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Mr. Jim Cunningham: Does my hon. Friend recall that the Opposition introduced the Child Support Agency when they were in Government? Its target was savings, and it did not necessarily go after the people it should have gone after. While we are on the Opposition's handling of pensions and payments, does my hon. Friend recall who introduced the Horizon project? We are still dealing with the aftermath of that project, which has affected our new approach to the CSA and the need to separate the wheat from the chaff.
Mr. Browne: My hon. Friend is quite right to remind the House that the motivation when the CSA was introduced was not to get benefit and support to children—the thrust of our child support policy and CSA policy—but to save money for the Exchequer. He is also right that although the system was flawed and difficult when it was introduced, part of the problem was that it changed significantly as it was developed, often in response to the demands of absent parents, who wanted it to reflect their lifestyles. It is accepted by Members on both sides of the House that the child support system that we inherited consequently allowed people, particularly absent parents, to devise a lifestyle that defeated the right of the child to be maintained. People were given advice by financial advisers about how to structure their debts or mortgage liabilities to defeat the right of their natural children to be maintained. The new method of calculation does not allow that, and it is far simpler. As I shall explain, when it works properly it will make a significant difference to the maintenance of substantial numbers of children and poor families throughout the country.
In favour of the Conservatives' introduction of child support is the fact that they moved forward significantly the debate about who had primary responsibility for maintaining natural children. I remember that when the new child support system was introduced, there was a debate about whether or not people should maintain their natural children or whether the state should pick up the cost. We no longer have such debates, and to some extent the Opposition, whatever their motives, are to be thanked for taking the issue up and moving social policy forward significantly.
To return to the functioning of the IT system, I have been asked whether I can give the House more detailed or candid information than my right hon. Friend the Secretary of State gave the Select Committee only a fortnight ago. He gave that evidence to put the record straight, and on the issue of transfer, which is the issue that, quite reasonably, exercises people, we have consistently made it clear that we will allow only those cases that are the stock of the CSA system to be transferred to the new system when we are certain that it is working properly and will not damage people's family incomes, as it would if it were not working properly. The House can rest assured that when we are satisfied that that is the case it will be told immediately, and arrangements will be made to make that transfer. If hon. Members would like more detail, I recommend that they
read my right hon. Friend's evidence to the Select Committee when, after careful questioning, he revealed a significant amount of information. In answer to a question about whether he would contemplate cancelling the contract, he said that if things did not get any better, that would have to be considered. That is as honest as we can be—there is no point shirking our responsibilities.
Mr. Waterson: I do not want to press the Minister beyond what is appropriate in what is partly a commercial situation, but I would be grateful for clarification. Current thinking is that the migration will start in the autumn—[Interruption.] The Minister says that they have not said so, so I shall put it differently. Without my wishing to pursue the EDS point, does the Department have a working assumption about the date when either the migration will start or when it is minded to say that enough is enough?
Mr. Browne: I accept that the hon. Gentleman wants to get his question on the record, but he will not get an answer from me that is different from the one that he has already been given. When we are satisfied that the design and functioning of the system are robust enough to allow for migration, we will set a date for that migration. Until then, the Secretary of State, Ministers in the Department and senior officials will continue to work with the provider or contractor to ensure that they are sticking to their agreement that they will work to improve the system. I am not in a position to go into any more detail, but nothing has been kept from the House, which has been told candidly that there are difficulties with the system that are being worked on. When the work is complete and the system is robust enough to support migration, a date will be fixed for that. However, a date has not yet been fixed.
A substantial part of the speech by the hon. Member for Havant dealt with the alternative to our pensions policy—the restoration of the earnings link to pensions. It was said that he needs help to pay for that by scrapping the new deals. Indeed, it now becomes apparent that to do their sums on this policy, the Conservatives need to know whether we are committed to the uprating of pension credit by reference to wages. It is no wonder that the right hon. Member for West Dorset (Mr. Letwin) admitted that they would have to make some "painful decisions" in order to pay for their policy. I was disappointed that the hon. Member for Havant did not respond to that point. Perhaps he or the hon. Member for Eastbourne (Mr. Waterson) should do so at some time in the future, because a significant number of people out there want to know who will have to suffer the pain for that policy.
Let me deal with the reasons why we in Government think that it is the wrong policy and are not responding to the constant siren songs urging us to move in that direction. First, it is unaffordable; secondly, it is unsustainable; and thirdly, it is unfair. Although the pension credit had not yet been introduced in May 2002, the hon. Member for Havant knew full well that it was about to be. Did he have a Damascene experience in October 2003 when the pension credit appeared? It would be interesting to know why he did not anticipate
that that was going to happen some time before when we discussed it in some detail and considered the White Paper and other papers that informed it.In any event, in May 2002 the hon. Member for Havant said on "On the Record" that he opposed reintroducing the earnings link as it was "not affordable". Nothing has changed since then. Even if he took more than £200 million off pensioners in extra tax, as he would, there would be a £500 million shortfall by year 4 of a Tory Parliament.
Mr. Browne: Will the hon. Gentleman give me a moment? That shortfall assumes that there are savings to be made of hundreds of millions of pounds a year from scrapping the new deal programmes. I understand why he does not like the report by the National Institute of Economic and Social Research on the new deal for young people, but the evidence just from the new deal for lone parents says that it saves the Exchequer £40 million a year by getting people off benefits and into work. There are no savings to be made by scrapping the new deal, but there are significant other additional costs, as we already know from 18 years of Tory Government in which we saw growing numbers of young people in long-term unemployment.
Mr. Willetts: I am grateful to the Minister for giving way, although he did not do so as promptly as my hon. Friend the Member for Eastbourne (Mr. Waterson) did to him.
When the House debated the pension credit, I supported a reasoned amendment, which was also supported by the Liberal Democrats and by the right hon. Member for Birkenhead (Mr. Field), and which proposed that the money going into the pension credit should instead go into a higher pension for older pensioners. I continue to believe that that would have been a better way forward. We are now in a world where the pension credit has come into force, and where more than half of all pensioners will be on it. We are therefore tackling the problems of a world in which more than half of pensioners are on means-tested benefits. The question is: what is the best way forward in the world that we are now in? I think that increasing the value of the basic state pension by earnings is the best way of getting us out of the mess that has been created by the pension credit.
Mr. Browne: I am grateful to the hon. Gentleman for that, but he needs to explain why he has indulged in this significant U-turn. I have a whole page of quotations from him—[Hon. Members: "Go on."] Well, I shall be persuaded, then. In 1993, he said, in relation to sustainability, that his Government had taken the crucial step of
- "Ending the link between the basic pension and earnings"
- "the seductive politics, but dangerous economics . . . which has bedevilled state pension arrangements in other countries."—[Official Report, 8 July 1993; Vol. 228, c. 516.]
It is interesting to note that in discussing taxing pensions the hon. Gentleman does not make great play of a part of his policy, about which all pensioners should know: under the Tory plan, nothing will be done to help the poorest pensioners. They will not only fall further behind, but any increase in their basic state pension will be knocked straight off their pension credit. Not only will the poorest be worse off, but any advantage that they could anticipate will be knocked off the pension credit.
We heard today that it is the Tory party's intention to allow the pension credit to wither on the vine. That would involve another significant on-cost, and the Conservative proposal that we are considering would cost £18 billion, and £12 billion after netting off the savings from income-related benefit. It would take 14 years to achieve that. All women who are watching the policy develop should be especially afraid of it. They will fare especially badly because half of them do not get the full basic state pension. They would be seriously short-changed.
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