with their children and support them. That is a simple aim, which I think is supported by members of all parties, but in that respect we have failed as a society. A third of non-resident parents pay nothing, and 50 per cent. of children in poverty come from single-parent families. Daughters in single-parent families, where the single parent is not working, have only a 7 per cent. chance of obtaining higher education qualifications.
The present system is clearly not working, so what we are discussing now is what we can do to improve it. I agree with my hon. Friend the Member for Banbury (Mr. Baldry) that our chief concern should be for those who are most vulnerable and have the least resources.
I was privileged to share most of last week--while I was thinking about what I would say today--with a man called Jean Vanier, who set up the L'Arche homes for people with severe learning disabilities. Small beginnings were built up into a worldwide movement. We are
discussing circumstances that involve much pain and anger; he deals with circumstances involving an enormous amount of pain and anger, and disability as well. He has been extraordinarily successful in overcoming the difficulties by adopting an intensely personal approach to each case. Everyone is treated as an individual and has a personal assistant. The help that is given is not simply material--although I suppose that asking the CSA to give other than material help would be asking too much of it.
I conclude from that visit that we shall make real progress in meeting social objectives only through a personalised system. That would involve someone sitting down with the couple concerned, if possible--or with the two people separately, if they refuse to be interviewed together--working out the total income involved, and encouraging the father to adopt a system of payments and visiting. Some may say that they accept all that, but it is not possible. Let us look at the present system, which has become unbearably complex. Because it must deal with a hundred items of information, the CSA spends 90 per cent. of its time making calculations and only 10 per cent. on enforcement. The whole thing is a mess. Society must give up on it and move to a simplistic system of crude rough justice.
The pressure imposed on the CSA by existing claims is such that we must move to such a simple system. To do that would be intensely unpopular politically, but it is the only option for the Government. The lack of a clear timetable is dangerous: the existence of two systems operating side by side will cause enormous vexation and unhappiness.
The Government, being politically acute, realise that a move to the new system for existing claimants would be unpopular. I think that it would be right, but the Government are not going to do it: they are going to introduce the new system only for new claimants. That is a shame, although it may be necessary. I understand all the difficulties. As a member of the Select Committee, I have visited the CSA and studied its work. I have listened to what my constituents have said, and I know that it is rough justice, but at the end of the day we are not being very ambitious, are we? We are giving up on so many people. We are saying that we, as a society, believe that a child is worth 15 per cent. of someone's income. A child is not worth 15 per cent. of someone's income; a child is worth 100 per cent. What right have we to say that we are so lacking in ambition--so unwilling to try to use the levers available to us--that we set arbitrary formulae such as this?
Human nature will break through, as it always does. The small print tells us that the departures will be abolished and variations will be introduced. Once variations are introduced, they will multiply, just as they did when we tried to introduce a relatively simple system. They will multiply because fairness and justice will demand it, and we shall end up with a system very similar to the present one. If the Government cannot afford to devise a personalised system, perhaps they will at least provide a named official to ensure that both parents deal with the same person throughout the process.
I want to say a little about pensions. We are creating an affluent society. Over the past two decades, 80 per cent. of richest pensioners have been better off, and a third of the poorest have been better off. We should be ambitious for society: we should encourage everyone to provide for their old age. I agree with what many have
said about the complexity of the three current different systems. We need a seamless web enabling us--by means of compulsion, if necessary--to force people to make adequate funded contributions.
The Government have made the fair point that those who earn less than £9,000 a year are unlikely to be able to build up a fund sufficient to raise them above the means-tested benefit level. I do not know the answer; I simply know that a complicated system involving stakeholder pensions, second pensions, occupational pensions and personal pensions will not encourage people to accept the funded system that we all want. The only way is to have some element of compulsion but, once that is in place, let people choose the sort of system that they want. Many countries have gone down that route. I am convinced that the private sector is best placed to provide such a choice.
I have talked about society being ambitious. One ambition can be to break and to restore broken relationships. We can try to build communities. There is no point talking about building a world community, a European community or a national community if we cannot use whatever small resources we have to build community between two people.
Jean Vanier told a moving story that affected my ideas on the subject. He has a friend who is a French lady and very elderly. In the 1940s, she was very good looking and a fine pianist. Everyone liked her. She had a tremendous future. When the war started, she joined the resistance. Eventually, she was captured by the Gestapo after using her piano-playing prowess to try to infiltrate it and to warn the resistance of what was going on. The Gestapo tortured her to the extent that it destroyed her entire nervous system. She would never be free from pain for the rest of her life. She went into that prison with 20 people, but she was the only one to survive.
The person who tortured that lady was a young Nazi doctor called Leo. In 1983, she received a telephone call and she immediately recognised his voice. He said that he was about to die and wanted to come to see her. He did so. They talked for two hours and he asked for her forgiveness. She forgave him. They embraced. As he was going away, he asked what he should do. She told him and he did it: he went back to the Austrian village where he was the burgomaster--he had admitted nothing about his past; he was a distinguished man--and admitted everything in front of the whole village. Two or three weeks later, he died.
Mr. David Crausby (Bolton, North-East):
Welfare reform is, by its nature, controversial in that it will for ever be popular to increase welfare and unpopular to propose any reduction in benefits, so it makes a pleasant change to be able to speak on a welfare reform measure with which I almost entirely agree. Interest will inevitably
Anyone who contemplates a future in British politics will surely support the reform of the CSA for parents who live apart. Many of us have waited with bated breath since we were elected for the delivery of an understandable system of child support rates. Most of us would agree that the principle that absent parents must be held responsible for the maintenance of their children is completely sound, but the present system of enforcement is incredibly unfair.
We must all have had constituents who have suffered injustice as a result of the present provisions. I am delighted that one of the aims of this long-awaited Bill will be to introduce lower rates for non-resident parents on very low incomes.
A simpler method for the calculation of child support has been desperately needed. At long last, legislation proposes a formula that will at least be clearly understood. Most important, we must ensure that the changes that we enact will primarily be in the interests of children, who have too often been under-represented in the years of debate on child support.
Part II deals with the state second pension. I hope only that the Government will do a better job in delivering a second pension than a series of Governments have done in the past. The sad reality is that, historically, Government have proved to be no more trustworthy when it comes to the actual payment of pensions than those who controlled the Daily Mirror pension scheme. That is not surprising as we permit a situation where we have not built up the adequate funds required to guarantee the payment of pensions.
As politicians, we would not tolerate, or consider tolerating, a private pension provider paying its pensioners out of current members' contributions, yet that is the situation. Our Government operate a pay-as-you-go scheme, expecting today's national insurance contributions to pay for today's pensions.
I hate to have to say it, because I always strongly believed in the state provision of pensions and still do, but the historical reality is that pensioners would have been much safer in the hands of a dodgy insurance company than they have been depending on the whim of some future Government either to pay or to renege on the promise of a pension. With those words of caution, I enthusiastically support the measures in the Bill concerning child support and SERPS, but we must not forget the important issue of the control of occupational pension funds. I intend to confine my remaining remarks largely to aspects of the Bill that involve occupational pensions.
I almost entirely agree with the Bill, but I nevertheless have some reservations about the clauses that deal with reforming the regulation of occupational and personal pensions. I am particularly concerned about the Bill's proposals on member-nominated trustees, which do not go nearly far enough.
The Pensions Act 1995 was an important step in the right direction. I loudly applauded it at the time. For the first time, there was a general requirement for members to have the right to nominate and to select one third of
their scheme's trustees. Before that Act, we had the ridiculous situation of employers having the right to appoint trustees on behalf of their employees. It was a patronising concession in the 1978 legislation, which allowed workers to be involved in decisions concerning their pensions, but based on the precept that those workers could not be entirely trusted to decide whom their trustees would be.
The 1995 Act was a step in the right direction, but did not, of course, do enough to defend pension scheme members. Although the Bill is a further improvement, there is still some considerable way to go.
Why, for example, should member-appointed representatives amount to only one third of the trustees? If it is right for employees to be involved in the management of their pension funds, why must they always be in a minority? Clearly, proper control of pension funds should be in the hands of those who should have ownership of those funds. The most prudent managers will inevitably be those who have most to gain or to lose from a fund's good or bad administration.
It makes sense that employers who have responsibility for variable contributions to a fund--and, thus, the obligation to ensure that the pension scheme is sufficiently funded--should, quite rightly, be entitled to have authority and influence over the fund. To deny reasonable representation to responsible employers would be counter-productive in encouraging those employers' involvement in occupational pension schemes, and good employers deserve to be encouraged in the provision and management of pensions.
Unfortunately, however, all employers are not automatically responsible employers. When employers enjoy a contributions holiday for several years while members continue to pay, I start to take a different view about their in-built right to a majority of trustee appointments.
I believe that representation on a board of trustees, and control and influence over a pension fund, should be linked to the contributions paid. If, for example, an employer has paid over 50 per cent. over the lifetime of a fund, that employer should be entitled to majority control. However, when the balance shifts--as could quite easily happen in a mature fund, to which employees are making the majority contribution--the balance of power on the managing body of trustees also should shift. Therefore, should an employer wish to retain a majority of the appointed trustees, the very minimum that the employer should be prepared to do is to contribute at least as much to the scheme as the members have contributed to it.
I spent 19 frustrating years serving as an employee representative trustee on an occupational pension scheme, and much of my time was spent struggling with employer-appointed trustees who, when it came to the crunch, almost exclusively reflected the point of view of the employer who appointed them. Too often, meetings became a negotiation between employee-elected trustees and employer-appointed trustees.
I do not blame anyone for that type of behaviour, because the way in which our schemes are established in law make such conflict inevitable. In truth, it was more than their job was worth for employer-appointed trustees to act against the interests of the hand that fed them. Moreover, if they had behaved differently, the result
would have been almost immediate replacement by someone who was more responsive to the company's interests.
I do not want anyone to get me wrong: I do not have any problems with the practice of pension negotiations between employers and employees. Indeed, I think that pension negotiations are a very healthy exercise, and encourage them as often being much more constructive and less inflationary than the negotiation of pay increases. My concern is that the board of trustees is not the place for negotiations, as trustees' common responsibility should be the prudent management and investment of their fund. When trustees are answerable to different masters, they will inevitably respond differently, and not always act in the interests of their pensioners and fund members.
The Bill contains clauses on winding up schemes. Winding up a pension scheme, for whatever reason, could have a devastating effect on the lives of its members. An elderly person's accumulated package of pensions is similar to a child's education in that one gets only one shot at it, and, once it starts to go wrong, it is extremely difficult to put right. When a company goes into liquidation close to the end of a man or a woman's working life, he or she may suffer incredible shock. Understandably, scheme members cannot grasp why it should take years to sort out their pension scheme.
I therefore welcome the Bill's proposal to require that regular reports be made to the Occupational Pensions Regulatory Authority, which clearly has to have a stronger role in those traumatic circumstances, so that it is able to add some impetus to the process.
Trustees should, of course, have the time to ensure that they comply with their obligations under trust law, and they must be supported in often very difficult and frustrating circumstances so that they are able to do their job properly. However, employees often have expectations of pensions that are calculated to the very last penny and plans beginning on the very day that they retire. Changes in those expectations may be devastating to those people and could make them feel extremely vulnerable. In such circumstances, the very last thing that those working men and women need is for a wound-up scheme to take years in which to resolve its liabilities. I therefore welcome the Bill's proposals to speed up the process.
My only word of caution is that schemes in difficult circumstances are rarely overfunded, and that we must ensure that the operation is as inexpensive as possible. Ultimately, we should remember that the reforms are about protecting workers who have expectations and entitlements to a pension, rather than about rewarding organisations and highly paid individuals who seem to appear and descend like vultures when a scheme is in trouble.
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